SIPP fees question

[markjay]

Anyone has an idea what's reasonable for ongoing fees?

My IFA quoted 0.65% of the fund value annually for advice.

Does this sound about right?

Not looking to haggle it down, just wanted to know if he is being reasonable with his fees.

Thank you in advance...

 

[geraldrobins]

Consider what his advise gives you on returns and compare to the indexes.

 

[bas358]

With RDR the adviser must make it clear what service he is going to provide for the annual fee.

You then need to decide based on this, the background work he will undertake to monitor your plans if this is a fair fee.

 

[Palfrem]

Why should it be a percentage of the fund at all?

Ask him for a flat rate annual fee based on the number of hours he works for you.

A decorator won't charge for decorating your lounge based on a % of the value of your house would he?

 

[Chrishazle]

I manage my SIPP myself via Hargreaves Lansdown - it's not difficult, and they give a lot of info to help you choose your investments. Considering the IFA's fee will be on top of the SIPP providers fees....

Some years ago I had our investments with a large, well respected outfit, on full management. By switching to DIY, I've saved about £2.5k pa in their fees, and done as well with the funds as they were doing!

 

[wongl]

My IFA quoted 0.65% of the fund value annually for advice.

Is this fee on top of the annual fund management fee?

Almost all/most managed fund applies an annual management fee (upto a couple of percent of the value of the fund - even if the fund is losing value). In many cases, a portion of annual fund management fee is 'kicked back' or shared with the adviser who sold the fund.

Many 'fund supermarkets 'who sells funds on a DIY basis (i.e. you choose the funds yourself without taking advice) then they will refund a portion of this 'kick back' to you annually. See the likes Hargreaves Lansdown and others like them. Often these type of fund supermarkets will provide regular newsletter reporting on which funds are looking like good investments and which funds are falling behind the market trend - not strictly advice as such legally, but pretty handy for DIY purposes!

 

[wemorgan]

7 years ago I spoke to a IFA and he quoted ~1%. The funds he recommended cost 0.1% more than I could buy direct. Plus he charged 25% for any additional investments. I shook his hand and went to Hargreaves Landsdown.

0.65% sounds like the going rate, which is still too high IMHO. As above, go fixed fee.

 

[Chrishazle]

I offered an IFA an incentive contract - if he lost money he got nothing, if he made money he got a variable percentage, giving him the opportunity to make considerably more than his standard fee.

Guess what - he declined!!

 

[markjay]

If I understand correctly... the general opinion is that his fees are not excessive with respect to the service he is offering, though some here think that the service he is offering is in fact redundant?

 

[markjay]

As for the percentage he is asking... of course the anticipation is that the return will be greater than 0.65%, after all a 2% return will be required just to keep up with inflation.

What I was trying to gauge is whether his quoted fees are excessive or reasonable, and I think the answer is as per my previous post above.
.

 

[tim.100]

I used to use a 'large, well respected outfit, on full management.' The most money they made for me was in their own shares - a trade which I directed because they had a conflict with regard to their own stock.

I switched to a cheaper platform and had an exit interview with above outfit. I was informed that the cost of reporting and the regulatory burden was about half of the 1.0% fee I paid. Then you had the VAT element too - which is a tax on savings.

So if you regard the 0.5% as the statutory element, then the 0.15% on top is arguable good value!