Financial advisor fees

Gobigorgohome

I’ve been offered redundancy money and was looking for an advice where the best to invest. The financial advisor that I met said the fees are 3% for advice which would inc my pension, all savings and redundancy pay. 

My pension is over £350k so when i work out the total assets it is around £500k. 

So does that mean the fee for their advice would be £15k?? Is this normal?
that sounds extreme, i was hoping it would be couple of hundred. I only want an advice where to invest. 

A bit about me
50, high tax payer (but now will fall into additional tax due to redundancy) mortgage balance £400k (but still on low fixed rate for another year), no other depts, total savings £100k (isa, current accounts and premium bonds) redundancy pay £60k

tacpot12

3% of £500,000 is £15,000, so yes, that's the fee.  I think 1% is more typical, so you can negotiate or use someone with more reasonable fees.

You many be able to reduce your tax, and even avoid the additioanl tax by making additonal contributions to your pension.  Have a look at these:
How to Higher and Additional Rate Pension Tax Relief
How to use your pension to manage income tax | RBC Brewin Dolphin

Albermarle

The initial fee is normally in the range of 1 to 3%. I would have thought something closer to 1% would have been appropriate for your size of funds. Maybe the advisor is not fully aware of the size of all your assets ?
Usually an ongoing fee of 1 to 0.5% annually is agreed, ( although not always) again in your case should be nearer the lower end.
Make sure you see an IFA, not an advisor linked to an investment/pension company/bank etc .

The cost is largely down to the detailed procedures they are forced to go through as they are highly regulated. They will want to know everything about you in some detail ( and probably in triplicate) before dispensing any actual advice.

Some people think advice is expensive and could be cheaper, but you will be lucky to get any advice for £2000, never mind £200 !

kempiejon

that sounds extreme, i was hoping it would be couple of hundred. I only want an advice where to invest. 

But that's not what anyone is selling. Advisors have a lot of responsibilities and liabilities. As others have said you might be able to negotiate on the fee. If all you want to know is where to invest, for some it's straight forward and even empowering to understand that for yourself. Plenty of opinions and information around these boards and elsewhere. One of the smartest things I ever did was educate myself and take financial control of my retirement finances.

dunstonh

So does that mean the fee for their advice would be £15k?? Is this normal?

No, its very high.

, i was hoping it would be couple of hundred. 

And that is totally unrealistic too.

Ballpark would be around £2500-£5000

aroominyork

You say you "only want an advice where to invest". What exactly do you mean? It sounds like you do not want an adviser to manage your investments for an ongoing fee. Do you want to know how to plan and structure your assets, or advice about specific investments (ie which funds)? 

boingy

Definitely don't pay those outrageous fees!

I don't think you need a financial adviser at all. You need to look ahead to that mortgage fixed-rate ending and think about reducing the size of the balance with some of your money at that point. 

Your pension pot is decent for your age. If you wanted some opinions on it start a thread in the pensions section and include details of your pensions(s) and what they are invested in. 

BTW, I'm assuming you already have a new job lined up.

Notepad_Phil

Gobigorgohome said:

I’ve been offered redundancy money and was looking for an advice where the best to invest. ... i was hoping it would be couple of hundred. I only want an advice where to invest. ...

What is 'best' for you is likely to be very different to what is 'best' for me and unfortunately a couple of hundred pounds is an unrealistic figure to expect to pay a professional person to get the right advice for you. Assuming this is an Independent Financial Advisor then I wonder whether the advisor is aware of how much you have, but if you've somehow found yourself talking to just a Financial Advisor (i.e. essentially more of a salesman) then I can see where a non-negotiable 3% might come from and in that case if you really believe you need an advisor then you want to start your search again and this time make sure you only talk to Independent Financial Advisors.

Gobigorgohome

Thanks. Pension is not an option right now as I need to be able to access the money if needed

kempiejon

Gobigorgohome said:

Thanks. Pension is not an option right now as I need to be able to access the money if needed

Here's some free advice. If you need access to the money investing is not the route, cash or something very similar with known returns is best for any money you might need within the next few years.

Gobigorgohome

dunstonh said:

So does that mean the fee for their advice would be £15k?? Is this normal?

No, its very high.

, i was hoping it would be couple of hundred. 

And that is totally unrealistic too.

Ballpark would be around £2500-£5000

dunstonh said:

So does that mean the fee for their advice would be £15k?? Is this normal?

No, its very high.

, i was hoping it would be couple of hundred. 

And that is totally unrealistic too.

Ballpark would be around £2500-£5000

Thanks this helps