Many of my friends are Financial Advisers and are providing an excellent service to their clients at a reasonable cost.
But only this week I was asked to look at a half yearly statement (often issued in May and Oct) for a family friend and what I found really scared me.
Nothing complicated. Just a Pension Plan and an ISA allocated to a Model Portfolio (Cautious Risk) – total value around £250,000.
The disclosed half yearly fee was in excess of £2,200. That’s a whopping £4,400 (around 1.6%) per annum. But wait a minute… there are the Investment Manager’s fees on top of that (Typical Cautious Managed Fund around 0.5% per annum). That all tots up to in excess of 2% per annum.
Just how scary is that?
Lets try to put it into some type of perspective. The average dividend from FTSE100 companies is around 3.5% per annum. That’s 57% of your dividends going out as fees.
Is your Adviser really adding that type of value?
Is there a sensible alternative? It depends on how complicated your finances are. For a straightforward case a Portfolio of tracker funds on the Hargreaves Lansdown platform will cost you just around 0.6% per annum – that’s a saving, in this example, of almost £3000 per annum. That’s a pretty good holiday in my book.
If the best part of £400 per month was leaving your bank account to pay your adviser you would sit up and pay attention. It does not make any sense to be happily paying those fees just because you can’t easily work out how they are being deducted.
If you would like to explore this in more detail just check the “request more information” box and I will get back to you soon.
If you do nothing else, check your half yearly statement and look at what you are paying. It’s a competitive world out there and fees are not set in stone. A sensible discussion with your Adviser may provide a worthwhile fee reduction – I would be very interested to know if you do save money – please let me know.
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