ISA advice. Are these fees too high?

[nearden]

Hello, we are looking to invest monthly in an ISA (around £500 a month) and spoke to a FA from Wesleyan. They discussed various options, one of which was an ISA with profits fund to smooth out any fluctuations. The charges mentioned were 3% for every monthly deposit and 1% annual. Looking at other providers this seems steep. I have also looked at Vaguard Lifestrategy ISAs with a 0.22% charge which seems to be recommended on various websites. The investment would be for at least 5 years and in the main is to put money away for our kids. Does anyone have any experience with either of these schemes or any advice about charges. From the various research carried out I am leaning towards Vanguard. I've also looked at the Halifax. Thanks in advance

For 500 a month it's nuts to go near something so high fee! The FA sounds a bit bent!!

Vanguard is great and very low fee. Or Nutmeg.

www.wesleyan.co.uk/savings-and-investments/isa/with-profits-isa#performance

You can Compare the performance with vanguard using Trustnet.

With profits have a very bad press but The company you mention come highly recommended, sounds very expensive to me. Their investments are recommended to teachers!

I think the process of smoothing just means holding back profits in the good years to prop up the bad years, I would be inclined to go for Vanguard's low cost investments and just look at it once a year.

www.lovemoney.com/news/4032/britains-worst-withprofits-providers

@Alwayscheerful...This company's investments are not 'recommended to teachers'!
It provides free financial advice to teachers who are members of one particular teachers union on the Teachers Pension defined benefit scheme. In return it gains potential clients for its own financial products.

These attract a high fee, typically a percentage 5% of any lump sum plus further charges on ongoing investments. On top of this there will be the providers fund charges.

Compare this to a self-invested Vanguard's Lifestrategy Stocks & Shares ISA Fund account fee of 0.15% per year, (capped at £375), and annual fund charge of 0.22%.

Fees can make a sizable difference to how investments perform.

OP, run a mile! Did they really quote a 3% upfront fee on every monthly deposit? That's madness. You'd need a return greater than 3% just to go back to the original amount. Eg you invest 100, they take 3 for fees, so you have effectively invested 97. You'd need your investment to grow by 3.1% (=100/97-1) just to break even A return of 6% would actually be a return of just 2.8% because of the effect of this fee ( 97 x 1.06 = 102.8 )

I've just opened an account with vanguard on the recommendation of mil's friend - during 2020 mil has seen an 18% increase on her portfolio plus dividends!

I've also set up my daughter's isa via them and I'm excited to see what she ends up with in her pot at 18.

Smooth out any fluctuations sounds like snake oil charmer speak to me.
I would go with vanguard but read about it first! Jack boggle...

Mr Bay.
My dc are with hargreve and lansdown but hold lots of vanguard funds including life stragety.
I need to stream line them and will move them to vanguard soon, however they have been running at around 25% for years!!
It makes me cringe when people complain about low cash rates isa or putting large sums into pb.

You'll have heard the statutory warning: past performance is not a guide to future performance. If you believe this to be true (and you should), then the only thing you can control is how much you pay in fees. Run away now.

With Profits? Is it 1996
Did they try to sell you an endowment policy too!

Do not waste your hard earned cash on a financial advisor.

Open your own ISA on a fund platform (I like Fidelity but there are many others) and choose your own tracker funds including Vanguard.

Thank you so much for all of your responses they are much appreciated and do make me feel reassured that my instincts that the Wesleyan was too pricey are possibly correct. I will look into other options including those suggested above.

I have a Vanguard investment- very pleased

That's amazing performance! I've just thrown my cash in to the fund I've been recommended by someone who has very decent portfolio.
I just hope I get a better return than I have done previously with my savings account - I think last year I got about £20!

@Newyearoldyou

Mr Bay. My dc are with hargreve and lansdown but hold lots of vanguard funds including life stragety. I need to stream line them and will move them to vanguard soon, however they have been running at around 25% for years!! It makes me cringe when people complain about low cash rates isa or putting large sums into pb.

Sorry meant to include the quote!

I was in exactly the same position. Had an isa with Wesleyan for a couple of years before I found Vanguard and have never looked back. They're a good solid company but their funds are too conservative which means they're relatively safe but also very sluggish.

Their fees are ridiculous and I was glad to move on. Vanguard is also a mutual (ie no shareholders) but they allow a lot more freedom for their investors and they have massive scale so safe as houses.