Paying for financial advice - how much???
Discussion
That all seems to make sense now, I really just wanted to check that it was the norm to be charged that amount. I appreciate that good advice costs money, goodness knows we already pay enough for our solicitors and accountants! Just a bit of a novice when it comes to finances (but hopefully not for long!)
The comment about his car was a bit flippant, I took it as confirmation that he must know what he's talking about and be doing well, I would be happy to pay the fees if I thought he would do as well for our investments. Sweeping generalisation I know, must try harder in future not to stereotype!
The comment about his car was a bit flippant, I took it as confirmation that he must know what he's talking about and be doing well, I would be happy to pay the fees if I thought he would do as well for our investments. Sweeping generalisation I know, must try harder in future not to stereotype!
howmanlass said:
That all seems to make sense now, I really just wanted to check that it was the norm to be charged that amount. I appreciate that good advice costs money, goodness knows we already pay enough for our solicitors and accountants! Just a bit of a novice when it comes to finances (but hopefully not for long!)
The comment about his car was a bit flippant, I took it as confirmation that he must know what he's talking about and be doing well, I would be happy to pay the fees if I thought he would do as well for our investments. Sweeping generalisation I know, must try harder in future not to stereotype!
The comment about his car was a bit flippant, I took it as confirmation that he must know what he's talking about and be doing well, I would be happy to pay the fees if I thought he would do as well for our investments. Sweeping generalisation I know, must try harder in future not to stereotype!
if the IFA chap tells you anything that you doubt, post it up here and i'm sure that the IFAs on here will give you the inside track
minimax said:
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!
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!"
bollox,
All IFA's are the same - those that work for the banks are no different to the rest.
And to answer the original question you should be able to choose between paying commission or a fee.
Edited by AM04ARO on Friday 2nd March 22:06
£200 per hour does seem steep and this is the problem with time fee based advice - it will cost you to make him a cup of coffee 
The other option is a fixed %age fee agreed up front and which you should only pay if you proceed with their reccommendations.
If you are investing capital as opposed to general savings advice then you don't have to make do with products any longer. The problem with products such as With Profits & Distribution Bonds e.t.c. is that they are not only expensive (5-6% or more initial charge which pays the IFA his commission) they are also tax innefficient for most people, except maybe higher rate taxpayers, beacause Insurance companies have to pay income tax and corporation tax on their funds which you, the investor, effectively pays. You cannot reclaim these taxes even if you (or your spouse) are a non taxpayers. You would also be wasting your Capital Gains Tax (CGT) allowances currently £8,800 each per year thus effictively paying a voluntary tax!!
As an adviser for a Discretionary Wealth Manager for the last 12 years charging a set fee for our clients, which they only pay if they proceed, seems to work well and is IMO a fairer way to pay for totally impartial advice. Advice should always be free up to the point at which you invest, then you pay the fee based on the capital invested which for us is a flat 2% plus VAT (2.35% in total),less if the client invests more than £100k, this is only ever payable once and the client can take his time in his discussions with his adviser without having to watch the clock!!
By the way I drive a company BMW .....you would be more concerned if he had turned up in a Vauxhall Astra
The other option is a fixed %age fee agreed up front and which you should only pay if you proceed with their reccommendations. If you are investing capital as opposed to general savings advice then you don't have to make do with products any longer. The problem with products such as With Profits & Distribution Bonds e.t.c. is that they are not only expensive (5-6% or more initial charge which pays the IFA his commission) they are also tax innefficient for most people, except maybe higher rate taxpayers, beacause Insurance companies have to pay income tax and corporation tax on their funds which you, the investor, effectively pays. You cannot reclaim these taxes even if you (or your spouse) are a non taxpayers. You would also be wasting your Capital Gains Tax (CGT) allowances currently £8,800 each per year thus effictively paying a voluntary tax!!
As an adviser for a Discretionary Wealth Manager for the last 12 years charging a set fee for our clients, which they only pay if they proceed, seems to work well and is IMO a fairer way to pay for totally impartial advice. Advice should always be free up to the point at which you invest, then you pay the fee based on the capital invested which for us is a flat 2% plus VAT (2.35% in total),less if the client invests more than £100k, this is only ever payable once and the client can take his time in his discussions with his adviser without having to watch the clock!!
By the way I drive a company BMW .....you would be more concerned if he had turned up in a Vauxhall Astra
AM04ARO said:
minimax said:
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!
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!"
bollox,
All IFA's are the same - those that work for the banks are no different to the rest.
And to answer the original question you should be able to choose between paying commission or a fee.
Edited by AM04ARO on Friday 2nd March 22:06
berk.
someone who has worked in a bank, qualified and can only deal in the banks own products (known as a tied agent) versus someone who has (usually been through this process) moved onwards, gained experience and now works independently for himself or a good firm - having been in the business for some years?
hmmm, toughy.
it's all about the product knowledge and troubleshooting ability with financial advice, and someone who is a tied agent simply cannot know about lots and lots of products with the same proficiency as someone who makes it his business to know about the whole market.
blueyonder said:
£200 per hour does seem steep and this is the problem with time fee based advice - it will cost you to make him a cup of coffee The other option is a fixed %age fee agreed up front and which you should only pay if you proceed with their reccommendations.
If you are investing capital as opposed to general savings advice then you don't have to make do with products any longer. The problem with products such as With Profits & Distribution Bonds e.t.c. is that they are not only expensive (5-6% or more initial charge which pays the IFA his commission) they are also tax innefficient for most people, except maybe higher rate taxpayers, beacause Insurance companies have to pay income tax and corporation tax on their funds which you, the investor, effectively pays. You cannot reclaim these taxes even if you (or your spouse) are a non taxpayers. You would also be wasting your Capital Gains Tax (CGT) allowances currently £8,800 each per year thus effictively paying a voluntary tax!!
As an adviser for a Discretionary Wealth Manager for the last 12 years charging a set fee for our clients, which they only pay if they proceed, seems to work well and is IMO a fairer way to pay for totally impartial advice. Advice should always be free up to the point at which you invest, then you pay the fee based on the capital invested which for us is a flat 2% plus VAT (2.35% in total),less if the client invests more than £100k, this is only ever payable once and the client can take his time in his discussions with his adviser without having to watch the clock!!
By the way I drive a company BMW .....you would be more concerned if he had turned up in a Vauxhall Astra
The other option is a fixed %age fee agreed up front and which you should only pay if you proceed with their reccommendations. If you are investing capital as opposed to general savings advice then you don't have to make do with products any longer. The problem with products such as With Profits & Distribution Bonds e.t.c. is that they are not only expensive (5-6% or more initial charge which pays the IFA his commission) they are also tax innefficient for most people, except maybe higher rate taxpayers, beacause Insurance companies have to pay income tax and corporation tax on their funds which you, the investor, effectively pays. You cannot reclaim these taxes even if you (or your spouse) are a non taxpayers. You would also be wasting your Capital Gains Tax (CGT) allowances currently £8,800 each per year thus effictively paying a voluntary tax!!
As an adviser for a Discretionary Wealth Manager for the last 12 years charging a set fee for our clients, which they only pay if they proceed, seems to work well and is IMO a fairer way to pay for totally impartial advice. Advice should always be free up to the point at which you invest, then you pay the fee based on the capital invested which for us is a flat 2% plus VAT (2.35% in total),less if the client invests more than £100k, this is only ever payable once and the client can take his time in his discussions with his adviser without having to watch the clock!!
By the way I drive a company BMW .....you would be more concerned if he had turned up in a Vauxhall Astra
it is a difficult one really. as a punter you don't want to pay only to find later that the advisor was rubbish or that you didn't need the advice....
....and as an advisor you don't want to waste time turning up to spend time with someone who has £50 a month to put away and who'd be better off going on the t'internet and finding a cash ISA.... both sides have to weigh it up.
personally, i'm in favour of a cautious 20 minute consultation by the advisor free of charge to ascertain liklihood of deals being struck and commission earned, or advice being paid for and given.
minimax said:
blueyonder said:
£200 per hour does seem steep and this is the problem with time fee based advice - it will cost you to make him a cup of coffee The other option is a fixed %age fee agreed up front and which you should only pay if you proceed with their reccommendations.
If you are investing capital as opposed to general savings advice then you don't have to make do with products any longer. The problem with products such as With Profits & Distribution Bonds e.t.c. is that they are not only expensive (5-6% or more initial charge which pays the IFA his commission) they are also tax innefficient for most people, except maybe higher rate taxpayers, beacause Insurance companies have to pay income tax and corporation tax on their funds which you, the investor, effectively pays. You cannot reclaim these taxes even if you (or your spouse) are a non taxpayers. You would also be wasting your Capital Gains Tax (CGT) allowances currently £8,800 each per year thus effictively paying a voluntary tax!!
As an adviser for a Discretionary Wealth Manager for the last 12 years charging a set fee for our clients, which they only pay if they proceed, seems to work well and is IMO a fairer way to pay for totally impartial advice. Advice should always be free up to the point at which you invest, then you pay the fee based on the capital invested which for us is a flat 2% plus VAT (2.35% in total),less if the client invests more than £100k, this is only ever payable once and the client can take his time in his discussions with his adviser without having to watch the clock!!
By the way I drive a company BMW .....you would be more concerned if he had turned up in a Vauxhall Astra
The other option is a fixed %age fee agreed up front and which you should only pay if you proceed with their reccommendations. If you are investing capital as opposed to general savings advice then you don't have to make do with products any longer. The problem with products such as With Profits & Distribution Bonds e.t.c. is that they are not only expensive (5-6% or more initial charge which pays the IFA his commission) they are also tax innefficient for most people, except maybe higher rate taxpayers, beacause Insurance companies have to pay income tax and corporation tax on their funds which you, the investor, effectively pays. You cannot reclaim these taxes even if you (or your spouse) are a non taxpayers. You would also be wasting your Capital Gains Tax (CGT) allowances currently £8,800 each per year thus effictively paying a voluntary tax!!
As an adviser for a Discretionary Wealth Manager for the last 12 years charging a set fee for our clients, which they only pay if they proceed, seems to work well and is IMO a fairer way to pay for totally impartial advice. Advice should always be free up to the point at which you invest, then you pay the fee based on the capital invested which for us is a flat 2% plus VAT (2.35% in total),less if the client invests more than £100k, this is only ever payable once and the client can take his time in his discussions with his adviser without having to watch the clock!!
By the way I drive a company BMW .....you would be more concerned if he had turned up in a Vauxhall Astra
it is a difficult one really. as a punter you don't want to pay only to find later that the advisor was rubbish or that you didn't need the advice....
....and as an advisor you don't want to waste time turning up to spend time with someone who has £50 a month to put away and who'd be better off going on the t'internet and finding a cash ISA.... both sides have to weigh it up.
personally, i'm in favour of a cautious 20 minute consultation by the advisor free of charge to ascertain liklihood of deals being struck and commission earned, or advice being paid for and given.
Agreed......it is a difficult one! The number of times I've sat in a clients house on a wet dark evening to be told he only has a £3k Cash ISA and wants to know if it's a good un'
Qualifying the client is difficult because you don't want to come accross as only being interested if he has a shed load of cash. We at least try and qualify new clients before going to see them. Anyone who has a reasonable amount of capital to invest will normally expect to have to pay for advice - unless they are DIYers of course who just want to pick your brains and have no intention of investing!!
I realise I'm going against the grain somewhat, but I'd be inclined to stick with the guy you've met because:
1) It seems you trust him;
2) He's far more likely to give you objective advice if he's not swayed by commissions;
3) Clearly you will be a highly valued customer, rather than just another number on his monthly target.
1) It seems you trust him;
2) He's far more likely to give you objective advice if he's not swayed by commissions;
3) Clearly you will be a highly valued customer, rather than just another number on his monthly target.
minimax said:
AM04ARO said:
minimax said:
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!
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!"
bollox,
All IFA's are the same - those that work for the banks are no different to the rest.
And to answer the original question you should be able to choose between paying commission or a fee.
Edited by AM04ARO on Friday 2nd March 22:06
berk.
someone who has worked in a bank, qualified and can only deal in the banks own products (known as a tied agent) versus someone who has (usually been through this process) moved onwards, gained experience and now works independently for himself or a good firm - having been in the business for some years?
hmmm, toughy.
it's all about the product knowledge and troubleshooting ability with financial advice, and someone who is a tied agent simply cannot know about lots and lots of products with the same proficiency as someone who makes it his business to know about the whole market.
Berk?
Hmm, I would be if banks did not have both multi tied agents and IFA's. And lets not ignore the Private Banking arms most also have. When you want access to everything you really should not over look them.
Guess I should have said that the banks IFA's are the same.
Thanks for the berk comment though.
To the OP you can negotiate even if you end up paying commission, personally I would not pay for the first consultation until I knew they could do something for me.
Edited by AM04ARO on Saturday 3rd March 20:46
my family own a big financial institute
i will get back to you tomorrow regarding this £200 an hour, i think £200 an hour is about right though. Don't forget the profit on £200 will be only be about £50 or even less.
You should get comission rate only if it is a small investment, and this can be as low as 1%, however IFA's will try to give you a fixed rate if its a small investment and try to make you pay comission if its a significants sum- as they get more-. IFA's are good for inheritance tax purposes though, they can tell you how to avoid paying all of it which would save you a packet! PLus i dealt with one client who has made 60% profit in 18 months on an initial investment of £250k.
all the IFA's are regulated too, if you have queries relating to the cost, why dont you take it up with the FSA?
since Labour has came to power, they have tried to abolish all IFA's and now its all highly regulated. The IFA has to gp through stringent measures now from the FSA and as a result of Labours controlling influence (which has also put a tax on private pensions), about 65% of IFA's have gone out of business. I will let you know in more detail about it tomorrow. regards K
[
i will get back to you tomorrow regarding this £200 an hour, i think £200 an hour is about right though. Don't forget the profit on £200 will be only be about £50 or even less.
You should get comission rate only if it is a small investment, and this can be as low as 1%, however IFA's will try to give you a fixed rate if its a small investment and try to make you pay comission if its a significants sum- as they get more-. IFA's are good for inheritance tax purposes though, they can tell you how to avoid paying all of it which would save you a packet! PLus i dealt with one client who has made 60% profit in 18 months on an initial investment of £250k.
all the IFA's are regulated too, if you have queries relating to the cost, why dont you take it up with the FSA?
since Labour has came to power, they have tried to abolish all IFA's and now its all highly regulated. The IFA has to gp through stringent measures now from the FSA and as a result of Labours controlling influence (which has also put a tax on private pensions), about 65% of IFA's have gone out of business. I will let you know in more detail about it tomorrow. regards K
[
Edited by k321 on Tuesday 13th March 01:18
k321 said:
You should get comission rate only if it is a small investment, and this can be as low as 1%
about 65% of IFA's have gone out of business.
easy to see why!
if you invest £20k and the adviser gets 1% thats £200.....for what could easily involve a few meetings and a couple of hours paperwork - one of the main reasons i gave up being an IFA and now run my business as a multi-tie, saves people asking to pay by fee!
T (IHT consultant)
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