Finding the right financial advice/wealth management

caeracer

Having spent the last 15 or so years always looking after my own money management and investment planning, I'm getting to the point where I am thinking about using someone with more knowledge and experience to do this.

Whilst I am not looking for someone to cover all aspects (I recognise that you can't be an expert in everything), coverage across investments, pensions and mortgages is attractive. I am clearly a target for SJP and the like and, having worked in the Finance industry for 10 years (including a very large asset manager for 6 years) I want to avoid the pitfalls of simply having a fund picked out the air for very generic reasons and/or paying over inflated wrap charges.

Simplistically, what I'm looking for is someone with access to whole of market that will research and present reasoned recommendations based on my circumstances. What I'm not looking for is someone who will a) treat me like an idiot and try to hide everything from me or b) someone who thinks that the road to high commissions lies in selling me lots of critical illness cover (without good reason or calculation).

In summary, I'm 33 and have:

- Something over £100K in pensions
- Around £60K in ISAs (in a wide range of funds from Japan to Europe to Gold).
- Around £10K in direct equities

The usual recommendations are to ask friends and family - but they all use SJP!

If it is simply a case of getting on unbiased.co.uk and speaking with a large number of IFAs then that's what I'll do. I'm just seeing if there is a more direct way to find the 'type' of IFA I'm looking for.

There are several people who post on here regularly that appear to be in line with what I am looking for, but I have avoided just PMing them for the time being!

Thanks in advance.

dunstonh

SJP are very slick and come across professional. However, its not cheap and you are limited as effectively they are sales reps (under FSA proposals to take effect next year they wont be able to call themselves advisers).

The problem is that the term IFA currently covers a wide range of skills and ability ranging from a salesforce adviser who is little better than a tied agent to a highly skilled and qualified adviser specialising in certain areas. Most fall somewhere in between. Again, proposals for next year will see the number of IFAs drop as higher qualifications are going to be required and a further move towards fee based advice.

At the moment it may be trial and error and check out a few to see what you get. However, to make the odds better, avoid salesforces (regional and national), try and get in with partner/director IFAs as you would generally expect them to be more switched on with changes and are not likely to change employer every few years. Plus they have an interest in the company reputation.

Go fee based (whether explicit fee or commission offset). The amount you have makes fee option better.

earlgrey_3

A company with such a grandiose name but whose address isn't "St James' Place" but Tetbury Road, Cirencester tends to make me smile. The performance of their funds seems distinctly ordinary.

The problem with recommendations from friends is you don't know how sound their view is unless they've used several alternatives and their situation is similar to your own.

caeracer

So, following the advice here I found a local firm and have spoken twice with one of their advisors who is a CFP. His recommendation is one of two SIPP wrappers with a selection of around 7 funds initially (£100K transfer). It all looks good but I have one question around commission - with both it is 1% initial commission plus 0.5% trail for which I get 6 montly reviews, yearly rebalancing etc.

Does this sound about right?

dunstonh

with both it is 1% initial commission plus 0.5% trail for which I get 6 montly reviews, yearly rebalancing etc.

Does this sound about right?

Matches my remuneration exactly No surprise as 1% plus 0.5% is considered the ideal charge for NMA IFAs. Its a lot cheaper than the typical maximum and its cheaper than the average as published by the FSA.

Also, the 0.5% is the same as HL would take if you were doing it yourself so the cost of advice is effectively that 1% which is £1000.

If you get cheaper than the average and get a CFP IFA with it then you are on to a winner.

caeracer

Thanks dunstonh - but something you said about HL made me think about the other charges. One of the SIPP wrappers (Scottish Widows) is 0.5% AMC but with lowish fund AMCs (0.5% - 1.2%); however, they pay commission straight out of the investment amount. The other is L&G which is 0.7% AMC, higher fund AMCs (1% - 1.7%), but commission does not come off the investment amount. On balance, in the illustrations, SW comes off slightly better but there isn't much in it.

On the face of it, these costs look higher than the HLs of this world. But HL seem to have retail fund AMCs?? Is this why they appear 'cheaper'?

dunstonh

HL use unit trusts and keep the 0.5% trail that is paid. The AMCs on unit trusts range from 1% typically to 1.75% with 1.5% being the average.

Apart from the initial advice cost there should be little or nothing in it between HL and the IFAs. L&G's version, like SWs also allows access to their pension fund range. If a few of those are used then I would expect both contracts to actually come out cheaper than HL. If its SW's retirement account, then they have fund based discounts on that which may make it slightly more expensive in the early years but cheaper in the later. They use what is becoming known as "factory gate pricing" where you see where everyone gets paid. With smaller fund values, you can end up paying more than the retail AMC but as the fund value goes up they discount this and depending on fund value you can get less than the retail AMC with larger amounts. So, yours may be more initially but less later.

caeracer

Thanks a lot - I like SWs transparency on the payments and as you suggest, if more is invested the wrap fee comes down. I also have a historical connection with FundsNetwork which gives SW the edge

dunstonh

caeracer, an announcement this morning by Selestia/Skandia now makes their contract one of the best on the market (from 18th Sept).

They have removed all initial charges on all tax wrappers so commission taken = initial charge on all funds (1% in your case) and their contract has the OEIC/UT/SICAV funds at retail amc (with IFA being paid the natural trail).

The Scot Widows could still be cheaper if you get into the discounted end of the fund values but it may be worth getting your IFA to do a Selestia illustration to compare (although that means waiting until 18th September when it changes). This is only out this morning so your IFA may not be aware of it. Depending on his relationship with Selestia/skandia he may not be told straight yet.