What level of fees are reasonable? S&S ISA

[ISAmanagementfeeworrier]

I have a long established S&S ISA, which I’ve been dropping relatively small amounts into each month. It’s not a huge pot, I keep well below the annual limit, but will be useful when I’m on SP in future years to supplement income. I plan to liquidise it at that point. I choose low risk funds to invest in (cautious).

The fees look really high to me though, I’d be interested in others experiences for their S&S ISA funds. Not exact numbers, but for example, if a person paid in £400 in a quarter and the charges for account and fund were 70% of that as the annual charge, is that broadly speaking standard for the industry and your experience of fees? Just interested in benchmarking! I appreciate there is an overhead and if I paid in more I guess the ratio would look better, but still. I can’t help but shake the feeling I’m paying much more for management than gives me value, I suppose I’m wondering if I should consider cashing out earlier or switch IFA? NC for this!

I’m not sure how you would get to 70% to be honest. I think some of my worst fee charges for ISA are around around 1% (AJ Bell) that seems excessive - most of mine are things like VWRA something like 0.2% annual charge (albeit that isn’t my isa more general investing on IBKR)

Would recommend digging into the rebel finance school and they have a session on fees and charges to expect

At first glance, with the details you've provided, that doesn't seem merely excessive - it's outrageous.

My S&S ISA is with AJ Bell and their fees for shares are 0.25% of the total up to a maximum of £3.50 a month or £42 per year. There are AJ Bell's dealing charges on top which are either £5 or £3.50 per trade depending how busy I am with it.

Some of my investments have their own fund management charges, but even the most expensive of them are in low single figure percentages and most of my portfolio is in individual shares anyway.

If you're paying 70% of £400 that's £280 a year and is daylight robbery in comparison. Would you care to name and shame them and perhaps we can look in closer detail?

So you are paying in £1600 a year and they are charging you 70% in fees making their annual charge £1120?
I think if it's flat fee of £1120 for their service, then you are on the wrong product and you have to question how they haven't considered this service as fundamentally not suitable and direct you elsewhere.
If their charges are annually 70% of your new investments I have no words apart from daylight robbery!
Sorry if I've misunderstood your financial situation.

I’m paying £8 ish a month on£30k invested

We must be misunderstanding.

Nobody would think that’s how to invest or save.

Thanks @InveterateWineDrinker and @pickywatermelon - I will hold fire naming for just now as I have emailed my IFA contact asking the same question, and I am due my annual risk appetite meeting. I think what I am missing is the % figure for the charges relative to the whole fund, but big thanks for your example to benchmark against and the rebel finance school resource , that’s really helpful! I invest in a single fund, Prufund Cautious. The IFA company has been bought a few times over the years, most recently last year. When they sent a questionnaire over to check I had meetings with IFA etc I did flag that on the face of it the charges seemed very high vs what I drop in each quarter but no one came back to me. Not the best start, but we’ll see…. I am happy to come back and name and shame if needed once I know those fund fee %. Thanks again!

Nope this is ballpark correct re what I pay in monthly and what the fees are. What I don’t have in front of me though is the value of the fund annual increase which I think gives the fuller picture. TBH, I’ve just looked each year at the annual statement and seen its been going in the right direction and just thought okay then, on I go. I’ve only just looked carefully at the fees the last few quarters and thought they seem high to me. I appreciate I have been woefully incurious about this until now and should have scrutinised before.

Wow. That’s v different to what I’m paying!!

How much is in the fund? If it’s £100k, then it’s not a bad fee, but the charges are with reference to the total value of the pot, not what you’re adding each quarter.

Yes- I think that’s total pot is the figure I need to make the assessment, good to hear you think it’s perhaps not a bad fee, or ballparkish. The fund isn’t that large no, (I wish!), but more than the £30k example above.

You can’t be paying 70% in fees. Thats insane.

Do you mean 0.7%?

Although you say it’s correct that if you pay in £1600 p/a, £1120 is being taken as fees.

The only way this would be possible is if there is a flat, standalone charge that you are paying to someone and because the value of what you are paying in is low, it works out at 70%.

Which, if true, the service is wildly inappropriate for you and I would suggest you should refer to the financial ombudsman at some point (you would need to complain to whoever is taking the fee first. If they don’t refund, escalate toFOS).

Is it the IFA that’s taking this fee?

That fund has annual fees of 1.68% of total holdings so I think anything above that is the fee taken by your IFA.

If your total fund is £30k you are paying 3.7% which is still very high - St James Place levels I’d say?

You can find out what other platform charges by going to a few big ones and check their fees. For example, look at Hargreaves Lansdown, Fidelity, Vanguard, AJ Bell etc. This will give you the benchmark. You don't need to ask others.

And you don't need to know the total fund size. You just need to know your pot size. The fee is charged often as a percentage of your investment. There might be tiers for larger pots paying less %. There might be a cap. The are also dealing charges.That's why different platforms suit different investors.

assume you are also paying (directly or indirectly ) for this annual risk appetite meeting.

That doesn’t sound right at all OP.

im paying £53 a year on £10k+

as per @WelcometomyUnderworld the charge is in relation to the whole pot, but yes, c 70% of what I drop in monthly is the same as my fees. Charges are broken down across the account charge, and fund charge- split by an ongoing advisor charge and an annual management charge, 30:70 ish split. So no, only a proportion looks to be going to the IFA - assume the advisor charge is that (honestly, the more I read, the more I feel ashamed I haven’t asked before!)

There will be a fee for the fund you hold (checked by a PP as 1.68%, which is on the high side), and fee for the platform and advice.

If you have everything in a single cautious fund and aren't chopping and changing you really don't need ongoing advice, so that's an unnecessary charge.

The platform fee may be a flat rate or a percentage of the total pot (which may be capped once you reach a certain level) - if you have a larger fund usually a flat rate or capped one will be best.

You'll need to check exact figures but on a first look you're being massively overcharged.

Yes, I will be (indirectly). And I’ve often wondered if an annual meeting is, again, typical!

The AMC on the Prufund you're invested in is 1.21% I think. Your adviser should only be taking a max of 1% per annum from your fund.

I think you have mis-read what you are paying.

IFA is a profession and I have no problem paying for that expert advice I don’t have. I am just wondering if these charges and fees are relatively typical within the market- or not. Again, if they are a little at higher end, that might not be too much a concern if I feel I’m getting value overall.

Thanks @Belladog1, that’s also really useful.

Remember your advisor gets rich from people like you paying their outrageous fees. Ditch them and switch to passive global index investments?

Here's a comparison table to give you an idea of a reasonable fee range: https://monevator.com/compare-uk-cheapest-online-brokers/

Thank you- great idea and I will do that. I think where I refer to fund size, I mean my ‘fund’ - ie it’s my pot I mean.