IFA ongoing fee..Why pay?
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I get why people go to a Financial Adviser initially, and I get why people may revisit when circumstances change, but why in the world pay an FA or IFA when the investment plan is ticking over?
If there were to be a seismic event affecting financial mkts., your FA is likely to spew more dust than Krakatoa, but unlikely to elevate your fortunes above the herd.
Before you commit to an ongoing IFA fee please check your investments: - if they are in funds then those funds have managers and you are already paying THEIR fees.
A £500,000 investment under an IFA charging 0.5% means you are paying £50 per week for the privilege; a bit like insurance except you have no claim.
If there were to be a seismic event affecting financial mkts., your FA is likely to spew more dust than Krakatoa, but unlikely to elevate your fortunes above the herd.
Before you commit to an ongoing IFA fee please check your investments: - if they are in funds then those funds have managers and you are already paying THEIR fees.
A £500,000 investment under an IFA charging 0.5% means you are paying £50 per week for the privilege; a bit like insurance except you have no claim.
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ZingPowZing wrote: »I get why people go to a Financial Adviser initially, and I get why people may revisit when circumstances change, but why in the world pay an FA or IFA when the investment plan is ticking over?
Playing devils advocate and thinking of an analogy here...
Say you purchase a new house, 3 double bedrooms, and you pay the estate agent a fee when you purchase it. Great. Would you want to continue paying that estate agent an ongoing fee every month/year - probably not. But what if after a year or two, your 3 double-bed house was now a house with one very large master bedroom and two box rooms? Not quite what you bought and certainly no longer fit for purpose given you actually need 3 double bedrooms? You get the point.
Disclosure: I do not currently pay for ongoing IFA advice0 -
but why in the world pay an FA or IFA when the investment plan is ticking over?
And who will change the funds and rebalance and carry out continuing due diligence? Either it is to be the IFA or the investor.
A lot of people use IFAs as sounding boards and to do the annual bed & ISA/bed & pension, use CGT allowances and much more.If there were to be a seismic event affecting financial mkts., your FA is likely to spew more dust than Krakatoa, but unlikely to elevate your fortunes above the herd.
That isnt what an IFA is for.Before you commit to an ongoing IFA fee please check your investments: - if they are in funds then those funds have managers and you are already paying THEIR fees.
But the fund manager will not do any of the things an IFA will do.A £500,000 investment under an IFA charging 0.5% means you are paying £50 per week for the privilege; a bit like insurance except you have no claim.
A 500k portfolio needs tax wrapper use and taxation control as well as rebalancing and the investor probably doesnt want to waste time doing all that themselves even if they could do it.0 -
A 500k portfolio needs tax wrapper use and taxation control as well as rebalancing and the investor probably doesnt want to waste time doing all that themselves even if they could do it.
It's quick and easy to do if you have a portfolio designed for ease of management. There are some complex situations that require esoteric knowledge, but the job the average IFA does just needs some easily attained knowledge and a little common sense. The industry has a vested interest in making things more complicated than necessary.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
ZingPowZing wrote: »I get why people go to a Financial Adviser initially, and I get why people may revisit when circumstances change, but why in the world pay an FA or IFA when the investment plan is ticking over?
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Mine doesn’t just tick over, It’s reviewed properly every quarter and on an ad-hoc basis if events transpire.
By properly I mean the global outlook, asset allocation, fund performance are all formally reviewed.
If fund changes or rebalancing are required then recommendations are made.
I.e. it’s actively managed.
Further more my IFA (inclusive in the fees) helps me with any financial planning or other transfers/ISAs or advice I need.
I currently have a face to face planned for pension planning I,e, getting a better handle on when I/we can retire.
If by ticking over you mean the investments are never reviewed then I agree they are not offering value.
Things change. Property funds have changes, Neil Woodfords reputation has changed.
Leaving things as they are is not a good plan (unless it’s one of those lazy funds designed to do that).0 -
Why would you pay a mechanic to service your car?
If you have the tools, the time, and the knowledge its cheaper to DIY
But if any of those 3 things are missing its better to pay the mechanic.1 -
Most people pay a mechanic a specific price when they need them to do a specific job, and would baulk at the idea of paying them a regular fee when there's nothing wrong with their car.Why would you pay a mechanic to service your car?
If you have the tools, the time, and the knowledge its cheaper to DIY
But if any of those 3 things are missing its better to pay the mechanic.0 -
It's worse than the OP describes.
I was the executor of an estate with a large multi £100K investment portfolio as part of the estate.
The investment side was "managed" by a IFA, with the deceased leaving it all to the IFA to manage entirely
In practice it was all put with Brewin Dolphin who are an investment wealth manager and to be fair only deal with IFA's and not the general public (though I think that is changing)
So Brewin Dolphin were making any changes necessary in line with the general investment policy/risk attitude.... and the IFA was doing precisely fk all apart from collecting the annual fees and writing an annual report.
Now Brewin-D management fees were lower than they would have been had they been dealing with the public since they were dealing with what should be laughably called an "investment professional" so there would have been a saving there for the client
All the same it was basically "money for old rope" to quote an old saying for the IFA who was coining it in.0 -
So Brewin Dolphin were making any changes necessary in line with the general investment policy/risk attitude.... and the IFA was doing precisely fk all apart from collecting the annual fees and writing an annual report.
What adjustments needed to be made that the IFA didn't do?
If the correct thing to do is nothing the IFA should advise the client to do nothing.
(FWIW I would generally avoid IFAs who outsource to DFMs. Unless the IFA charges a low ongoing fee to reflect the work outsourced to the DFM, but not enough do. However, that does not change the fact that IFAs should not implement unsuitable changes to look busy. And your decreased friend / relative evidently disagreed with me about adviser + DFM arrangements, and it was their money not mine.)0 -
If you found a rat in the kitchen eating your food would you make an agreement that it could only eat a quarter of your food or would you get rid of it?0
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Why would you pay a mechanic to service your car?
If you have the tools, the time, and the knowledge its cheaper to DIY
But if any of those 3 things are missing its better to pay the mechanic.
With a new vehicle it’s to keep the warranty valid.
I guess the equivalent is to have access to misspelling compensation and ombudsman if things go wrong.0
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