IFA and my mums investments

Aminatidi
Aminatidi Posts: 532
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edited 25 January 2020 at 4:10PM in Savings & investments
My mum came into a reasonable sum of money some time back which at the time was sufficient for her to use a financial advisor.

He's was out this week for his two-yearly face to face review and it would appear that her money is split across two investment products with the rest being "cash" she manages herself across various accounts.

There is about £5.5K in an "Investec FTSE 100 Enhanced Income Plan 33" which is, I believe, fixed and cannot be touched until 2023.

There is around £35K in a Standard Life MyFolio Managed II fund.

The charges for the MyFolio, the platform, and his service, which appears to be an annual phone call and a visit every two years are broken down as:

* Fund Management Charge 0.83% which looks to be about right from the funds own factsheet.
* Ongoing Adviser Fee 1%
* Platform Fee 0.39%

Apparently there are no charges or fees to stop using the adviser other than giving him a short period of notice.

You know where this one is going...

Can anyone see any hidden benefit or something I may be naive to in suggesting she moves to something DIY and cheap and simple - most likely with me managing it though the accounts of course being hers?

The advisor is a likeable enough chap but I'm really struggling with where £700/year of "value" comes from other than peace of mind.
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  • lpgm
    lpgm Posts: 355
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    I'm sure it's lovely, but the Investec FTSE 100 Enhanced Income Plan 33 sounds horrendous!

    Look, if you're confident you can DIY, you probably should. You must explain to your mum this is an exercise in cutting costs - you can't guarantee the actual investment return.
  • newatc
    newatc Posts: 836
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    I agree with your thoughts. I would suggest your Mam politely explains to the advisor that she is happy with the advice given but would like to stop the automatic annual review and to contact him when she feels the need for another review.
  • Aminatidi
    Aminatidi Posts: 532
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    lpgm wrote: »
    I'm sure it's lovely, but the Investec FTSE 100 Enhanced Income Plan 33 sounds horrendous!

    Look, if you're confident you can DIY, you probably should. You must explain to your mum this is an exercise in cutting costs - you can't guarantee the actual investment return.

    I'm trying to find out the options on the Investec product.

    It pays a small amount each month which my mum doesn't need so my first thought was if it's possible and cost effective to see if that could be redeemed early.

    Their product brochure suggests it is but it isn't clear if there are penalties and if so what they are.
  • Albermarle
    Albermarle Posts: 21,619
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    £40K is on the low side for paying for financial advice .
    So that is why she is being charged 1% for what is probably almost zero work involved , apart from a twice yearly visit .
    Then again that is only £400 not £700 . If she DIY she would still have to pay platform and fund fees but if you go to Standard Life retail site ( for DIY) then the platform and fund charges are slightly cheaper than you are paying now .
  • Aminatidi
    Aminatidi Posts: 532
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    edited 25 January 2020 at 2:10PM
    There's also nearly £50K in cash savings accounts so a bit more than just the funds but still not a fortune.

    Regards fees in total it's 2.2% which admittedly includes fund and platform fees but that's not far off half any returns in fees.

    Having spoken to her just now I'm amazed but she is on board with going the DIY route.

    I think explaining how much she would be paying over the next 10 years was a bit of an eye opener as right now it's buried in paperwork which she doesn't fully read as it's a bit of a blur.

    I've told her think on it for a few days just to be sure.

    She would like FSCS cover which means OEICs rather than ITs (I hold ITs myself) and she has "admitted" that she would have liked to be able to do something with her leftover income each month but because her ISA is managed by the IFA she wouldn't think it worth contacting him about £50 or £100 each month.

    Another thing I found when I showed her my own HL account was that she's interested in the simplicity of something like HL's Active Savings as it's just one place to go.

    So now I have a dilemma which is somewhere like HL where the charges are higher but arguably there's more flexibility, or somewhere like Vanguard where the fees are much less but of course the choice is more limited and there are no savings products built-in.
  • cattie
    cattie Posts: 8,841
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    Aminatidi wrote: »
    So now I have a dilemma which is somewhere like HL where the charges are higher but arguably there's more flexibility, or somewhere like Vanguard where the fees are much less but of course the choice is more limited and there are no savings products built-in.

    You're looking at it the wrong way. It's not a dilemma not being able to have cash savings on the same platform that's holding funds.

    Many of us have our savings in accounts completely separate from where our investment funds are held.

    I myself switched from an IFA who I was paying fees to for no real advice & had my isa funds transfered to iweb last year. I have absolutely no regrets & am more than happy with the huge amount I'm saving in fees to the IFA. I've found this site great for gleaning advice etc. on what the best fund selections for me could be.

    My savings are spread about, some in premium bonds for easy access & others in fixed rate bonds & one the bond term is up I just look for the best paying interest bond I can find to put the money into. There's very little work & time involved. One of the bonds is held with HL Active Savings for the simple fact that at the time they offered the best rate & I'm happy to stick with them on maturity as long as I don't find a better deal elsewhere.
    The bigger the bargain, the better I feel.

    I should mention that there's only one of me, don't confuse me with others of the same name.
  • Aminatidi
    Aminatidi Posts: 532
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    Yes I might be and personally I agree but she's not great with computers and already has seven bank accounts :)

    I would be tempted by iweb if she hadn't mentioned being interested in being able to add small regular amounts and I think iweb charge for all transactions?

    HL and Vanguard are free dealing but as you know there's a platform fee.

    Still less than the IFA route I guess so it's all a bonus :)
  • SonOf
    SonOf Posts: 2,631
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    The advisor is a likeable enough chap but I'm really struggling with where £700/year of "value" comes from other than peace of mind.

    I dont believe the investec investment supports ongoing adviser charging. So, that would make it £350 a year. So, where are you getting £700 from (£35k in the ISA at 1% is £350)
  • Aminatidi
    Aminatidi Posts: 532
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    SonOf wrote: »
    I dont believe the investec investment supports ongoing adviser charging. So, that would make it £350 a year. So, where are you getting £700 from (£35k in the ISA at 1% is £350)

    The paperwork from the IFA which states the total charges on the £35K are > 2%

    You're correct there isn't any ongoing fee for the Investec product.
  • newatc
    newatc Posts: 836
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    If you mother wants to be able to access her funds/savings then it might be worth paying the extra for the HL platform as their site and customer service is good.
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