Are these IFA fees reasonable?

jamesd

freddy124, what services is the IFA providing? Are they doing the asset allocation and fund selection and providing annual rebalancing?

whiteflag, please tell me how much fee you would charge for a nil commision execution only purchase of a Scottish Widows personal pension.

whiteflag_3

jamesd wrote: »

freddy124, what services is the IFA providing? Are they doing the asset allocation and fund selection and providing annual rebalancing?

whiteflag, please tell me how much fee you would charge for a nil commision execution only purchase of a Scottish Widows personal pension.

Sorry but I dont get involved in execution only business, only full advice.

My hourly rate is £125
Admin £ 35

We use the same back office system as Dh which allows us to bill our clients for all work undertaken by the hour. I did a similar piece of work to the OPs recently and the bill came to just over £900.

I have a problem with Dh moaning about his own overheads and then advising people to shaft their IFA for doing what seems to be a pretty reasonable deal.

dunstonh

I have a problem with Dh moaning about his own overheads

I am not moaning about my overheads. The are relatively low compared to my turnover. I was pointing out that the costs are not just to cover a piece of paper.

then advising people to shaft their IFA for doing what seems to be a pretty reasonable deal.

I dont see full commission as being reasonable on some products as the amounts can be disgraceful with certain values.

The OP has been offered £1200. You have said £900 and I would be £500. So, it is correct for the OP to be told that he can get it cheaper.

BTW whiteflag, I thought it was you that had dropped IFA and gone multi-tie and took full commissions every time and was proud of it. It appears it wasnt you but one of the other older ones that has now gone from the site. So, apologies for suggesting you took max commission.

whiteflag_3

dunstonh wrote: »

The OP has been offered £1200. You have said £900 and I would be £500. So, it is correct for the OP to be told that he can get it cheaper.

Apology accepted-

Dh -My point is that rather than you saying that 3.4% was high , it would have been fairer to say that the £1200 taken was less than half the £2460 that could have been generated, therefore the OPs IFA was being pretty "reasonable". Don't forget as well that when you say you would be £500, you would also be £194 in year 2, £203 in year 3 and so on.

jamesd

whiteflag, dunstonh, we don't know what services were provided with certainty so it's a bit unproductive trying to decide if the price was fair.

It is clear that it was possible to get the highest likely service - a fully advised sale - at lower cost and saying so seems reasonable since money saving for the consumers relies on them being informed.

Vendors making money, at fair rates or otherwise, isn't one of the objectives of this place, though it helps to be fair when it comes to ongoing professional services: you're not going to get as much of the good will you need from a small trader you're buying from if you seek unduly low pricing that makes the vendor feel hard done by.

One of the myriad ways in which dunstonh has been helpful here is helping consumers to know something about the more competitive end of the product pricing range. More vendors with competitive pricing helping with the education would be welcomed by me at least.

ipri

Hi I'm currently seeing an IFA ....has just sent a fee after 1st meeting...He said all inclusive ...£2750.....however "May" need to pay vat....if I purchase a policy then I wont have to pay this....also 4% on any monies (up to 75k)....he want to move all to "Transact"...ie £3000 !!

why cant they just be open at the interview?...probably not bother and manage myself with help from forums like this....

dunstonh

why cant they just be open at the interview?...

Who is they? You said you saw an IFA. Was there more than one IFA at the meeting? or have you seen multiple IFAs and got identical charges?

It does seem that the IFA is being open. When you see someone for the first time you dont know what you are doing with them. You dont know if its a transaction that will be 6 hours work or 20 hours work. This is why the first appointment is free as it gives you and them a chance to find out and then agree the way forward before you employ that person. Much the same as any other profession.

That appears to have happened here and the IFA seems totally open about it.

however "May" need to pay vat....if I purchase a policy then I wont have to pay this

That is the correct interpretation for VAT. If no product is purchased VAT needs to be added. If a product is purchased it doesnt.

also 4% on any monies (up to 75k)....he want to move all to "Transact"...ie £3000 !!

Is that the commission alternative to the fee? Take another read as you may find that the fee option is if you dont purchase and the commission option is the alternative. Under FSA rules if you take the fee, you have to rebate commission or use it to offset the fee. If the fee is collected via commission on the pension then it also benefits from tax relief making the net fee to you cheaper.

APhil

I'm thinking of using a IFA to advise me on my current Pensions (not sure if they are working hard enough for me of working at all!) and possible Life insurance. Has anyone got any advice on whether to employ IFA on a set fee or commission basis. I'm abit nervous of the commission way but I'm also unsure about how much the fee would be. The IFA that I have contacted so far wasn't very forthcoming with his fee.

Any advice

APhil

dunstonh

Most IFAs are small local firms (there are larger salesforces but you want to avoid them). There is little point asking us what another IFAs fees will be because you may go to a high net worth specialist investment IFA with plush city offices and pay a lot for it. Or you may go to an IFA that fills in the hole of the old home service agent and deals with the lower end of the market.

With pensions, it is often worth agreeing a fee but having it paid out of the pension so you benefit from tax relief on the fee.

The IFA that I have contacted so far wasn't very forthcoming with his fee.

Did you explain what you wanted? Once the IFA knows the amounts and what you are after they can tell you which the best option will be. Until they know what you want it is often hard to know what option will be best or what the fee will be. That is why the first meeting is free of charge.

[Deleted User]

Why does everyone think that they need an ifa?

We had one for a year (good value that year in a capped stakeholder) and got rid of him when he wanted to charge 3% of the pension pot plus 0.5% trail. My dh bumped into him at the station and the ifa was going first class while my dh was going second. He also turned up in a big poncy car. I took everything over from the following day ( lets just say that we received cost details the previous day )and transferred the pension to sippdeal, where it remained in cash until I was ready to deal with it. It is not rocket science and believe me when I say that the pension is doing very nicely indeed. Ok, the research was intense but definitely not impossible for anyone with a decent brain. I am not talking about a small amount of money by the way and have even got the relevent cert re lifetime allowance etc. The information is out there

Beware: the nice man, the smooth talker etc and the spratt to catch a mackerel. We took the spratt but didn`t bite when it came to handing the ifa the big fat mackerel