Cost of an IFA

chattykathyblue · 12 March 2017 at 2:28PM

My husband had his initial consultation with an IFA as he has 3 works pensions and we weren't sure what to do with them for husband's retirement in 2 years time. The 3 pots combined come to about £450k. The IFA has recommended everything is transferred into a SIPP . The fee for transferring is 1.5% and then 0.65% for the IFA and an additional 1.95% annually for the Discretionary Fund Manager the IFA uses. Does this seem reasonable?
TIA

TheTracker · 12 March 2017 at 2:57PM

So I make that about £18,500 in the first year.

Reckon that before spending that sort of money you should consult an IFA.

Oh, hang on ...

https://www.moneymarketing.co.uk/issues/16-february-2017/04-05-and-06-living-the-high-life-whats-behind-the-rise-in-adviser-pay/

xylophone · 12 March 2017 at 3:04PM

Are you able to DIY?

http://monevator.com/find-the-best-online-broker/

dunstonh · 12 March 2017 at 3:05PM

The fee for transferring is 1.5% and then 0.65% for the IFA and an additional 1.95% annually for the Discretionary Fund Manager the IFA uses. Does this seem reasonable?

1.5% initial on £450k is high. Its great on £100k but unless it is a defined benefit scheme, you should be looking for less than that.

0.65% p.a. is high. The most dominant figure is 0.5% p.a. It is typical to see 1% p.a. on small values but that usually tapers away as the value gets higher. Also, that also tends to be where the IFA is doing the investment work. In this case, the IFA is not doing the investment work. So, what are you paying them extra for?

So, overall, it seems very very expensive. It would not be difficult to find it cheaper.

chattykathyblue · 12 March 2017 at 3:27PM

xylophone wrote: »

Are you able to DIY?

http://monevator.com/find-the-best-online-broker/

I really don't think we could or would want to. We don't mind paying someone but obviously don't want to pay over the top

thank you

chattykathyblue · 12 March 2017 at 3:28PM

dunstonh wrote: »

1.5% initial on £450k is high. Its great on £100k but unless it is a defined benefit scheme, you should be looking for less than that.

0.65% p.a. is high. The most dominant figure is 0.5% p.a. It is typical to see 1% p.a. on small values but that usually tapers away as the value gets higher. Also, that also tends to be where the IFA is doing the investment work. In this case, the IFA is not doing the investment work. So, what are you paying them extra for?

So, overall, it seems very very expensive. It would not be difficult to find it cheaper.

Thank you for your reply. It's obvious we need to look elsewhere

xylophone · 12 March 2017 at 3:36PM

Have you and your husband obtained state pension statements?

https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

Might it be worth considering a DIY transfer to a SIPP and holding the money in cash while you find an IFA to advise on initial choice of funds with the option of an annual review?

https://directory.moneyadviceservice.org.uk/en

http://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=0&adg=G+HLBS+HLS&gclid=CJLAwLOl0dICFeUp0wod-xAHGw

http://www.thisismoney.co.uk/money/pensions/article-3646973/How-invest-pension-drawdown-12-step-starters-guide.html

sandsy · 12 March 2017 at 4:48PM

So 2.6% in advice and product charges.
If inflation was 2.5%pa, you'd need to earn 5.1%pa, year in year out, just for your fund to retain the same buying power as it has today.

And that's ignoring the initial advice cost.

Cost of an IFA

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