HELP - Wealth Management Charges £15k - worth it??

[notyetretired]

So, will keep brief but hopefully share the relevant info:
DH will be selling his business (well part of it, then staying on for another 5 years or so before selling the rest of the business to a 3rd party)
Pensions around £1m
3 properties (rentals at the moment with about 50% equity across the board)
I earn around £75k p.a.
DH earns around £400k (with dividends)
Main house worth £1.5m with £500k mortgage

That's very top line, no other savings really apart from the odd ISAs, and some in a low interest savings account.

We don't live an extravagant lifestyle but need to cover mortgage and fees (2 kids at school, private, 1 DC at uni, paying for this) and a nice holiday or two if possible but obviously want to ensure that the sum that DH gets for part of the business is not just eaten away by inflation.

DH has been approached by a 'wealth manager' who suggests charging £12k upfront for evaluating our assets, doing research etc, then an ongoing management fee of 1.3% a0nd annual custody fee of 0.15% plus various other charges e.g. brokerage fees.

Are these fees really the going rate? Just seems high to me!

I work in Wealth Management. We have our own portfolios that our clients money is invested in.

Before investing/pensions/ISA’s etc. clients have a full Fact find conversation with the advisor. Telling them all about their financial situation before any advise is given.

Our charges are Zero upfront. 1% Advisor charge on investments, the platform the money is on is around 0.3% and the charges for the funds is usually around 0.56%. This is all per annum.

I would try and see some other Advisers! That sounds like an extortionate upfront fee.

Upfront fees are quite rare now.

@JennyfromtheBlok Sorry to clarify, they have already taken down a lot of details in terms of our assets and made some suggestions but no investment recommendations.
So the £12k is to carry on the fact finding, evaluate affairs and do the research and analysis for the proposed recommendations before implementing. But agree, it sees extortionate. Will definitely look at other options.
Is there a central location where one can find a list of reputable wealth management companies/IFAs?

Its not St James Place is it?

Try https://www.red7fm.com/meet-simon/

Not my business, but someone I have worked with and would recommend

No it isn't. Not a very large company, around 4-5 people I think.

I have similar assets. My financial advisor charges about £5K per year total plus I pay the platform fees with AJ Bell. He and I have a deliberate strategy to make long term investments and not trade much - just a check in once a year. So I guess my account is pretty easy to manage.

Look at unbiased.co.uk to find IFAs

@parietal sounds more reasonable. thank you!

There’s enough financial investment info online, you don’t need an IFA with 2 GCSE’s giving you advice.

notyetretired · Today 13:59
@JennyfromtheBlok Sorry to clarify, they have already taken down a lot of details in terms of our assets and made some suggestions but no investment recommendations.
So the £12k is to carry on the fact finding, evaluate affairs and do the research and analysis for the proposed recommendations before implementing. But agree, it sees extortionate. Will definitely look at other options.
Is there a central location where one can find a list of reputable wealth management companies/IFAs?

@notyetretired does that include tax or legal advise then? Seems so so expensive. I am trying to figure out if that’s just investment advise.

@parietal situation does sound far more realistic

@Mayflower282 There is a lot to it if you want to make the most of your money. Yes you can just get info from online. As with anything or you can use someone who you can talk to about your personal requirements and aims.

Good lord, run and run fast.

If you are around the M25 area we have a FA who is very steady, (dare I say probably a tad dull in real life) but I truly trust him.

Can’t remember what we paid when we moved the money out of a pension and into Royal London, but my friend who is a wealth manager for some sharks (imo) (not SJP) edited to add was impressed by how low they were.

We paid NOTHING up front for disclosure of savings, future plans, incoming inheritance (it was in probate).

When we signed on the dotted line that is when we got charged.

Our fees this year were surprisingly pleasant, will be more this year as the fund has shot up from the initial steady 3.7% - 4% to 6.6% growth last time I checked.

So if you are in the M25 area PM me and I will give you his name. We are just outside Guildford and he has us and clients in Guildford, so don’t be misled by the areas posted.

Failing that I will give you the name of the organisation he is a member of, they are all independent.

Not sure don't think so it's to look at financial security for the family, maximise the value of company and estate planning etc and of course provide a suitable investment strategy as part of a 'wealth management plan'.

Someone I know used www.findawealthmanager.com and was really impressed.

@Londonscallingme will look into this, thanks

Look at what you are getting for each part.

Custody fees - you can’t do without them even if you manage your own money, so get them as low as possible. 0.15% seems OK, the more you have the less you should pay as a percentage. Look at Hargreaves Lansdown, Charles Stanley, Fidelity to compare.

Management fees - 1.3% seems high. Ask to see their performance relative to their peers. And I would think really hard about going with a small firm - how likely is it that a small firm would be able to outperform a larger one in this regard?

Upfront fee - this seems odd. It sound like a financial planning fee (pension advice? IHT? Investment wrappers?) but if you can’t explain what it is for and be certain that it is good value, don’t do it. As a pre-requisite for accessing the other services it would be unusual to have an upfront fee.

I don't know about wealth managers and their fees, but wouldn't it be a good idea to use some of the wealth to:

1. pay off mortgage
2. pay lump sum school fees
3. put money in some sort of thing for kids/uni kids - I'm not entirely sure, but maybe LISA?

Instead of random investments that pay the wealth manager money?

It seems a bit of a shock to pay out 15k for a wealth manager.

Also the fact that your dh has been approached by the wealth manager seems to be a red flag. I guess when people need a wealth manager, they search them out, just like anything else people need?

@Chickenrunning @iwafs
Very useful advice. Should clarify, as I've since checked, DH was recommended these guys by someone he works with (a client) that he rates.
This is to cover financial security planning for the family
Succession planning
Maximise value of company going forward
Create an estate planning and sustainable investment strategy including pensions, off shore bonds etc

So, St James Place, what is the deal with this? A friend recommended someone strongly and, when I looked into the IFA, it looked like he was affiliated with St James Place, and similarly someone else who recommended another IFA was also connected to SJP.
What's the issue with them? Extortionate fees? Are they all charging the same?

Extortionate fees and only recommend their own products

Thanks!

Unbelievably, the last 3 recommendations from friends (professionals including one who worked in the city in equities; they don't know eachother) have recommended financial advisors who are tied to St James Palace. They all seem very pleased - SJP must be a major employer of IFAs!

Oh crikey - be careful. They have some terrible press!!!

We use a wealth management company after my husband sold his business and for our investment of similar amounts you mention and we are charged 1% of all the funds he manages. We own property too that isn't included in his portfolio to manage as we don't want to put all our eggs in one basket. We also have our own investments with H&L. We tried St James who wanted something like 8% a year and it was a def no.

Some of us have Level 6 Qualifications. It’s the gold standard and I’d not go to anyone without Chartered IFA status. Google is not always your friend.

OP it’s a LOT to Fact Find someone. Too much IMO.

I also don’t like that DH been approached. If you need advice, I would suggest that you ask for recommendations and you interview 3 companies.