IFA pension charges.
Discussion
Looking for some advice or comparison charges on a SIPP from an IFA.
Monthly contributions 4%
Annual charge 1%
This is on top off the providers charges.
P.S. Also there would be charges for any moving of poorly performing funds which he chose in the first place.
I think he is taking my parents for a ride?
Cheers.
Monthly contributions 4%
Annual charge 1%
This is on top off the providers charges.
P.S. Also there would be charges for any moving of poorly performing funds which he chose in the first place.
I think he is taking my parents for a ride?
Cheers.
TheStigsWeeBrother said:
Looking for some advice or comparison charges on a SIPP from an IFA.
Monthly contributions 4%
Annual charge 1%
This is on top off the providers charges.
P.S. Also there would be charges for any moving of poorly performing funds which he chose in the first place.
I think he is taking my parents for a ride?
Cheers.
Yes and no.Monthly contributions 4%
Annual charge 1%
This is on top off the providers charges.
P.S. Also there would be charges for any moving of poorly performing funds which he chose in the first place.
I think he is taking my parents for a ride?
Cheers.
1% per annum seems to be the industry standard for advisers these days. Some charge less, but some charge more.
4% initial is also pretty standard.
So he is not taking your parents for a ride in the sense that he is charging about average for his advice, but nevertheless it highlights how extremely expensive financial advisers are.
It really depends on what value he is offering in return and what sums are involved.
If he is providing financial planning, modelling, tax planning, estate planning and so on there could be good value to be had from his fees.
However, if he simply recommending a pension provider and some funds then I would consider this to be highly excessive for the work undertaken.
In any event, charging to switch your parents out of poor performing funds he recommended in the first place is absolutely ridiculous. On this basis alone I wouldn't use such an adviser.
JulianPH said:
Yes and no.
1% per annum seems to be the industry standard for advisers these days. Some charge less, but some charge more.
4% initial is also pretty standard.
So he is not taking your parents for a ride in the sense that he is charging about average for his advice, but nevertheless it highlights how extremely expensive financial advisers are.
It really depends on what value he is offering in return and what sums are involved.
If he is providing financial planning, modelling, tax planning, estate planning and so on there could be good value to be had from his fees.
However, if he simply recommending a pension provider and some funds then I would consider this to be highly excessive for the work undertaken.
In any event, charging to switch your parents out of poor performing funds he recommended in the first place is absolutely ridiculous. On this basis alone I wouldn't use such an adviser.
Thank you for the quick reply and yes I thought that charging again for his poor advice was not on.1% per annum seems to be the industry standard for advisers these days. Some charge less, but some charge more.
4% initial is also pretty standard.
So he is not taking your parents for a ride in the sense that he is charging about average for his advice, but nevertheless it highlights how extremely expensive financial advisers are.
It really depends on what value he is offering in return and what sums are involved.
If he is providing financial planning, modelling, tax planning, estate planning and so on there could be good value to be had from his fees.
However, if he simply recommending a pension provider and some funds then I would consider this to be highly excessive for the work undertaken.
In any event, charging to switch your parents out of poor performing funds he recommended in the first place is absolutely ridiculous. On this basis alone I wouldn't use such an adviser.
He does include tax planning and the rest so being charged about average doesn't seem so bad.
I will talk to him about that and see if there is any room for discounted rates.
Cheers.
b
hstewie said:
hstewie said: Sorry, the IFA wants 4% of all your parents monthly contributions?
Yep, and 1% of his parents entire pension fund each year on top.Crazy
Edited to add, I was trying to be polite (and not sounding as though I was selling an alternative). The charges (whilst normal) are also extreme in terms of initial and ongoing impact, as you rightly point out.
Edited by JulianPH on Wednesday 13th March 17:40
TheStigsWeeBrother said:
Looking for some advice or comparison charges on a SIPP from an IFA.
Monthly contributions 4%
Annual charge 1%
This is on top off the providers charges.
P.S. Also there would be charges for any moving of poorly performing funds which he chose in the first place.
I think he is taking my parents for a ride?
Cheers.
Monthly contributions: When your parents first engaged with the adviser were the monthly contributions agreed then as part of the plan? If so an argument could be made that there shouldn't be a charge as there isn't any work for the adviser to do. Monthly contributions 4%
Annual charge 1%
This is on top off the providers charges.
P.S. Also there would be charges for any moving of poorly performing funds which he chose in the first place.
I think he is taking my parents for a ride?
Cheers.
1% annual is the very top end, but I think you can get a comprehensive service for far less. Depends on how much they have invested.
Poorly performing funds: I'd be very wary of fund pickers or anyone that claims to beat the market. He should be paying your parents for this IMO.
Depending on your parent's pot size you should be able to get a comprehensive ongoing service for approx. 1-1.25% all in funds, platform and adviser charge.
Technology is making things cheaper - e.g. I'm having a planning meeting over with a client over Zoom in an hour where we discuss anything on their mind and adjust their financial plan. Convenient for them and saves time and money for the adviser.
Derek Chevalier said:
TheStigsWeeBrother said:
I will talk to him about that and see if there is any room for discounted rates.
If a client asked me for a discount I would tell them where to go. Conversely, if you feel he is overcharging why would you stay with him?You said that my parents should be getting the service for 1-1.5% all in but you also said you would tell me where to go if I asked for that.
If my parents decide to change advisors is there any penalties for moving?
TheStigsWeeBrother said:
Thank you for your advice.
You said that my parents should be getting the service for 1-1.5% all in but you also said you would tell me where to go if I asked for that.
If my parents decide to change advisors is there any penalties for moving?
No. There are no penalties for moving from an adviser. None whatsoever (unless you have contracted exit penalties, which is not normal).You said that my parents should be getting the service for 1-1.5% all in but you also said you would tell me where to go if I asked for that.
If my parents decide to change advisors is there any penalties for moving?
JulianPH said:
TheStigsWeeBrother said:
Thank you for your advice.
You said that my parents should be getting the service for 1-1.5% all in but you also said you would tell me where to go if I asked for that.
If my parents decide to change advisors is there any penalties for moving?
No. There are no penalties for moving from an adviser. None whatsoever (unless you have contracted exit penalties, which is not normal).You said that my parents should be getting the service for 1-1.5% all in but you also said you would tell me where to go if I asked for that.
If my parents decide to change advisors is there any penalties for moving?
bhstewie said:
hstewie said: There isn't much that surprises me but that has stunned me.
Literally WTF?
Unbelievable, isn’t it? Literally WTF?
At those percentages, fag-packet maths tells me that if I signed my retirement and savings pot over, and contributed for 12 months, the IFA would have netted more than thirty grand from me. Over thirty grand. In one year. However, with a straight face, they’ll ask rhetorical questions about ‘adding value’. Please. I’d like to hear the sales pitch as to why I ought to be buying his wife a brand new BMW 3 Series as opposed to less than 5 grand for a personal, fully managed service a-la-Julian, or two grand on a low cost DIY platform.
Once upon a time, when information wasn’t as readily available, one could be forgiven for signing up to an IFA plan such as above - but nowadays, unless senile, it’s hard to fathom how it goes on.
Presumably because IFAs seem to enjoy engendering an air of superiority masking the bulls
t within; it’s all utterly pointless questions interspersed with keywords, jargon and over-complication of very simple concepts. You only have to read threads on here to listen to some of the garbage spouted. My recent favourite from another thread used terms like ‘distill enabling objectives’. Jesus Christ. Idea for a business - IFAs pay me 2.5% to translate their rubbish into layman’s terms to their clients. This way we get one eye each of the client, but the end result means they figure out they’re being had.
Sort of a lucrative, one-shot public service.
Edited by Testaburger on Thursday 14th March 02:56
Given that that comment (about distilling enabling objectives) was a pop at me, let me explain. If you go to a financial planner, or any other professional, they should try and establish what it is you’re trying to achieve - and usually, there will be a number of reasons why. Only when a planner has established that, can they work backwards and make a recommendation that is as safe as they’re prepared to put their name to. Which is why it’s impossible for any credible professional to start dispensing pearls of wisdom based on a few sentences.
The issue of cost is distinct to that. You can pay a fortune for good or bad advice, or you can pay next to nothing for good or bad advice.
Whilst I did laugh a little at the "distill enabling objectives" I do kind of get the point - you've got to have a plan 
Where I must admit I do struggle is that I lurk on plenty of investment forums and a consistent theme is they all have IFA's on them who post with an air of "You're doing something terribly wrong but I'm not going to give you any clue what it is".
I get it if it's about someone rocking up saying they've put their life savings in Scottish Mortgage, BitCoin, or seven BTL's in cheap parts of Glasgow.
I'm less convinced when I see it about someone simply asking where to chuck £100/month from their spare cash and asking if LifeStrategy 60 (for example) is a reasonable choice.
Funny thing is mentioning Fundsmith, think of the grief Terry Smith gets over his 0.95%.
Either way 5% fk me 
Where I must admit I do struggle is that I lurk on plenty of investment forums and a consistent theme is they all have IFA's on them who post with an air of "You're doing something terribly wrong but I'm not going to give you any clue what it is".
I get it if it's about someone rocking up saying they've put their life savings in Scottish Mortgage, BitCoin, or seven BTL's in cheap parts of Glasgow.
I'm less convinced when I see it about someone simply asking where to chuck £100/month from their spare cash and asking if LifeStrategy 60 (for example) is a reasonable choice.
Funny thing is mentioning Fundsmith, think of the grief Terry Smith gets over his 0.95%.
Either way 5% f
k me TheStigsWeeBrother said:
Derek Chevalier said:
TheStigsWeeBrother said:
I will talk to him about that and see if there is any room for discounted rates.
If a client asked me for a discount I would tell them where to go. Conversely, if you feel he is overcharging why would you stay with him?You said that my parents should be getting the service for 1-1.5% all in but you also said you would tell me where to go if I asked for that.
If my parents decide to change advisors is there any penalties for moving?
Your parents will most likely have to pay an initial charge if they engage with a new adviser, but if your parents do go down this path make 100% sure they are not just paying for more of the same.
bhstewie said:
hstewie said: Whilst I did laugh a little at the "distill enabling objectives" I do kind of get the point - you've got to have a plan
Where I must admit I do struggle is that I lurk on plenty of investment forums and a consistent theme is they all have IFA's on them who post with an air of "You're doing something terribly wrong but I'm not going to give you any clue what it is".
I get it if it's about someone rocking up saying they've put their life savings in Scottish Mortgage, BitCoin, or seven BTL's in cheap parts of Glasgow.
I'm less convinced when I see it about someone simply asking where to chuck £100/month from their spare cash and asking if LifeStrategy 60 (for example) is a reasonable choice.
Funny thing is mentioning Fundsmith, think of the grief Terry Smith gets over his 0.95%.
Either way 5% fk me
Don’t disagree with any of that. You should see the number of legal letters I have received these past eighteen months. Just looked at your profile. I guess it’s like you being asked how much fuel do you need and you responding with “Dunno where I’m going yet, what the route is, altitude, headwinds, contingency waypoints, pax, freight” etc. Where I must admit I do struggle is that I lurk on plenty of investment forums and a consistent theme is they all have IFA's on them who post with an air of "You're doing something terribly wrong but I'm not going to give you any clue what it is".
I get it if it's about someone rocking up saying they've put their life savings in Scottish Mortgage, BitCoin, or seven BTL's in cheap parts of Glasgow.
I'm less convinced when I see it about someone simply asking where to chuck £100/month from their spare cash and asking if LifeStrategy 60 (for example) is a reasonable choice.
Funny thing is mentioning Fundsmith, think of the grief Terry Smith gets over his 0.95%.
Either way 5% f
k me I’m easy too about the £100 a month point. If someone, demonstrably, has simple needs then there is no reason why they can’t have safe, simple and cheap financial advice. Still, though, the Regulator has decreed on this point, via PERG. Which is why regulated individuals need to be very careful about what they post.
I’m now as cynical about my second career choice as you, trust me. But I still try and do my job to the standards I set, and I certainly won’t join in the gratuitous race to the bottom.
https://www.handbook.fca.org.uk/handbook/PERG/8/28...
Ginge R said:
Don’t disagree with any of that. You should see the number of legal letters I have received these past eighteen months. Just looked at your profile. I guess it’s like you being asked how much fuel do you need and you responding with “Dunno where I’m going yet, what the route is, altitude, headwinds, contingency waypoints, pax, freight” etc.
I’m easy too about the £100 a month point. If someone, demonstrably, has simple needs then there is no reason why they can’t have safe, simple and cheap financial advice. Still, though, the Regulator has decreed on this point, via PERG. Which is why regulated individuals need to be very careful about what they post.
I’m now as cynical about my second career choice as you, trust me. But I still try and do my job to the standards I set, and I certainly won’t join in the gratuitous race to the bottom.
https://www.handbook.fca.org.uk/handbook/PERG/8/28...
I do fully take that point and of course if someone was truly thinking of doing something that to appeared totally dumb/inappropriate I'd fully hope anyone in a position to offer sensible advice would do so.I’m easy too about the £100 a month point. If someone, demonstrably, has simple needs then there is no reason why they can’t have safe, simple and cheap financial advice. Still, though, the Regulator has decreed on this point, via PERG. Which is why regulated individuals need to be very careful about what they post.
I’m now as cynical about my second career choice as you, trust me. But I still try and do my job to the standards I set, and I certainly won’t join in the gratuitous race to the bottom.
https://www.handbook.fca.org.uk/handbook/PERG/8/28...
Unfortunately I do see a fair bit of it as self-serving and a bit "smoke and mirrors" though.
That's not me saying IFA's are bad, simply that if their in-person performance is as evasive as some of the online performances I can see where the reputation may come from.
I can see the obvious point which is that it's easy for muppets like me to say "Throw it in Fundsmith" when I've no regulatory obligations to meet, but there's something a little weird IMHO when you've got this suggestion that someone looking at throwing a modest amount in a middle of the road mixed asset may be making a huge mistake if they choose a particular variant of LifeStrategy over the broadly equivalent L&G or Standard Life option etc.
That probably comes across as a rant - not meant to but I'm still in shock over 4%
Don’t disagree. But I’d still want to be happy I have challenged every aspect of the plan and made sure that other stuff that they may not have disclosed, isn’t lurking. I have a robo proposition (currently off line for various reasons) which I started to work on even before I became regulated and before the term was coined, and which is my passion. When it returns, when my life settles down, I think you will be pleasantly surprised - and I hope your faith in advisers recalibrated. lol
You’re absolutely right about the charges of course.
You’re absolutely right about the charges of course.
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