Paying for financial advice - how much???

[howmanlass]

We had a financial advisor come round tonight to have an initial chat about our circumstances before preparing a report for us. It's something we could use as we've never really had any sort of finances to speak of before but now we're getting into a better position. The guy seemed to know his stuff and I think I would have confidence in him (albeit I've only met him once).

Anyway, point is, at the end of the meeting he told us his fees... £200 an hour!!! Now, I'm guessing it will take him a good few hours to do all the admin to get us set up but is it worth it? Our investments would have to make a fair bit to cover the expense. He did say some of it could be ofset by commissions on the products we take up but I imagine it would still cost us a bit to start off with... and he drives a rather expensive looking BMW (sorry, it was dark so I didn't see what flavour it was!)

[Caddyshack]

He should have given you a terms of business of and IDD (inital Disclosure document) but suffice to say that £200 per hour doesnt sound right unless its big investment and he is going to rebate all of the commision...send me a P.M. and I can hep you find someone at £0 per hour on commision only basis OR much lower than that on an hourly basis.

I have been Financial Advisor for over 11 years and know enough people to find someone very good that wont be far fom you.

You do not have to pay him anything up to now!

I have a much better car than a BMW though!

[howmanlass]

Caddyshack said:

He should have given you a terms of business of and IDD (inital Disclosure document) but suffice to say that £200 per hour doesnt sound right unless its big investment and he is going to rebate all of the commision...send me a P.M. and I can hep you find someone at £0 per hour on commision only basis OR much lower than that on an hourly basis.

I have been Financial Advisor for over 11 years and know enough people to find someone very good that wont be far fom you.

You do not have to pay him anything up to now!

I have a much better car than a BMW though!

We got a Key Facts statement laying out all the charges which sounds like it's the IDD. It all seemed legit... just very expensive! I wouldn't say our investment is even that big, but we need just about everything we have sorting out.

He kept using the analogy of comparing Porsche's and Fiesta's i.e. you get what you pay for.

[Caddyshack]

Sounds like rubbish to me..if you want then send me an email to [e-mail] I will give you a number to call me on and we can have a chat...I expect I can point you in the right direction

The Key Fact / IDD sounds correct though.

By the way, the idea of Independent Financial Advice is to offer you the option of a Fee (fixed or maybe per hour) or commision and all commision should be disclosed to you.

Edited by Caddyshack on Thursday 1st March 22:39

[mr.man]

I've used the same independant financial advisor for 19 years and never paid him a penny.
He constructed a comprehensive portfolio for me and made it quite clear that he would earn
on a commission only basis. The amount of commission was indicated on any new contract or investment.

[howmanlass]

Does the commission not just get added to your premiums over time? Not sure how it works, it's just frustrating not knowing enough about it myself and having to trust what we're being told by someone who does know all about it!

[Caddyshack]

The commissions are in the product whether you pay a fee or not..therefore its pay a fee and get the commission paid back or not pay a fee...its like mortgages...go direct and pay 5% or go through broker and pay 5%...the broker still gets paid.

[mr.man]

When the advisors get it right and get you into the right products at the right time (yes there is an element of luck or fortune telling if you prefer), the rewards to you will far outweigh any commission they received.
In the last 12 months my portfolio value rose by more than twice what I earnt. BUT your investment may not perform as predicted and ......

[Tiggsy]

Caddyshack said:

The commissions are in the product whether you pay a fee or not..therefore its pay a fee and get the commission paid back or not pay a fee...its like mortgages...go direct and pay 5% or go through broker and pay 5%...the broker still gets paid.

Thats depends though - if you invest a million pound into, say an Investmnet Bond and the IFA takes a commision you may get a 102% allocation with the adviser earning upto £70k......on a fee basis if the adviser worked for, say £10k you are £60k better off....simple as that.

[howmanlass]

Tiggsy said:

Thats depends though - if you invest a million pound into, say an Investmnet Bond and the IFA takes a commision you may get a 102% allocation with the adviser earning upto £70k......on a fee basis if the adviser worked for, say £10k you are £60k better off....simple as that.

That makes sense, if only we had a million pounds to invest!

[percy flage]

My guess would be that the person you saw worked for a company that imposes a fee structure on the adviser. £200 an hour would be about right for a "large" IFA firm. Likelihood is that the fee rate is set at a level where you opt for the commission route, perhaps unaware that the IFA can pick up upwards of 5% for lump sum investments, 20% of the regular premium for investments and upwards of 100% of the first year's premium for protection.

Is he qualified? How much do you value his advice? How much would you pay for a solicitor or accountant?

[Eric Mc]

Partners in medium sized accountancy practices would mostly be over the £200 per hour mark now. Associates and managers would be just under.

[minimax]

Caddyshack said:

He should have given you a terms of business of and IDD (inital Disclosure document) but suffice to say that £200 per hour doesnt sound right unless its big investment and he is going to rebate all of the commision...send me a P.M. and I can hep you find someone at £0 per hour on commision only basis OR much lower than that on an hourly basis.

I have been Financial Advisor for over 11 years and know enough people to find someone very good that wont be far fom you.

You do not have to pay him anything up to now!

I have a much better car than a BMW though!

hmmm. not so sure on that, the resident financial advisor here in my office (very large network for AR's as well as a DA writer) will charge £200 per hour for straightforward financial advice ie "I have this and this and this, what should I do with them"

...if it's more of a case (with the OP) of "I would like a stakeholder, please arrange one" or similar then there would be no charge, just commission retained by the advisor.

I think this is entirely fair enough. I mean, why should the advisor spend lots of time and money (or his firm spend it if he's employed) to give out free general advice?

[minimax]

howmanlass said:

Caddyshack said:

He should have given you a terms of business of and IDD (inital Disclosure document) but suffice to say that £200 per hour doesnt sound right unless its big investment and he is going to rebate all of the commision...send me a P.M. and I can hep you find someone at £0 per hour on commision only basis OR much lower than that on an hourly basis.

I have been Financial Advisor for over 11 years and know enough people to find someone very good that wont be far fom you.

You do not have to pay him anything up to now!

I have a much better car than a BMW though!

We got a Key Facts statement laying out all the charges which sounds like it's the IDD. It all seemed legit... just very expensive! I wouldn't say our investment is even that big, but we need just about everything we have sorting out.

He kept using the analogy of comparing Porsche's and Fiesta's i.e. you get what you pay for.

I am sorry, I don't think it matters what car he drives. he might well choose to drive a BMW and live in a rough part of town (with a garage!) just for the love of the car...or he might not....or (shock horror!) he might be good at his job and therefore doing well for himself.

people seem not to realise that just because someone is successful it does not mean they should lower their prices if you wish to do business with them simply because you can see the fruits of their labours.

[minimax]

mr.man said:

I've used the same independant financial advisor for 19 years and never paid him a penny.
He constructed a comprehensive portfolio for me and made it quite clear that he would earn
on a commission only basis. The amount of commission was indicated on any new contract or investment.

which is exactly fair enough. he did work for you and got paid.

if you had initially gone to him and said " i'd like some general financial advice " he'd have said fine, £200 per hour or similar...normally that would be refunded to you once you actually did some business with him though - at least this is the generally accepted norm

[minimax]

howmanlass said:

Does the commission not just get added to your premiums over time? Not sure how it works, it's just frustrating not knowing enough about it myself and having to trust what we're being told by someone who does know all about it!

that's about right.

it is possible to gift commission back to the client by means of a cheque upfront or a reduction in premiums...theoretically it's possible to gift the entire commission back to the client to reduce the premiums - there is an option for this on the submission document but I have never done it.

it would typically be used when there was a big investment/policy in the offing - commission maybe, say, £15,000 you might gift £2,000 back to the client as a way of inducement to do the business through you. my colleague (Times/Guardian/Observer/Express Life Consultant) does this frequently.

[darreni]

minimax said:

Caddyshack said:

He should have given you a terms of business of and IDD (inital Disclosure document) but suffice to say that £200 per hour doesnt sound right unless its big investment and he is going to rebate all of the commision...send me a P.M. and I can hep you find someone at £0 per hour on commision only basis OR much lower than that on an hourly basis.

I have been Financial Advisor for over 11 years and know enough people to find someone very good that wont be far fom you.

You do not have to pay him anything up to now!

I have a much better car than a BMW though!

hmmm. not so sure on that, the resident financial advisor here in my office (very large network for AR's as well as a DA writer) will charge £200 per hour for straightforward financial advice ie "I have this and this and this, what should I do with them"

...if it's more of a case (with the OP) of "I would like a stakeholder, please arrange one" or similar then there would be no charge, just commission retained by the advisor.

I think this is entirely fair enough. I mean, why should the advisor spend lots of time and money (or his firm spend it if he's employed) to give out free general advice?

Indeed, people think we are financial social workers sometimes. We are a business.

A good ifa will save/earn you far more than they ever cost you.
The hard part is finding a good one. Word of mouth is best. We never advertise, but have a constant stream of high quality new clients.

Avoid retail banking "IFA's", pressure driven sales advice will never be the best solution.

[minimax]

Caddyshack said:

The commissions are in the product whether you pay a fee or not..therefore its pay a fee and get the commission paid back or not pay a fee...its like mortgages...go direct and pay 5% or go through broker and pay 5%...the broker still gets paid.

how would a broker be paid if the client went direct?

with mortgages it's slightly different regarding commissions, the broker directs the client to the mortgage company as it's the best deal/lowest rate*/fastest/only one that'll take them and in return the lender pays a commission to the broker known as a procuration fee for "procuring" the business for them ie saving the lender the cost and hassle of advertising for the customer.

procuration fees vary from 0.3% to 2.5% depending on the deal














*lost count of how many times i've had to explain that this is not one and the same thing

Edited by minimax on Friday 2nd March 10:56

[minimax]

percy flage said:

My guess would be that the person you saw worked for a company that imposes a fee structure on the adviser. £200 an hour would be about right for a "large" IFA firm. Likelihood is that the fee rate is set at a level where you opt for the commission route, perhaps unaware that the IFA can pick up upwards of 5% for lump sum investments, 20% of the regular premium for investments and upwards of 100% of the first year's premium for protection.

Is he qualified? How much do you value his advice? How much would you pay for a solicitor or accountant?

spot, as they say, on.


by the way, the insurance commission is not all it's cracked up to be.

sure, if I do a 750k policy level term inc waiver with a 200k CIC rider for a 40 yr old smoker like for example yesterday i'll earn over £17,000....but look on it as an interest free loan as if at any time that policy lapses I must return all of the cash in the first 2 years, and 85% of it in the third year - so bearing in mind how quickly policies churn life commissions are really only an interest free loan...

...to get round this you take it on the drip, one monthly payment = one monthly commission...but this is still unequal in most cases. ie the policy I wrote yesterday has a £558 monthly premium (the fellow has a couple of health issues which make it pricey ) but every month I will expect £597.

I confess to not knowing how they do the arithmetic on this!

[minimax]

darreni said:

minimax said:

Caddyshack said:

He should have given you a terms of business of and IDD (inital Disclosure document) but suffice to say that £200 per hour doesnt sound right unless its big investment and he is going to rebate all of the commision...send me a P.M. and I can hep you find someone at £0 per hour on commision only basis OR much lower than that on an hourly basis.

I have been Financial Advisor for over 11 years and know enough people to find someone very good that wont be far fom you.

You do not have to pay him anything up to now!

I have a much better car than a BMW though!

hmmm. not so sure on that, the resident financial advisor here in my office (very large network for AR's as well as a DA writer) will charge £200 per hour for straightforward financial advice ie "I have this and this and this, what should I do with them"

...if it's more of a case (with the OP) of "I would like a stakeholder, please arrange one" or similar then there would be no charge, just commission retained by the advisor.

I think this is entirely fair enough. I mean, why should the advisor spend lots of time and money (or his firm spend it if he's employed) to give out free general advice?

Indeed, people think we are financial social workers sometimes. We are a business.

A good ifa will save/earn you far more than they ever cost you.
The hard part is finding a good one. Word of mouth is best. We never advertise, but have a constant stream of high quality new clients.

Avoid retail banking "IFA's", pressure driven sales advice will never be the best solution.

agreed with all you just said, and I would cut a ball off to own that RS2!


retail banking IFA's ...."ooh, i've done my exams, that must mean that now i'm a proper IFA!"