What percentage fee does your ifa charge?

[vpillow]

I am shopping around for an ifa and have spoken to a few.

They will charge a percentage fee on any investments I make with them, and I would like to know how this compares with other ifas around the UK.

Please share! Thanks

I'm a Chartered IFA and I charge 1-2% depending on the size of fund and complexity of the work. 3% used to be common but not any longer. This is referred to as the initial fee. I would however charge more than that for a final salary pension transfer as the liability is huge.

I then charge a fee to maintain the investments of 0.5% if it's me, if I'm using a DFM then less.

I have colleagues that charge 1% but frankly that it too much in a low growth environment. Other colleagues charge 0.5% and 0.6%.

I can't afford to deliver the service and do as the FCA expects and do the work my clients deserve unless there is >£100k

HTH

There was a Which report on this I believe

Thank you, that's very helpful. The ones I have spoken to charge around 3%. I will shop around a bit more.

Well I think you should challenge that myself. I think 3% is high, unless it is a smaller investment. The thing the firm has increased liability with higher investments, but the work on something small say £50k is just as much as £200k and the liability isn't that much more. It is a balance. I think you have bargaining power/

What is it you're doing?

Nothing atm. I have just over 100k to invest via an inheritance, and maybe more if I get made redundant soon, plus a final salary pension pot which I could start withdrawing next year. So, big decisions to make.

I have been following the ynab investment course which recommends a firm called Betterment where you skip an advisor and it works out the funds for you, based on your age, but of course that's in the US.

I wondered if there was an equivalent in the UK.

I can't say I am confident with the two advisers I have seen - there was a lot of metaphorical dick-swinging going on with a 'conservative' promise of 6% returns, which felt like a sales spiel.

It does sound to me that you could use some advice, but indeed finding someone that is suitable can be difficult. I'm sure you've asked friends and family if they know anyone, but failing that, keep looking and keep talking. You should be able to establish a relationship of trust and have confidence that the advisor knows their stuff and is not selling you dreams. This is a relationship that should last you for years to come.

I would look for Chartered Financial Planner and go from there. Unbiased is a good starting point and/or the CII (gold standard professional body - the personal finance society is part of the CII) has a listing: www.thepfs.org/yourmoney/find-an-adviser/

As for 'conservative' 6%. Well you don't need to be an investment manager to look at what has happened in the markets this year. Anyway, is growth or income what you're after? That in itself makes quite a difference.

Commission may be a thing of the past, but if all that adviser is interested in is getting his (I use that advisedly) hands on the money then run. Investment should only be done within the context of a solid foundation and a plan that looks at short, medium and long term needs.

Good luck.

Thank you. I need to wait a little while before knowing if I am looking for growth or income - if I take redundancy it will be a balance of both as I have the pension too. But if I stay in work a bit longer, then it's growth, but over a shortish term until I retire.

I'm tempted to start asking a load of questions now, but will save your energies for the real thing! Good luck with your search.

I would avoid any adviser who was conservatively promising 6% returns. And I'd personally avoid all IFA's unless I had a particularly good reason for going to one.

Is there any reason you feel you need an IFA? If you don't know anything about investing then start reading up on it before you go to see one. I haven't heard of YNAB before, I recommend reading Smarter Investing by Tim Hale and the Monevator blog as the best place to start for UK investors.

Betterment isn't here in the UK, but you can't go far wrong with Vanguard Lifestrategy funds in a suitable low cost broker. Will only cost you something like 0.25% per year in fund fees plus £100 per year for the broker. Whereas IFAs are probably charging 2-3% initially, plus 0.5% to 2% per year, plus 0.5% to 1.5% fund fees on top of that.