Sterling ISA

doire_2

Hello,

Recently i visited an independent finanical advsior.

I told him i wanted to put some money away for the future.

As im an IT contractor, my employer would contribute nothing towards a pension.

The advisor recommended a stocks and shares ISA.
I plan to put £250 per month into this ISA as im currently also putting money into a cash ISA.

Is a stocks and shares ISA a good idea? How many years shsould i expect to see a return on my money?

Has anyone had any dealings with Sterling ISA's?

Is there any other option apart from a pension or ISA in which i could save for my retirement?

Thanks for any help on this matter

VictorMeldew

I've had a Sterling ISA for around 3 years. As I understand it, (please correct me someone if I'm wrong) there are two levels of charges available for this ISA, a standard rate in which the IFA get's a 1% commission, and a higher rate where they get 3% commission. The IFA can opt to charge either rate. I've recently found out that I've been paying the higher rate, and I also naivley signed to say that the advisor can claim his commission back from me if I don't stick with the ISA for the full term. Sterling seem to pay their commission up front (ie my advisor got 48 months commission up front), and so unless you stay with the ISA for the term the advisor won't get the full commission, the remainder would be clawed back from him.
Whether this means that you pay more overall for this ISA, or that the advisor just gets more commission and gets it upfront (and therefore perhaps swaying his decision as to which provider to choose for you, and also not wanting to move from it) is something I'm still trying to work out.

There have been a few other threads on this ISA as well:

http://forums.moneysavingexpert.com/showthread.html?t=514464
http://forums.moneysavingexpert.com/showthread.html?t=955683
http://forums.moneysavingexpert.com/showthread.html?t=955635

And here in the Telegraph (although the charges are much higher for some reason in this one:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/03/08/cmnifa08.xml

Hope this helps a bit until someone who knows what they're on about comes along!

doire_2

VictorMeldew wrote: »

I've had a Sterling ISA for around 3 years. As I understand it, (please correct me someone if I'm wrong) there are two levels of charges available for this ISA, a standard rate in which the IFA get's a 1% commission, and a higher rate where they get 3% commission. The IFA can opt to charge either rate. I've recently found out that I've been paying the higher rate, and I also naivley signed to say that the advisor can claim his commission back from me if I don't stick with the ISA for the full term. Sterling seem to pay their commission up front (ie my advisor got 48 months commission up front), and so unless you stay with the ISA for the term the advisor won't get the full commission, the remainder would be clawed back from him.
Whether this means that you pay more overall for this ISA, or that the advisor just gets more commission and gets it upfront (and therefore perhaps swaying his decision as to which provider to choose for you, and also not wanting to move from it) is something I'm still trying to work out.

There have been a few other threads on this ISA as well:

http://forums.moneysavingexpert.com/showthread.html?t=514464
http://forums.moneysavingexpert.com/showthread.html?t=955683
http://forums.moneysavingexpert.com/showthread.html?t=955635

And here in the Telegraph (although the charges are much higher for some reason in this one:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/03/08/cmnifa08.xml

Hope this helps a bit until someone who knows what they're on about comes along!

Thanks VM.

Some interesting reading there

dunstonh

And here in the Telegraph (although the charges are much higher for some reason in this one:

http://www.telegraph.co.uk/money/mai...8/cmnifa08.xml

That telegraph article is a disgrace. It says its about ISAs but its not. Its about their investment bond (where the commission is not explicitly chaged against the investment like an ISA would be and the 7% is instead of receiving natural fund based trail and doesnt cost the client any more).

That said, the Sterling ISA is generally not as good as Cofunds, Fidelity or Selestia due to fund range. The Sterling ISA does allow the adviser to take remuneration in a number of ways rather than the standard. If it is taken in the standard way then no problem. If the adviser has built in extra charges then you should be on guard and know you can get cheaper. Sterling does have a death guarantee on the ISAs which can appeal to perhaps some older investors and if you are getting standard charged then that could be a valid recommendation.