St james Wealth
Discussion
jonah35 said:
Having a qualified adviser tos it with you for hours and write you reports and visit you every year costs money.
If someone has £20k invested thats £200 per year for an annual review and to look after your assets, or about £16 per month.
If you have £300k then thats £250pm. Hardly extortion.
The cheapest property I let out costs me £720 per year plus VAT in letting agent fees and they do little more than advertise it on rightmove and se to up a dd. they don't give me complex advise on trusts, iht and financial planning!
Some people hate others making money, some dont mind paying a fee.
Sorry but £250 a month is extortion.If someone has £20k invested thats £200 per year for an annual review and to look after your assets, or about £16 per month.
If you have £300k then thats £250pm. Hardly extortion.
The cheapest property I let out costs me £720 per year plus VAT in letting agent fees and they do little more than advertise it on rightmove and se to up a dd. they don't give me complex advise on trusts, iht and financial planning!
Some people hate others making money, some dont mind paying a fee.
For professional advice on something I can't do such as trusts and IHT then I would seek out a lawyer who would cost me far less than £3k and it would most likely be ONE-OFF not ANNUAL!!
There is very little difference in managing someone's £100k or £300k in my experience and certainly when it comes to the advice I was given and what looks like the time taken to prepare it.
They are welcome to a fee - by the hour for the work they do.
Ramping it up on assets is RELATIVELY reasonable - but only if the work is incrementally complex and time consuming.
You are an idiot if you pay £3k for someone to choose a bunch of funds for your £300k investment EVERY YEAR. That's 1ppt and will seriously take a big chunk out of the end sum if you expect 6-7ppt performance every year.
My (ex)advisor expected me to continue paying a fair amount - though not 1% - each year for their 'advisory service'. He did have the honesty to say that his 'advisory' role wouldn't reoup the cost in better fund performance, so with that in mind, and the fact my affairs were now sorted out, and not wanting to pay £4,000 for a couple of e-mails a year, I chose transactional. He couldn't cope with that (nor provide the service) so we had a fight. In fact their Ops Director is trying to call me...
RDR has certainly shaken things up.
RDR has certainly shaken things up.
walm said:
Sorry but £250 a month is extortion.
For professional advice on something I can't do such as trusts and IHT then I would seek out a lawyer who would cost me far less than £3k and it would most likely be ONE-OFF not ANNUAL!!
There is very little difference in managing someone's £100k or £300k in my experience and certainly when it comes to the advice I was given and what looks like the time taken to prepare it.
They are welcome to a fee - by the hour for the work they do.
Ramping it up on assets is RELATIVELY reasonable - but only if the work is incrementally complex and time consuming.
You are an idiot if you pay £3k for someone to choose a bunch of funds for your £300k investment EVERY YEAR. That's 1ppt and will seriously take a big chunk out of the end sum if you expect 6-7ppt performance every year.
If you had a £300,000 car, would you pay no more than £3,000 (annually) to service it? Would you pay £3,000 to service it once and then expect hat to be good or 3 years, no matter how little or how much you drove it? 'Ramping it up' on assets, are you suggesting inducing the adviser to take more risk, to earn more fees? If anything, the more the portfolio value, the less the charges. In principle though, you're right.. 1% on £300,000 would probably be an unrealistic level of charges.For professional advice on something I can't do such as trusts and IHT then I would seek out a lawyer who would cost me far less than £3k and it would most likely be ONE-OFF not ANNUAL!!
There is very little difference in managing someone's £100k or £300k in my experience and certainly when it comes to the advice I was given and what looks like the time taken to prepare it.
They are welcome to a fee - by the hour for the work they do.
Ramping it up on assets is RELATIVELY reasonable - but only if the work is incrementally complex and time consuming.
You are an idiot if you pay £3k for someone to choose a bunch of funds for your £300k investment EVERY YEAR. That's 1ppt and will seriously take a big chunk out of the end sum if you expect 6-7ppt performance every year.
There is a lot of difference between handling different sums of money, but not much in fixed overhead - para planners, admin staff, compliancy all costs the same per hour. Wealthy investors segment into two broad groups determined from their return and term preferences: those with an income preference, and those with a capital gains preference. Each requires different involvement as well.
Yougov data from earlier this year revealed that 40% of wealthy investors come from poor or very poor backgrouds, while 55% come from middle-income backgrounds. A quarter of wealthy investors are income focused, while 39% are Capital Gain focused, while the rest (30% or so) want a mix of income and capital gains. Only 11% of wealthy investors invest for the short term (less than one year), while 58% judge their investments over the medium term (one to five years), with 29% investing for the long term (five years or more).
Each of those approaches and timescales require completely different levels of intricacy and involvement. Wealthy investors like to keep personal control. The vast majority of wealthy investors manage some or all of their investments themselves. Even wealthy investors using professionals tend to have an active involvement in the monitoring and evaluation of their investment portfolios.
If a client is a collaborator, they usually want to understand the nuts and bolts of an investment process, and that's more costly and time consuming. If a client is a DIYer, they will invariably want the highest level of detail, demand absolute accuracy as much as anything, to provide professional validation of their personal instinct.
If a client is a delegator they might want nothing more than a headline view, less detail and a simple picture of where they are and where they are headed. Great for clients starting out, and fair, because it isn't as expensive for them. But extortion in principle though? Well, everyone has a view on value. One size doesn't fit all, a commercial reality that anyone who doesn't have experience of running a consultancy might not appreciate. And would you have the clients cross subsidise each other?
IHT and Trust regulation doesn't stand still, it is always evolving remember, as is all regulation relating to financial planning. And don't forget, so too do clients needs, wishes, feelings and circumstances change with time. The insurance you bought 10 years ago might not be suitable any longer, so too, should financial advice and help be an ongoing process - only if your needs require it of course.
Paying by the hour is the least popular option for clients btw.
Simpo Two said:
My (ex)advisor expected me to continue paying a fair amount - though not 1% - each year for their 'advisory service'. He did have the honesty to say that his 'advisory' role wouldn't reoup the cost in better fund performance, so with that in mind, and the fact my affairs were now sorted out, and not wanting to pay £4,000 for a couple of e-mails a year, I chose transactional. He couldn't cope with that (nor provide the service) so we had a fight. In fact their Ops Director is trying to call me...
RDR has certainly shaken things up.
It has. If you're in cruise mode, if you have certainty about what you're doing and areas clued up as you seem to be, good luck to you. It might be worth having the occasional review to get an objective view or to confirm latest tax (etc) guidance and regulations.RDR has certainly shaken things up.
If a company has a "Ops Director" though, no wonder you had a fight on your hands!
Ginge R said:
Stuff
You are conflating different themes here. If an advisor ( such as those at SJP ) put a client into managed funds or portfolio management services, then it is clear that these are medium to long term investments. Investors end up staying put for a few years , because thats what the products need them to do.
The advisor is not making ongoing investment decisions - the fund manager is doing that. Once handed over to a portfolio management service, the advisor is frankly doing little, maybe nothing, for their annual cost. Certainly, SJP advisors are absolutely and categorically NOT investment managers. All they do is guide people into the range of products on the SJP platform. SJP advisors ( and other "IFA" types who operate the same way ) are not making investment decisions at all. All they did was run through a cookie-cutter process of "identifying risk appetite" and ramming the client into the appropriate product suite.
Most "advice" offered on the high street these days is little more than a sophisticated flow chart of questions and answers leading to a homogenised selection of packaged product solutions. So why pay more for it than you have to ?
Ginge R said:
If a company has a "Ops Director" though, no wonder you had a fight on your hands!
Not at all - we finally had a chat; he had read the e-mails, entirely agreed with my POV, was totally sympathetic, waived the bill and said he'd have words with the offending IFA - who is one of the directors...To be fair they had no legs; had they not rolled over it would have been straight to the Ombudsman, so an easy win. But it was helpful that a neighbour was a 'client relationship director' from a very big financial company. I always take advice, even if not financial
toppstuff said:
You are conflating different themes here.
If an advisor ( such as those at SJP ) put a client into managed funds or portfolio management services, then it is clear that these are medium to long term investments. Investors end up staying put for a few years , because thats what the products need them to do.
The advisor is not making ongoing investment decisions - the fund manager is doing that. Once handed over to a portfolio management service, the advisor is frankly doing little, maybe nothing, for their annual cost. Certainly, SJP advisors are absolutely and categorically NOT investment managers. All they do is guide people into the range of products on the SJP platform. SJP advisors ( and other "IFA" types who operate the same way ) are not making investment decisions at all. All they did was run through a cookie-cutter process of "identifying risk appetite" and ramming the client into the appropriate product suite.
Most "advice" offered on the high street these days is little more than a sophisticated flow chart of questions and answers leading to a homogenised selection of packaged product solutions. So why pay more for it than you have to ?
If an advisor ( such as those at SJP ) put a client into managed funds or portfolio management services, then it is clear that these are medium to long term investments. Investors end up staying put for a few years , because thats what the products need them to do.
The advisor is not making ongoing investment decisions - the fund manager is doing that. Once handed over to a portfolio management service, the advisor is frankly doing little, maybe nothing, for their annual cost. Certainly, SJP advisors are absolutely and categorically NOT investment managers. All they do is guide people into the range of products on the SJP platform. SJP advisors ( and other "IFA" types who operate the same way ) are not making investment decisions at all. All they did was run through a cookie-cutter process of "identifying risk appetite" and ramming the client into the appropriate product suite.
Most "advice" offered on the high street these days is little more than a sophisticated flow chart of questions and answers leading to a homogenised selection of packaged product solutions. So why pay more for it than you have to ?
toppstuff said:
You are conflating different themes here.
If an advisor ( such as those at SJP ) put a client into managed funds or portfolio management services, then it is clear that these are medium to long term investments. Investors end up staying put for a few years , because thats what the products need them to do.
The advisor is not making ongoing investment decisions - the fund manager is doing that. Once handed over to a portfolio management service, the advisor is frankly doing little, maybe nothing, for their annual cost. Certainly, SJP advisors are absolutely and categorically NOT investment managers. All they do is guide people into the range of products on the SJP platform. SJP advisors ( and other "IFA" types who operate the same way ) are not making investment decisions at all. All they did was run through a cookie-cutter process of "identifying risk appetite" and ramming the client into the appropriate product suite.
Most "advice" offered on the high street these days is little more than a sophisticated flow chart of questions and answers leading to a homogenised selection of packaged product solutions. So why pay more for it than you have to ?
I agree with lots of the points that you make, very well. In respect of your final point, yes.. To an extent, many IFA do do that, but not all, and not for all clients. I am worried that traditional find analysis oicking and assessment skills are being lost through managed portfolios.If an advisor ( such as those at SJP ) put a client into managed funds or portfolio management services, then it is clear that these are medium to long term investments. Investors end up staying put for a few years , because thats what the products need them to do.
The advisor is not making ongoing investment decisions - the fund manager is doing that. Once handed over to a portfolio management service, the advisor is frankly doing little, maybe nothing, for their annual cost. Certainly, SJP advisors are absolutely and categorically NOT investment managers. All they do is guide people into the range of products on the SJP platform. SJP advisors ( and other "IFA" types who operate the same way ) are not making investment decisions at all. All they did was run through a cookie-cutter process of "identifying risk appetite" and ramming the client into the appropriate product suite.
Most "advice" offered on the high street these days is little more than a sophisticated flow chart of questions and answers leading to a homogenised selection of packaged product solutions. So why pay more for it than you have to ?
I am not defending prescriptive charging, more, pointing out that value is added - whether the client appreciates it or values it - in the advisory aspect of it as well. I agree 100% that the % model is indiscriminatory in that it doesn't always reflect the work involved. If you compare selecting funds for a 22 year old within a cheap pension wrapper, compared to a £500,000 portfolio of OEICs invested within a model portfolio for a 40 year old, compared to a 60 year old client partly in £1,000,000 drawdown/decumulation, there is little correlation. But RDR addresses that.
The point I was making is that all the work that goes on parallel to the actual investment decisions is costly as well. The point you make about paying for the bolt ons (for want of a better phrase) is because they also cost. If a client is in growth mode, then the client has the choice of paying the extra, and at a cost he or she thinks is fair. If a client is well informed, he/she makes a decision about the value of paying for an ongoing service.
If a client is suporting a tactic within the strategy for, say, funding uni fees 18 years hence, I make only a nominal charge for that because those investments are in almost, a fire and forget mode. That is different to those funds which are being positioned for drawdown. Either way, just opening the file creates admin and compliancy fees, as well as ensuring one maintains capital adequacy. The last thing that he FCA wants is Advisers being so broke, they leave clients high and dry.
But advisers tend to attract a fair share of flak (in many cases, rightly so) but why is it that the percentage charges on funds don't reduce as fund sizes increase? Advice is specific, fund management is, genuinely, generic. This is a question we should be asking particularly of those running passives and trackers. A good fund can be completely the wrong choice for a poorly advised client. If a client doesn't want an ongoing service though, he/she doesn't pay for it, they walk away - I agree with that, it's a consumer driven market.
But let's broaden the debate, based on your post. The FCA compels very light regulatory pressure on charges for funds, yet if people dont understand percentage charges for IFAs, they wont understand percentage charges for investment funds; that's before we get on to the hidden charges in investment funds (honestly, do *you* know what they are?) and the other ways that investment companies skim money out of funds, by churning, excessive trading, by keeping some income from stock lending, which is bad enough as it is.
Advisers though, sustain increasing additional costs in the form of Indemnity and insurance cover and FSCS levies which have links to activity and assets under management. In terms of the value a good adviser can provide, there is markedly increased additional compounded value being added to £300,000 than we to £100,000 - and the value we are adding is a percentage of the amount.
But to charge the same fee initial/and annual management fee as a percentage or even the same flat fee is clearly wrong to some, so ok.. how do you address it? Do you ask the admin staff to be paid less when working with clients of a lower financial value, or do you charge a flat fee which will advantage only some? This is the darker side of RDR - the advice gap.
The final solution starts by working out how much time, energy and experience is involved to create the advice, for me to pay overhead (that doesn't discriminate downwards in the way some clients would like!), build in a profit margin and work back to the fee - that can be % or flat - it doesn't really matter provided its explained to the client and he/she understands it and most importantly agrees and benefits from it.
Regards.
Simpo Two said:
Not at all - we finally had a chat; he had read the e-mails, entirely agreed with my POV, was totally sympathetic, waived the bill and said he'd have words with the offending IFA - who is one of the directors...
To be fair they had no legs; had they not rolled over it would have been straight to the Ombudsman, so an easy win. But it was helpful that a neighbour was a 'client relationship director' from a very big financial company. I always take advice, even if not financial
Always useful.. To be fair they had no legs; had they not rolled over it would have been straight to the Ombudsman, so an easy win. But it was helpful that a neighbour was a 'client relationship director' from a very big financial company. I always take advice, even if not financial
Glad you got a result.
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