IFA's vs wealth management
Discussion
Looking at getting some pre-retirement financial planning help, the big 'Wealth management' (hateful term) companies charge an arm and a leg. They insist on an initial review and then regular follow ups, with tiered charges for the initial review of 3% for the 1st £500K, then 2% then 1%. It adds up pretty quickly and it's hard to see how they can justify the prices given that it costs them no more to give advice on a portfolio of £100K to £1M.
They would have to very significantly beat the indexes to make up for these charges, and looking back at my performance over the past 10 years or so I would have done less well.
I'm inclined to pay for a 1 off review with an IFA and not get sucked into one of these relationships to be honest. Does anyone have a better impression of them?
Any views, thanks.
They would have to very significantly beat the indexes to make up for these charges, and looking back at my performance over the past 10 years or so I would have done less well.
I'm inclined to pay for a 1 off review with an IFA and not get sucked into one of these relationships to be honest. Does anyone have a better impression of them?
Any views, thanks.
Those prices sound identical to what the revised charges look like on a certain wm beginning with an S but that's the charge on what you actually invest with them post advice and ideas ?
I guess it all depends on what level / how in depth you want the financial planning to be though and whether it involves "work" on Pensions or just more of an overview etc ?
As a start you could put up a couple of paragraphs here of what you are trying to achieve ( don't need numbers necessarily ) and see what the learned readers come back with.
I guess it all depends on what level / how in depth you want the financial planning to be though and whether it involves "work" on Pensions or just more of an overview etc ?
As a start you could put up a couple of paragraphs here of what you are trying to achieve ( don't need numbers necessarily ) and see what the learned readers come back with.
It wouldn't interest me, though a friend of mine uses Fisher and he says they do better with his money than he would have done.
Pandox2096 said:
It adds up pretty quickly and it's hard to see how they can justify the prices given that it costs them no more to give advice on a portfolio of £100K to £1M.
They will say that's to cover their insurance premium. Sounds like that meeting is going to cost you over £20K; what about ongoing charges? 'Nice work if you can get it' and all that. They make the money, but you take the risk.Pandox2096 said:
Looking at getting some pre-retirement financial planning help
If you are seeking financial planning, I'd suggest searching for a CFPhttps://financialplanning.cisi.org/cisiweb2/wayfin...
Pandox2096 said:
the big 'Wealth management' (hateful term) companies charge an arm and a leg.
You might not find many here!Pandox2096 said:
They insist on an initial review and then regular follow ups, with tiered charges for the initial review of 3% for the 1st £500K, then 2% then 1%. It adds up pretty quickly and it's hard to see how they can justify the prices given that it costs them no more to give advice on a portfolio of £100K to £1M.
You should be able to find a financial planner who will work on a pricing structure that is based on complexity, and a far lower price point. Pandox2096 said:
They would have to very significantly beat the indexes to make up for these charges,
They wouldn't be able to do this, and that's not what you should be paying them for. Pandox2096 said:
I'm inclined to pay for a 1 off review with an IFA and not get sucked into one of these relationships to be honest.
In that case I'd save yourself the money and invest the time in education and the tools to undertake retirement planning on a DIY basis. I don't see how a one-off review adds much value. alscar said:
Those prices sound identical to what the revised charges look like on a certain wm beginning with an S but that's the charge on what you actually invest with them post advice and ideas ?
I guess it all depends on what level / how in depth you want the financial planning to be though and whether it involves "work" on Pensions or just more of an overview etc ?
As a start you could put up a couple of paragraphs here of what you are trying to achieve ( don't need numbers necessarily ) and see what the learned readers come back with.
Thanks. So in broad brush termsI guess it all depends on what level / how in depth you want the financial planning to be though and whether it involves "work" on Pensions or just more of an overview etc ?
As a start you could put up a couple of paragraphs here of what you are trying to achieve ( don't need numbers necessarily ) and see what the learned readers come back with.
60, married 2 kids in their 20's at Uni/ working
Just starting to draw down a DB pension but continuing to work full time as I enjoy my job. 7 years to state pension for me and wife (non working), and plantain to keep gong for maybe 5.
House paid off
ISA's (shares), cash and shares in the proportion 30%, 30%, 40%
I'm in the lucky position not to need to continue working but I enjoy what I do. The thought of working to accumulate more savings that just go in IHT eventually doesn't thrill me though, so my thoughts are to gift the shares to the children under the 7 year rule before the budget and just stick them in a global tracker, converting from a share account to ISA account each year by £20K.
If you do the calculation of how advantageous it is to give stuff to your children at a younger age and take advantage of tax free wrappers and compounding etc, the benefits are eye-watering. That's what I'm keen to capitalise on (sic), but I'd hate to see large amounts disappear in 'wealth management' fees!
The other option is to start a SIPP for them, but that's really long term and who knows how the rules will change over time to claw back any tax benefits you might think you are getting? I'm more inclined just to go for ISAs and regular share accounts, given that they are basic rate tax payers so the SIPP tax benefits aren't that great, and hopefully they will have employer pensions soon.
Basically we are happy living within our means and don't want to be like our parents who sat on savings that they never used till they died, and then passed them to us (after tax) at a stage when we had already paid for childcare, schooling, mortgages etc.
But I'm also conscious of not wanting to reduce the incentives for them to work hard. It's a tricky balance. The SIPP has this advantage but as I said, I'm very wary of trusting that the rules won't change.
Firstly I'm not a Financial Advisor.
Your position sounds a good place to be in.
When I first "gave" my wm ( I too hate the word ) money to invest it was only after I had sat down with them and explained what my issues were and what I had thought of doing and he then gave me suggestions.
At the initial contact point I had made it clear that if I didn't go ahead I wasn't paying him a penny which he was happy to accept and also if I did accept his recommendations I still had other self managed investment's that I would continue with.
When I transferred my DB pension and one other DC Pension there was zero charge for any work and no money was taken off the total in upfront charges.
Anyway back to you.
Largely it seems you are talking about IHT and trying to second guess what may or may not happen in the future with Rachel and her replacements -good luck with that.
One difficulty with giving money away to children as early inheritances as it were is achieving that balance between too much and not enough and remembering that your future needs may change requiring more access to money.
This might be for cars ,holidays or care homes or whatever.
For instance I have taken out 100% of my TFLS from the transferred DB Pension to give to my 3 Adult children as early inheritance for their house purchase funds because I didn't want to take the risk of Rachel reducing the sum - I actually did this before Labour were elected.
I also received an inheritance from a relative for which I did a DOV and also passed that across.
SIPPS are a good idea but they wont be able to access for decades.
Passing money to children as part of "excess income " may also be worth looking into.
Your position sounds a good place to be in.
When I first "gave" my wm ( I too hate the word ) money to invest it was only after I had sat down with them and explained what my issues were and what I had thought of doing and he then gave me suggestions.
At the initial contact point I had made it clear that if I didn't go ahead I wasn't paying him a penny which he was happy to accept and also if I did accept his recommendations I still had other self managed investment's that I would continue with.
When I transferred my DB pension and one other DC Pension there was zero charge for any work and no money was taken off the total in upfront charges.
Anyway back to you.
Largely it seems you are talking about IHT and trying to second guess what may or may not happen in the future with Rachel and her replacements -good luck with that.
One difficulty with giving money away to children as early inheritances as it were is achieving that balance between too much and not enough and remembering that your future needs may change requiring more access to money.
This might be for cars ,holidays or care homes or whatever.
For instance I have taken out 100% of my TFLS from the transferred DB Pension to give to my 3 Adult children as early inheritance for their house purchase funds because I didn't want to take the risk of Rachel reducing the sum - I actually did this before Labour were elected.
I also received an inheritance from a relative for which I did a DOV and also passed that across.
SIPPS are a good idea but they wont be able to access for decades.
Passing money to children as part of "excess income " may also be worth looking into.
Panamax said:
1% maybe
2% pull the other one
3% the second word is "off".
2% pull the other one
3% the second word is "off".
And these are their " reduced " quantum's !
But there is still room to negotiate depending on your own circumstances and the agreement you have with the individual Partners.
I believe they are now all pretty much in line with the other "larger " and known WM's though.
Thanks,
Yes regular payments from 'spare' income are definitely also an option.
SIPPS are nice, but they also need to buy houses etc, and unless the CGT landscape changes a lot for the worse, that's also a pretty tax efficient way of them investing for which they will need access to the funds in maybe 10 years time I imagine, not locked up in a SIPP.
I'm also tempted to make some sort of matching scheme with them where we match every £1 they earn with an amount gifted, I wonder how HMRC would regard that, has anyone done anything like that?
Yes regular payments from 'spare' income are definitely also an option.
SIPPS are nice, but they also need to buy houses etc, and unless the CGT landscape changes a lot for the worse, that's also a pretty tax efficient way of them investing for which they will need access to the funds in maybe 10 years time I imagine, not locked up in a SIPP.
I'm also tempted to make some sort of matching scheme with them where we match every £1 they earn with an amount gifted, I wonder how HMRC would regard that, has anyone done anything like that?
Pandox2096 said:
I'm also tempted to make some sort of matching scheme with them where we match every £1 they earn with an amount gifted, I wonder how HMRC would regard that, has anyone done anything like that?
There is always the annual gift allowance which is currently £3k in aggregate across all that you gift to ?nickfrog said:
I would question the value of the "advice". The brunt of the information is in the public domain from a wrapper or fiscal POV so why pay for that?
As for their expertise in picking the right investment? Don't make me laugh.
DefinitelyAs for their expertise in picking the right investment? Don't make me laugh.
I had one of those free introductory talks with one of the big firms and they didn’t tell me anything I didn’t know or could learn from Martin Lewis or similar.
I guess it’s more a matter of double checking but maybe just one off review to look through our plans is enough for that.
I’ve learned our risk tolerance and how to balance assets reasonably well over the last 15 years of doing this seriously I hope.
Pandox2096 said:
Thanks,
Yes regular payments from 'spare' income are definitely also an option.
SIPPS are nice, but they also need to buy houses etc, and unless the CGT landscape changes a lot for the worse, that's also a pretty tax efficient way of them investing for which they will need access to the funds in maybe 10 years time I imagine, not locked up in a SIPP.
I'm also tempted to make some sort of matching scheme with them where we match every £1 they earn with an amount gifted, I wonder how HMRC would regard that, has anyone done anything like that?
Can't help on the matching scheme but I like the idea, I think Peter Jones from Dragons Den did something similar for his kids but I'd imagine HMRC would just class it as gifting.Yes regular payments from 'spare' income are definitely also an option.
SIPPS are nice, but they also need to buy houses etc, and unless the CGT landscape changes a lot for the worse, that's also a pretty tax efficient way of them investing for which they will need access to the funds in maybe 10 years time I imagine, not locked up in a SIPP.
I'm also tempted to make some sort of matching scheme with them where we match every £1 they earn with an amount gifted, I wonder how HMRC would regard that, has anyone done anything like that?
I agree with you on transferring it to kids ISA's, if IHT is a concern but you may need it in the future then, depending on the relationship you have with your kids, you could agree that it's there's in name only and that you may need it so don't spend it. If you are confident you won't need it I'd still go the ISA route over the SIPP because as you say locking it up for 40+ years makes little sense for many 20% tax payers, especially those who have financial discipline. Other things to think about there though would be does their employer match their pension contributions up to a certain percentage? If they do and they aren't using it fully then it could be worth discussing them maxxing that out and using some of the money your giving as income. If that doesn't apply I would suggest they keep it in ISA's so that they can use it to get a property as you say or, if not needed, until / unless they become 40% taxpayers or are nearer retirement at which point it may make sense to move it to a SIPP.
Notionally when someone tells you they only charge 1% you feel that’s ok as psychologically you think there is another 99% somewhere out there.
If you look at long term returns this is nearer to 15% of your gains.
I think 0.5% ongoing is acceptable.
We only charge 0.25% and our clients get a 0.25 discount with some DFMs.
We also only deal with 7 or 8 figure clients now as the cost of and time of compliance doesn’t justify it.
When you are looking at IHT and tax planning then the fees can more than pay for themselves when you are saving 40% IHT.
If you look at long term returns this is nearer to 15% of your gains.
I think 0.5% ongoing is acceptable.
We only charge 0.25% and our clients get a 0.25 discount with some DFMs.
We also only deal with 7 or 8 figure clients now as the cost of and time of compliance doesn’t justify it.
When you are looking at IHT and tax planning then the fees can more than pay for themselves when you are saving 40% IHT.
Pandox2096 said:
I'm also tempted to make some sort of matching scheme with them where we match every £1 they earn with an amount gifted, I wonder how HMRC would regard that, has anyone done anything like that?
It's either a normal gift where the 7-year IHT rule applies, orIt's a regular payment out of income and IHT is irrelevant.
In the latter case you would need to be able to demonstrate that you have "surplus" income to give away. You can't live off capital and give away your income.
Crucially IMO don't make things more difficult than they need to be.
In your situation I'd make big lifetime gifts right now. If she slaps a tax on lifetime gifts it'll apply immediately from budget day. It's very easy for her to make the case for a 20% tax on lifetime gifts because it already applies to gifts into trust. And there's no guarantee the rate would be as low as 20%.
P.S. You're turning your nose up at SIPP but the combination of tax relief and long term compounding can be staggeringly powerful, even when just driven off the basic £2,880/£3,600 p.a. Several decades of tax free compound returns on £720 that never actually cost anything in the first place is by a country mile the best financial deal in town.
Pandox2096 said:
Definitely
I had one of those free introductory talks with one of the big firms and they didn t tell me anything I didn t know or could learn from Martin Lewis or similar.
I guess it s more a matter of double checking but maybe just one off review to look through our plans is enough for that.
I ve learned our risk tolerance and how to balance assets reasonably well over the last 15 years of doing this seriously I hope.
This might sound like a flippant response, but based on the summary you outlined, I would just pay £200 and get a 1 month subscription to ChatGPT-Pro. I had one of those free introductory talks with one of the big firms and they didn t tell me anything I didn t know or could learn from Martin Lewis or similar.
I guess it s more a matter of double checking but maybe just one off review to look through our plans is enough for that.
I ve learned our risk tolerance and how to balance assets reasonably well over the last 15 years of doing this seriously I hope.
Write down in detail your exact situation and prepare a list of detailed questions. It will take 10-15 mins to 'think' per question, but you are going to get highly detailed and relevant answers.
Using the "pro" version gives *much* more reliable answers than using the lower tier or free versions of ChatGPT. You can then always get specific paid advice in the unlikely event you find you need to move outside of your financial comfort zone.
The main reason I think that is a reasonable approach is that your circumstance are fairly vanilla - and your finances are already well sorted. Pretty much all of the realistic options you outlined are feasible and will make sense, so it is going to depend mainly on your own preferences. There isn't much point paying a high fee for someone to hold your hand whilst they give you a financial model which says in pretty much every scenario you are totally fine imo.
Then I would give the fee that you would have paid directly to your adult children
The thing I struggle with is the idea of paying a %, as the time taken to advise on £100K and £5M can't be that different. You can quickly be in the realms of paying tens of thousands of £'s in fees which seems excessive unless the returns really are a lot more than doing your own tax research and using a few selected tracker funds.
Gnevans said:
We only charge 0.25%. We also only deal with 7 or 8 figure clients now as the cost of and time of compliance doesn't justify it.
Even the smallest 8 figure number (£10,000,000) delivers a fee of £25,000 per a year per client. And if each client needs about a week of attention per year that's already fee income in excess of £1million.
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