Quilter Cheviot / IFA

PostItNoteWarrior

Hi Newbie here hoping you folk might be able to enlighten me a bit.

I’m helping an elderly family member who has an IFA and then all their investments are with Quilter Cheviot.

They have 3 accounts with QC: a GIA & ISA account, a SIPP account and an offshore Bond account.

I’m trying to understand a couple of things:

1) what their charges are with QC, I’ve asked QC  and been told that their Annual Management charge is 0.8% but as a long term lurker on this forum I’m sure I’ve seen mentioned other charges…. Do I need to be asking them another question to find out about those? Does it depend on what portfolio service they have? Or could the AMC be all the charges there are?  I’ll ask them but it would be good to know if I should be asking specific questions.

2) it doesn’t seem like the IFA has been doing annual reviews… for at least several years. For the Offshore Bond there is definitely a reference in the IFAs report to an ongoing advice fee so should that mean the IFA should have been annually reviewing at least that product with them?

Is there any kind of definition of what an annual review should be…? By this I mean should there be a meeting (face to face/zoom)? Or perhaps the client should be written to if there is no meeting?

I’m trying to find out what the IFAs fees are and on what basis they are charged.  Can it vary? So if someone like Quilter Cheviot is doing all the fund management does the IFA not get a percentage of the total amount that’s invested but instead charge a flat annual fee? Or get a reduced percentage amount? I’m trying to find this out from the IFA but would be interesting to know what others have seen/heard of happening in similar scenarios with an IFA and then a company like QC.

And finally are OAFs separate from general IFA charges?  Or perhaps that depends on the IFA company set-up?

Sorry quite a few questions there!

dunstonh

1) what their charges are with QC, I’ve asked QC  and been told that their Annual Management charge is 0.8% but as a long term lurker on this forum I’m sure I’ve seen mentioned other charges…. Do I need to be asking them another question to find out about those? Does it depend on what portfolio service they have? Or could the AMC be all the charges there are?  I’ll ask them but it would be good to know if I should be asking specific questions.

To be honest, I don't know much about QC.   They never appear for me in my research.  However, they are a DFM.

DFMs can work multiple ways but the main two structures are:
1)  Via a single (or blended) OEIC funds.   The DFM charge would be built into the fund OCF
2) via a portfolio of funds where the DFM charge is taken explicitly.

2) it doesn’t seem like the IFA has been doing annual reviews… for at least several years. For the Offshore Bond there is definitely a reference in the IFAs report to an ongoing advice fee so should that mean the IFA should have been annually reviewing at least that product with them?

Depends on the date of the original sale.  if it pre-dates 1st January 2013 then its likely to be commission rather than fee.   Quilter now tend to show commission as fee on the statements.  Indeed, they also show a fee even if the fee is fully or partly rebated but don't show the rebate.   (the fee will appear on the cost and charges disclosure but the rebate will not but the transaction statement will show the rebate).  Its a quirk of the disclosure method.

Is there any kind of definition of what an annual review should be…? By this I mean should there be a meeting (face to face/zoom)? Or perhaps the client should be written to if there is no meeting?

They should deliver what was agreed to deliver.  That will vary depending on what was agreed.   Again, this applies to post 1st Jan 2013 sales.

The requirement to go "at least annually" - which is often by tax year started in 2018.

I’m trying to find out what the IFAs fees are and on what basis they are charged.  Can it vary? So if someone like Quilter Cheviot is doing all the fund management does the IFA not get a percentage of the total amount that’s invested but instead charge a flat annual fee? Or get a reduced percentage amount? I’m trying to find this out from the IFA but would be interesting to know what others have seen/heard of happening in similar scenarios with an IFA and then a company like QC.

IFA fees vary.
The IFA is not paid out of QC's charges or any fund or platform charges.  That ended 1st Jan 2013 except for life and pension funds (offshore bond falls under life).
If the IFA is being paid a fee, then it will show in the transactions list and on the annual cost and charges disclosure.
If the IFA is being paid a commission, then it may be paid out of commission earned on the funds held and may not show expliclty.  Although the Quilter platform does show both entries on the transaction statement.

And finally are OAFs separate from general IFA charges?  Or perhaps that depends on the IFA company set-up?

OAF? - do you mean ongoing adviser fee?
The adviser fee would be explicit and show as such on the transaction statement for the ISA & GIA.
On the onsure bond it would depend on whether it was pre/post 1st Jan 2013. 

If there was a servicing IFA, you would expect a GIA to get annual servicing to use CGT allowances and bed & ISA and bed & pension (potentially).  So, are you sure there is a ongoing servicing IFA being paid?

Linton

A quick overview of investment charging...

There are 3 things to be paid for:
1 - The funds.  The fund managers' costs (eg office accommodation, staff).  This is normally the AMC.
2 - The platform.  The cost of providing you with an environment in which you can invest (eg computers, software,web sites, help desk)
3 - Advice.   Someone who tells you what funds you should be investing in to meet your objectives. (eg advisor wages, training, secretarial assistance, liability insurance, office) 

1 & 2 may be merged when you access the funds through the fund manager's own interface.

For a real IFA as opposed to a mere FA it is a requirement that the advisor is only paid for advice.  He/she gets no personal benefit from recommending one investment rather than another and is not restricted as to which fund managers are to be considered.

Fund charges are a straight % taken from the total investment pot. Published fund returns are after charges.

Platform charges may be a %, possibly with limits, or they can be fixed independently of the portfolio size.  

IFA charges are up to the IFA.  In principle they could be by direct negotiation, fixed or a %. For ongoing advice  a % is usually quoted but the value of the % could well be dependent on the portfolio size - an IFA could not pay his costs on a 1% charge for dealing with a £20K portfolio but could be happy with a 0.5% charge if the size was £200K.

PostItNoteWarrior

dunstonh said:

1) what their charges are with QC, I’ve asked QC  and been told that their Annual Management charge is 0.8% but as a long term lurker on this forum I’m sure I’ve seen mentioned other charges…. Do I need to be asking them another question to find out about those? Does it depend on what portfolio service they have? Or could the AMC be all the charges there are?  I’ll ask them but it would be good to know if I should be asking specific questions.

To be honest, I don't know much about QC.   They never appear for me in my research.  However, they are a DFM.

DFMs can work multiple ways but the main two structures are:
1)  Via a single (or blended) OEIC funds.   The DFM charge would be built into the fund OCF
2) via a portfolio of funds where the DFM charge is taken explicitly.

2) it doesn’t seem like the IFA has been doing annual reviews… for at least several years. For the Offshore Bond there is definitely a reference in the IFAs report to an ongoing advice fee so should that mean the IFA should have been annually reviewing at least that product with them?

Depends on the date of the original sale.  if it pre-dates 1st January 2013 then its likely to be commission rather than fee.   Quilter now tend to show commission as fee on the statements.  Indeed, they also show a fee even if the fee is fully or partly rebated but don't show the rebate.   (the fee will appear on the cost and charges disclosure but the rebate will not but the transaction statement will show the rebate).  Its a quirk of the disclosure method.

Is there any kind of definition of what an annual review should be…? By this I mean should there be a meeting (face to face/zoom)? Or perhaps the client should be written to if there is no meeting?

They should deliver what was agreed to deliver.  That will vary depending on what was agreed.   Again, this applies to post 1st Jan 2013 sales.

The requirement to go "at least annually" - which is often by tax year started in 2018.

I’m trying to find out what the IFAs fees are and on what basis they are charged.  Can it vary? So if someone like Quilter Cheviot is doing all the fund management does the IFA not get a percentage of the total amount that’s invested but instead charge a flat annual fee? Or get a reduced percentage amount? I’m trying to find this out from the IFA but would be interesting to know what others have seen/heard of happening in similar scenarios with an IFA and then a company like QC.

IFA fees vary.
The IFA is not paid out of QC's charges or any fund or platform charges.  That ended 1st Jan 2013 except for life and pension funds (offshore bond falls under life).
If the IFA is being paid a fee, then it will show in the transactions list and on the annual cost and charges disclosure.
If the IFA is being paid a commission, then it may be paid out of commission earned on the funds held and may not show expliclty.  Although the Quilter platform does show both entries on the transaction statement.

And finally are OAFs separate from general IFA charges?  Or perhaps that depends on the IFA company set-up?

OAF? - do you mean ongoing adviser fee?
The adviser fee would be explicit and show as such on the transaction statement for the ISA & GIA.
On the onsure bond it would depend on whether it was pre/post 1st Jan 2013. 

If there was a servicing IFA, you would expect a GIA to get annual servicing to use CGT allowances and bed & ISA and bed & pension (potentially).  So, are you sure there is a ongoing servicing IFA being paid?

Thank you for your detailed reply.  I’ve found some more paperwork that also talks about QCs underlying fund charges which added to the AMC brings the total annual charge of 1.72%. I’ll go back to them to clarify.

This paperwork which is from 2017 also talks about some advice to move from an older pension into an AJ Bell one in the QC account. As that is pre 2018 then perhaps it falls outside the “at least annually” guidance.

I’ll try to find out if there is ongoing servicing IFA being paid.

Thanks again