IFA or go it alone?

[TUS373]

I have less than 10 years before state pension age. Most of my pension pot is with Quilter. I had an IFA for over 10 years and I took his advice. The pot grew well. Then, he retired himself, passing me on to another company and IFA saying they were good, low fees.

The new IFA I see once a year for a couple of hours. He shows me what my pension pot is worth, but I can see that on an app anyway. He asks my attitude to risk. Away he goes for another year.

The fees though. On the face of it 1% does not ar first seem much, but when it is a percentage of a pot, it becomes significant. The money grows, but it is the effort of Quilter rather than the IFA. That is tens of thousands that will be moved silently in his direction. I have to weigh up, is it worth it?

Having emailed Quilter, they suggest that I can sack off the IFA, but then they cannot make investment choices for my plan. That sounds like not being locked in, but being locked in.

If I make investment choices myself, I could by the same token get it wrong. I recognise that risk. I might save thousands, but lose even more.

I do not have anyone else to turn to for advice hence my post here. Do others face this conundrum? What are the options and relative risks? Can I ask IFA to cap their fees on line with their time and effort , rather me financing them?

[Macneil]

Surely you can work out if he's value for money at 1%? What growth has he achieved for you since you moved to him?

[TUS373]

It is not his work though. It has just carried on from the previous IFA who did all the work. The latest IFA is just in the right position for commission from existing investment. Not done anything other than 2 or 3 annual meetings.

[TUS373]

Also. It's more about future value for money. I know he would get £50k+ plus from me, but I cannot predict what the future growth is going to be.

[ATG]

Macneil said:

Surely you can work out if he's value for money at 1%? What growth has he achieved for you since you moved to him?

The value an IFA adds is about choosing and achieving an appropriate level of risk and tax efficiency. The return earned over a few years really tells you very, very little.

[phpe]

Not enough info in the OP original post to comment really.

Assuming you are around 57, is the IFA:

Asking about lifestyle/goals/objectives/family & dependents?
Doing Cashflow modelling and scenario planning?
What is the pension invested in and who is coming up with the asset/fund recommendations?
Benchmarking and against what criteria?
Looking at LSA and LSDBA limits?
Providing advice around IHT and post April 2027 pension changes?
Advising on carry forward/unused allowances?
What asset allocation strategies are being discussed during accumulation period until stopping work?
Advising on protection/insurances/wills/PoA/Expression of wishes?
Other taxation aspects?

[TUS373]

Thanks. I am more interested in what the alternatives are to having an IFA that examining in detail what he does. I have a lawyer in the house. We are sorted for Wills and POA.

Most of the other stuff on the list is really simple for my circumstances and little if anything changes year to year. Hence I would like to more about life without an IFA, scaling down commission in line with what they do, their time and effort.

[phpe]

I’d respectfully suggest that unless the IFA is

Asking about lifestyle/goals/objectives/family & dependents
Doing Cashflow modelling/scenario planning

Then how on earth can they give proper advice about what to invest in.

You need to have a clear idea of what lifestyle you are saving for, how much you will need to accumulate to get there and most importantly, when and how you are going to spend it once you get to the amount needed.

[TUS373]

And we did that. It is very simple. Is it worth spending £50k on in the future or what are the alternatives to a non-IFA future?

[TUS373]

Put another one way..i have a retirement target. The strategy is money in a Quilter Collective Retirement account. So now what is the IFA doing for their fee? Not a lot I feel....but I am not brave enough to gamble either. Hence, what options do people use themselves?

The IFA is a decent chap, but I am not getting enough from him. Essentially, my monthly contributions into my pension could be said to be paying him. The growth comes from Quilter.

[phpe]

So if it’s very simple, what is the principal objective you’ve discussed, documented, modelled and agreed with the IFA?

For example:

“To be financially independent by age 63 with a target net annual income of £63,000 net of taxes rising in line with CPI plus 1% for a period of 25 years”

[TUS373]

That kind of thing, yes. But it is done.

[phpe]

You re contradicting yourself somewhat

In some posts, you say all the IFA has done in 2-3 meetings is ask about risk profile and little else, and then in others the IFA has done detailed lifestyle & objective planning and cashflow modelling?

Can t be both!

[TUS373]

Thanks, for your input, but Im not concerned so much about what the IFA has done and don't want to get into those details. I know how it is going and what it costs. Its quite a bit so I naturally want to consider other positions, even it rules an IFA back in.

I am interested more in what are the options for the future, potentially working without an IFA and their fees, and the consequences. For instance, Quilter say 'yes, you remove the IFA but future contributions will go to cash, not be invested.

Quilter said: Model portfolios

You will remain invested in the current fund selection, but these will no longer be managed by either Quilter or a discretionary manager. The Managed Portfolio Service, which automatically switches funds and produces reports, will be unavailable if you remove your adviser. This will be for all types of contribution, including Direct Debits. If you have a current Direct Debit this will be updated to place future contributions into cash. You can redirect this to other assets via the OCC, customer app, or by using a paper switch form.

Additionally, if any WealthSelect (WS) or U3 share class funds were part of the model(s), you will be unable to invest further into these funds, including via switching.

You may of course return to a model portfolio if you decide to add a new adviser to your account, and they recommend the service.

If you would like to proceed with removing your adviser, please contact us.

So that is not great. They do the work in making fund decisions (not the IFA), but by removing the IFA that service would stop...eben though that is a separate fee and one I do think is worth the charges.

Hence, I want to understand more about how others may work through this scenario.

[Nicetobenice]

You'd have to either change your pension provider or change to a non-advisor set of products at Quilter.

If you don't feel comfortable doing that then you have your answer.

[scot_aln]

Can you replicate the holdings you have with another provider? As looks like with your current you have no choice but to have an adviser. From their site "Next steps
Because we believe in the value of financial advice, all of our products are only available via a financial adviser."

If you don't want to move from them then you can look compare with other advisers or just start (unless you have already?) by opening up a discussion on their fees.

I assume from this thread you are paying the IFA fees and then the fund fees and any holding or management on top?

[TUS373]

Yes. Spot on. I would like to know for example whether some IFAs can cap their fees or offer service for fee, rather than a commission. Also what kind of investments are available if opting out from IFA, potentially bringing one on an as needed basis?

It may be the way of the world that IFAs do their exams, take their %, and no one bats an eye lid. But I am querying this so I am working with more rounded information.

[Nicetobenice]

Yes some IFAs will work for a fixed fee.

But then you'd have to pay the fee if you take their advice or not.

[darreni]

When quilter say that you can drop the IFA but that they cannot then make investment choices for your plan, do they mean they cannot advise you on investment options (which would be correct) or that they would not accept instructions from you regarding the investments?

[phpe]

Until you can articulate exactly what a typical meeting with your IFA entails and what services are provided as ongoing advice, then it’s impossible to say whether 1% is ludicrously expensive or the best value for money in the world.