Financial Advisor Fees

magd36

I used a financial advisor to partially transfer a pension and set up a retirement investment account. I paid a one off fee to transfer and they receive an ongoing 0.75% annual fee which I’m ok with. They provide an annual review etc.

What generally happens if I use them to arrange other investments? I think I’ll have to pay a one off fee again but do they also get 0.75% of all new investments or do they get a smaller percentage for new investments. Is it possible they won’t receive any ongoing fee other than the 0.75% of the original investment.

Just wondering what the typical rule is.

magd36

I should add, any investments will be simple and nothing complex or off piste.

dunstonh

What generally happens if I use them to arrange other investments? I think I’ll have to pay a one off fee again but do they also get 0.75% of all new investments or do they get a smaller percentage for new investments. Is it possible they won’t receive any ongoing fee other than the 0.75% of the original investment.

There is no standard across the board.
Some may be greedy. Some not.
Many will not charge for top ups if you already hold sufficient money with them and are on an ongoing servicing basis.
Also, many advisers have tiered charges with ongoing and will lower their charge if the value gets higher.

Just wondering what the typical rule is.

There is no rule.
Also, is yours an FA (sales rep) or an IFA?

magd36

dunstonh said:

Also, is yours an FA (sales rep) or an IFA?

An IFA. I’ll ask them the questions for my specific situation. Thanks 

Albermarle

I suspect you will have to agree to the ongoing 0.75% for all investments, new and old.
However hopefully in this case they will not be an extra charge for arranging the new investments as you are an existing client. Although they might try to charge you.

dunstonh

Albermarle said:

I suspect you will have to agree to the ongoing 0.75% for all investments, new and old.
However hopefully in this case they will not be an extra charge for arranging the new investments as you are an existing client. Although they might try to charge you.

Usually, the ongoing is based on the total AUM.
However, it's the initial that is usually waived but some greedy ones will go for an initial as well.

luci

magd36 said:

I used a financial advisor to partially transfer a pension and set up a retirement investment account. I paid a one off fee to transfer and they receive an ongoing 0.75% annual fee which I’m ok with. They provide an annual review etc.

What generally happens if I use them to arrange other investments? I think I’ll have to pay a one off fee again but do they also get 0.75% of all new investments or do they get a smaller percentage for new investments. Is it possible they won’t receive any ongoing fee other than the 0.75% of the original investment.

Just wondering what the typical rule is.

My IFA provides written details of their charges.

Vienss

In most cases, your financial adviser’s ongoing 0.75% fee covers the total portfolio they manage — not just the original investment. So, if you add new funds to your retirement account, that amount usually becomes part of the same fee structure. However, if you open separate investments (for example, a new ISA or fund), advisers often charge a one-off setup fee again, plus include it in the same ongoing percentage. It’s always best to confirm your client agreement, as some advisers apply tiered or reduced rates for additional investments.

boingy

magd36 said:

I used a financial advisor to partially transfer a pension and set up a retirement investment account. I paid a one off fee to transfer and they receive an ongoing 0.75% annual fee which I’m ok with. They provide an annual review etc.

What generally happens if I use them to arrange other investments? I think I’ll have to pay a one off fee again but do they also get 0.75% of all new investments or do they get a smaller percentage for new investments. Is it possible they won’t receive any ongoing fee other than the 0.75% of the original investment.

Just wondering what the typical rule is.

You are not obliged to use them for other investments. You can arrange those yourself and you get to benefit from the extra growth.

magd36

Thanks for the replies. It doesn’t feel right that the on going percentage is applied to the total value of funds. There’s no more work to review a £200k fund or a £250k fund. In fact the amount to review should be fixed based on the type of investment not its value. It’s pushing me towards arranging additional investments myself. A tiered approach seems a lot more reasonable and a one off payment for setup. Thanks all.

Ayoubkhan51

That’s a good question it really depends on the agreement you have with your advisor. In most cases, if you add new investments under the same managed account, the ongoing fee (like your 0.75%) usually applies to the total portfolio value, not just the original amount. But if it’s a completely separate investment or product, they might charge a new one-off fee or even a different ongoing rate. It’s worth asking them to clarify how future additions are handled good advisors are always transparent about fees.