£100k for investment - is £2,500 a reasonable one off fee to manage this investment?

[Watellz]

Looking to invest for 5+ years. Don’t want to be choosing my own stocks and shares etc. Just want to hand it over to someone else (in this case a bank) to manage it for me and deal with tax wrapping etc.

Does a one off fee of £2,500 sound reasonable for managing a £100k for the duration of the investment?

I'm not an expert but 2.5% seems a very high fee to me.

What are you hoping to achieve with £100k?

Extremely high. Look at the Rebel Finance School, their latest free course is about to start, and manage it yourself.

No it sounds far far too high.

Do wait for some people with this level of experience to reply but, while you've only got me - if you don't want to get involved in choosing your investments, why not just stick it all in a big-brand managed fund? They always perform well enough and you can select a higher or lower risk/return fund depending on your preference.

I don't think the fees would come to as much as that for five years.

No would not be happy with that

What is the proposal and is there a reason you can’t manage it yourself?

I would not pay 2.5% for that size portfolio.

Or put it in a tracker with Hargreaves Landsdown or similar- Ramit Sethi’s podcasts always states that trackers out perform managed accounts consistently. It doesn’t take much knowledge and my investments (with vanguard, but their fees are going up) are always better than my parents managed accounts.

Nope. Too high.

Much too high and not really needed at all.

When I had an investment it was an annual management fee plus I’m sure they got commission when trading. I don’t believe it’s ever a ‘one off’ fee.

They don't get commission any more, but I agree management fees are usually annual. I'd expect the one-off fee to be for initial advice, and then there to be a separate annual management charge.

For the advisor, it is about the same amount of work to administer a £100k fund or a £1million fund. That is why charges will often be high for a small fund.

for amounts less than than £500k, you are better off managing it yourself in Vanguard or similar.

What do you mean by ‘tax wrapping’ in the context of this sort of amount, other than 20k per year into an ISA?
anyway, agree with PP, it’s lot and probably you just need index trackers on a platform which doesn’t itself charge high fees.

To answer a few questions:

By tax wrapping I mean the 20k ISA allowances each year, so after 5 years I have £100k tax wrapped and so no capital gains tax to when I take it out.

I know I could do this myself with a stocks and shares ISA, but I don't have the know how or desire to pick my own investments. I want an easy option. Hand over my money and they invest it for me in acvordance with the risk I choose.

I don't have the know how or headspace to manage it myself. It may seem simple to others, it wouldn't be for me.

It's a one off fee. No annual fees. When I've googled charges by financial advisers for this amount it's been around £1500 to £2000 for initial advice / set up and then an annual fee.

Look at Trading 212, we decided to pop our ISAs there after we were quoted around the same amount by our FA.

OP - it gets worse. You'll typically then need to pay an ongoing fee of c0.75% pa if you want to move £20k from a general investment account to your ISAs each year.

Don't shoot the messenger!

You can do it yourself with a bit of research. Most of the wealth management companies I know don’t really manage anything less then 2m

I just chose a stocks and shares ISA with MoneyBox. (It’s app based)

Then I could pick what risk (low, middle, high)
They have different names but I can’t remember them.

They then choose where it’s invested.

Obviously you can only do 20k per year so it might not be what you are after.

Sorry if I’ve misunderstood your question. But there’s no fees with the above.

OMG absolutely not. Spend a few hours reading and you could do this yourself. Reddit personal finance sub is excellent

Don't waste your money giving it to the bank. Doing it yourself is very easy and well worth £2500. Warren Buffet recommends investing in a market tracking fund. Go on this site for a few hours and ask questions. 10 hours at £250 is your £2500. I assume you don't get paid £250 an hour? The banks are probably going to fleece you further and their performance will probably not outperform a tracker.

https://www.lemonfool.co.uk/viewforum.php?f=88

I would open a stocks and shares ISA and 'standard' account with either HL, Interactive Investor or AJ Bell.

I'd put £20k into the ISA and £80k into the trading account.

Invest all £20k of the ISA into VUAG which is a Vanguard S&P500 accumulation tracker.

The remaining £80k could be invested in a Global accumulation tracker such as Legal & General's LGGG (fees are 0.1% per annum, so £80 a year for £80k investment).

The markets are quite volatile at the moment, so you could invest 50% up front and then 5% each month until fully invested. That might help to mitigate the risk of a market crash.

Every new tax year you could 'bed and ISA' £20k from the standard amount into the ISA.

Most, if not all, of the DIY platforms have a selection of "I don't know what I'm doing' fund packages. You just pick your risk level, and whether you want to stay at the same risk level or de-risk as you approach retirement. Then put everything in that fund - £20k in the ISA, the rest in a GIA, and set up up to move £20k over each year.

Then the only thing you have to do is fill in the CGT from one sale on your tax return each year. Which you'd need to do anyway. The platform will give you a tax report with the amount.

Firstly, there WILL be further costs as ALL funds have ongoing charges. Plus the platform will take a fee. If they’re trading for you, then there’ll be trading fees. The £2500 one off fee sounds like a set up cost but there absolutely will be ongoing fees. Who is this with? Avoid St James Place btw. Whoever it’s with ask them what the ongoing ‘fund fees’ will be. They will exist and they may deduct the amounts from your fund rather than charge you directly, lots do this.

Do you have the 100k to invest now? Or are you thinking £20k every year for 5yrs.
If the former, then like others have suggested open an ISA with £20k and a GIA (general investment account) with the other £80k. The isa is tax free but the GIA will be taxed (on profit - not the investment).
Good platforms Hargeave Lansdowne, AJBell and Vanguard. They ALL charge a platform fee (which is theirs) then there’s an ongoing fund fee depending on your investments. I use Vanguard and when I didn’t have a clue they were great. I kept it simple at the start with a ‘lifestrategy’ fund because they chose the investments. I’ve since faffed about and bought different things but it was a good safe and easy start.

Vanguard - they charge 0.15% for your total portfolio. So for 100k it’ll be £150 per year. This fee is capped at £375 so when you have more than £300k or so you’ll not pay more than £375 in their fees. As well as this fee there’s ’ongoing fund costs’ for each fund you have. So, if you choose something very straightforward like I did with Vanguard’s LifeStrategy 100% equity (where they choose your investments) that’ll cost 0.23% - so £230. This would total circa £600 per year. And you would just leave it be whilst you did more research and looked into funds that you can manage yourself.
The LifeStrategy are a good place to start as you can make some basic choices of 100% equity (so all stocks and shares); 80% equity & 20% bonds; 70/30; 60/40; 50/50 and then the other direction with more bonds and fewer stocks and shares. You can do a quick quiz on their website to ascertain your level of risk and which LifeStrategy best for you. Honestly don’t waste £2500!!

Oh and Vanguard don’t charge to move GIA to ISA or switch your funds (albeit the tax man will want a cut of any profit if it’s outside a wrapper). I’m not saying vanguard is better than HL or AJBell, I’m just familiar with using them. I have SIPP, ISA. GIA and daughter’s JISA all on the vanguard platform.