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Learner_3 · 10 September 2006 at 1:02PM

They actually credit the fund initially by 2.5% to "help with annual charges" but I will check on any hidden charges. Does 1.5% annual charge seem high, because if it performs it seems quite reasonable to me?

oldfella · 10 September 2006 at 1:46PM

Does 1.5% annual charge seem high, because if it performs it seems quite reasonable to me?

the usual annual fee for a unit trust is 1.5%, including 0.5% trailing commission for the agent (the latter is refundable if you buy in the right place. Upfront fees are 5% - again refundable from the right agent.

the problem with banks is they are lousy investers, and if you buy someone else product through them, there are 2 layers of margin/profit.

if they are helping with annual charges I would suspect there is a significant layer of cost somewhere

ask for a complete breakdown of all product costs, not just theirs.

Mike
Mike

kenshaz · 10 September 2006 at 1:53PM

Study the information on this site and make an informed decision ,cheerful cat is correct,bank employees have bias and their own agenda

dunstonh · 10 September 2006 at 2:20PM

Any salesforce adviser, whether tied, multi-tied or independent should be avoided. Some may be perfectly good but if you work in a salesforce , sales targes are likely to exist, along with league tables and incentives based on business. That sort of salesforce mentality has lead to many of the issues that the industry has had over the years.

Another issue with tied agents is that they are not able to recommend investment portfolios. Although they may give that impression, it will be documented as you choosing the funds and not them recommending them.

So, yes, get rid of Natwest.

They actually credit the fund initially by 2.5% to "help with annual charges" but I will check on any hidden charges. Does 1.5% annual charge seem high, because if it performs it seems quite reasonable to me?

Their NU product is far more expensive than the IFA version of the product and NU are not top of the tree currently. The IFA version has an annual charge of 1% on many funds with some external funds being a little higher. A portflio would average around 1.2% p.a. If you look closely at the Natwest version, you will see that they charge an extra 0.5% pa. for the first 5 years. This in effect wipes out the 2.5% they give you at the start.

*Sparkle*_3 · 10 September 2006 at 2:24PM

why not visit a few IFA see what advice they have, do your research and then make an informed decision when you are totally clear on which direction you want to follow, take your time.

Learner_3 · 10 September 2006 at 3:52PM

Thanks for all the advice. I suspected I would be advised against banks, but was hoping it sounded a good deal as I do struggle for time to look at investments indepentantly with a busy job. Back to the real world, thanks again!

Jake'sGran · 10 September 2006 at 6:54PM

Learner wrote:

The advisor tells me there are no set up costs and an annual charge of 1.5%. There are also penalties if I take my money out in the first 5 years on a sliding scale. Does this sound like a reasonable investment for growth?

I think he may be referring to set up costs for his services. If the investments he is suggesting are equity funds of one kind or another they will have initial charges of around 5% and annual charges too of around 1.5%. The adviser will make his money from the commission he receives from the funds he has suggested or, he may suggest a one off fee for his advice.
I have no wish to upset any of the advisers on this board but I long ago decded to do my own thing and have done well. You could do the same if you feel confident enough. You just need to do some research and go for the funds that have been in the top ten in their sector for five years or more.
If you are saving for a comfy retirement as I was you could buy Equity Income Funds via a discount broker. This is what I have tended to do and have Jupiter Income, Invesco Perpetual Income and High Income and Credit Suisse Income. The latter is not doing as well as the others and I may move it. I don't like penalties. Just prefer to have the freedom with my own money. Check the ones the Nat West man has suggested by having a look at their records on Citywire, Bestinvest or someone similar.

dunstonh · 10 September 2006 at 7:58PM

I think he may be referring to set up costs for his services. If the investments he is suggesting are equity funds of one kind or another they will have initial charges of around 5%

I know the product he is refering to and there is no initial charges. They have a 5 year tie in with stepped down exit charges instead though. After 5th anniversary, exit charges cease.

The adviser will make his money from the commission he receives from the funds he has suggested or, he may suggest a one off fee for his advice.

Being a bank adviser, he gets paid everything up front. However, it will be distorted by his pay and benefits. I.e. the commission goes to Natwest but the amount they get will not reflect what he gets as hes an employee.

ReportInvestor · 11 September 2006 at 12:36PM

oldfella wrote:

Does 1.5% annual charge seem high, because if it performs it seems quite reasonable to me?

If you have a look at

this MSE thread

you will see forum members going hammer and tongs over whether an investment with 0.4% reduction in yield (effectively charges) is the right one.
Only go to this thread if you have a clear head and an afternoon to spare

.

Your total expense ratio will be higher than 1.5%pa.
Say the initial difference between offer/bid prices you negotiate = 3%. That would make your reduction in yield 1.8% over 10 years.

The difference on £150K of that 1.4% difference in charges over 10 years = £22,373. Future performance is not known. The effect of charges is known.

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