Choosing an IFA

Groover24

Following on my from my previous threads I am considering investing myself based on information received frompeople on here, but I am also considering IFA.

Looking around I am finding that the initial charge of 2% seems normal with on-going advice around 0.75~0.8%. I have paid 1% previously but had that reduced to 0.5% as I felt the advice received didn't justify the 1% (about 30 minutes once a year). One IFA will advise and transfer my SJP pot without the need for on-going fees suggesting I can turn it on and off as I see fit - I need to ask more questions! They also suggested that the returns could be tweice those of my current SJP plan but I did not quite get my head around the basis of the comparison. Reasonable or not?

Do these numbers look reasonable?

I have looked at Ascot Lloyd and Prosperity Wealth as potential advisers but they seem to be big companies and I am unsure whether I would get the best deal or advice from them. Not sure. So I have looked at smaller local busnesses and found that, whilst I believe that they are IFA, they are appointed representatives. Looking into one I see that they use ValidPath as the umbrella network, if you like. Is this OK? The company offers potentially lower fixed fees for advice / implementation

tacpot12

I would ask the IFA for evidence that their portfolio for a customer with similar needs to yourself is receiving returns that are double what your SJP portfolio is returning. (It's possible that your SJP portfolio returns might be low due to charges or incorrect advice.) 

Groover24

tacpot12 said:

I would ask the IFA for evidence that their portfolio for a customer with similar needs to yourself is receiving returns that are double what your SJP portfolio is returning. (It's possible that your SJP portfolio returns might be low due to charges or incorrect advice.) 

I suspect that they may not give out too much information but it is a question I was going to ask. It looks like I would need to pay for the recommendations and advice even if I do not go ahead. That does not sit well with me. I know that time is money but I need to be confident that the offerings are suitable

MallyGirl

it might be that returns are similar but fees are lower.
Personally I would search harder for a local IFA - not any sort of tied FA that is limited in the offering they can make. I'd be wary of anything with Wealth in the name.

dunstonh

Looking around I am finding that the initial charge of 2% seems normal with on-going advice around 0.75~0.8%.

Many firms have a cap and collar to their fee or tier it based on amount.   So, the percentage needs to be placed in context with the amount.

The typical range for ongoing is 0.5-1% and again, that is usually based on value (larger amounts getting closer to 0.5%).

One IFA will advise and transfer my SJP pot without the need for on-going fees suggesting I can turn it on and off as I see fit - I need to ask more questions! 

All IFAs can do that.   It limits the investment selection but for many people, this is all they need.

IFAs cannot force you to have ongoing service.  So, there will be a transactional model.

They also suggested that the returns could be tweice those of my current SJP plan but I did not quite get my head around the basis of the comparison. Reasonable or not?

SJP is one of the most expensive distribution channels and its funds are not exactly known for their quality.

However, returns are mostly relative to the level of risk you take.    ie. the more equities you have, then the better the return has been in recent history.    Cautious investors with low levels of equities and higher levels of bonds have gone through the worst period in over 100 years.   So, if one portfolio is higher in bonds and the other is higher in equities, then you will expect the higher equities one to have the better returns.   However, that doesnt mean that one is better for you.

I have looked at Ascot Lloyd and Prosperity Wealth as potential advisers but they seem to be big companies and I am unsure whether I would get the best deal or advice from them. Not sure. So I have looked at smaller local busnesses and found that, whilst I believe that they are IFA, they are appointed representatives.

Most IFAs are small 1-5 adviser firms operating out of home offices or a small single branch location.  They tend to be directly authorised by the FCA and not appointed reps.    There has been consolidation going on, in a similar way to accountants and solicitors have been hoovered up into larger corporations.    At the moment, you appear to be looking at the latter.  Larger firms tend to ensure their advisers use the same solutions for everyone. Some even have their own brand platforms and investment portfolios yet still get away with referring to themselves as independent (grey area but many have dropped their IFA status to become FA but not all have).

Appointed reps can be independent but most are not.    

Most directly authorised small IFA firms tend to be running at or above capacity so don't advertise.  So, they don't pay for listings on lead generation sites like unbiased, trustpilot etc.  Many don't even have a website.  

Looking into one I see that they use ValidPath as the umbrella network, if you like. Is this OK? The company offers potentially lower fixed fees for advice / implementation

Never heard of them but there are so few IFAs in the network model nowadays, that is not a surprise.     Having just taken a look a the FCA register, this appears to be a small network but that is not unexpected as the larger you get, the harder it is to be independent (many ex IFA networks dropped IFA status and become FA because it became too difficult)

I suspect that they may not give out too much information but it is a question I was going to ask. It looks like I would need to pay for the recommendations and advice even if I do not go ahead. That does not sit well with me. I know that time is money but I need to be confident that the offerings are suitable

You are paying for advice.  An IFA has suitability as the primary objective.  That doesn't mean the best return. Indeed, rarely will advice result in the best return.  Nor will DIY as the best return would unlikely be suitable.

Groover24

MallyGirl said:

it might be that returns are similar but fees are lower.
Personally I would search harder for a local IFA - not any sort of tied FA that is limited in the offering they can make. I'd be wary of anything with Wealth in the name.

Me too! Most I find are tied into SJP but this one IS independent(ish)

dunstonh said:

Most directly authorised small IFA firms tend to be running at or above capacity so don't advertise.  So, they don't pay for listings on lead generation sites like unbiased, trustpilot etc.  Many don't even have a website.  

Where would I find the local businesses? Good old Yellow Pages? The ones I do find seem, as you suggest, to be part of a bigger group

You are paying for advice.  An IFA has suitability as the primary objective.  That doesn't mean the best return. Indeed, rarely will advice result in the best return.  Nor will DIY as the best return would unlikely be suitable.

Would it be unreasonable to expect more information up front without having to commit to anything? I had a few meetings last year and all seemed happy to provide a summary of the proposal without obligation.

dunstonh

Where would I find the local businesses? Good old Yellow Pages? The ones I do find seem, as you suggest, to be part of a bigger group

You are finding the larger salesforces because they are the ones willing to pay the massive fees to be on the listing sites.    

Go to https://www.unbiased.co.uk/

Click on the pension advisers near me:  (not the orange box that draws your attention, the one below it)


Once you input your postcode and value, the initial list will be all the firms paying large amounts to appear on hte list.  If its like my area, that means mostly salesforces and wealth management firms.

However, if you scroll to the bottom of the page, there is a tickbox:


That text is a lie.    It is ticked by default and what it should say is "show only advisers that have paid to be in the list".   If you untick it, the list will include most of the other local advice firms.     Those firms are available for you to contact.  They just haven't paid unbiased to contact via their software.

25 years ago, we paid nothing to be listed when it was just a directory for IFAs.    Around 15 years ago it cost about £250 a year, 10 years ago it was £480 a year.     Then they decided to switch from being a directory to a lead generation site and now its about £3000 per month for a nationwide entry that cost £40pm 10 years ago.
Hence why most small firms no longer appear on there unless you untick that box.

See if you get more local small firms appearing if you do the above.

ali_bear

I just tried that page and it asks for a whole load of information. Gave up. 

dunstonh

ali_bear said:

I just tried that page and it asks for a whole load of information. Gave up. 

You selected the wrong option.  Which is their intention, as that turns it into lead generation.   It is not the "find a pension specialist" - in orange.

The option below that needs to be selected is - pension advisers near me.  This just requires post code and amount and turns it more into a directory 

ali_bear

Thanks. I'm already seeing adverts for IFA's on the social medias 

garyelder

Have you looked at Finli based in westerham Kent and reading and other offices around the country