Down under or Thai? Aussie mum trades Oz for Land of Smiles

[sarahsbloke]

My initial thoughts on the commission for advice are that for any return below 2.99% he gets nothing for the advice he gave, thereafter his remuneration increases as a percentage of the total net return, starting at 20% commission for a net increase of between 3% and 3.99%, 22.5% commission for any increase of between 4% and 4.99% up to a maximum of 30% commission on any return equal to or greater than 7%. If the returns stated above are compared to his flat rate quote of 0.5% of total fund he can achieve a 300% increase in commission fees and I can consider him fully incentivised! Thoughts?

An Australian term bank account returns 6.5% with no risk at all to the capital (10% tax withheld)

You can open one through HSBC.

You are looking at far too small a return on your money ...... 12% would be better IMHO.

My IFA takes no commission from me, he earns from the fees paid by the investment companies.

When I lived in the UK, the fees always were paid by the other side ... I was warned to stay away from people trying to take fees from your end as well.

Edited October 28, 2010 by sarahsbloke

[chiang mai]

My initial thoughts on the commission for advice are that for any return below 2.99% he gets nothing for the advice he gave, thereafter his remuneration increases as a percentage of the total net return, starting at 20% commission for a net increase of between 3% and 3.99%, 22.5% commission for any increase of between 4% and 4.99% up to a maximum of 30% commission on any return equal to or greater than 7%. If the returns stated above are compared to his flat rate quote of 0.5% of total fund he can achieve a 300% increase in commission fees and I can consider him fully incentivised! Thoughts?

An Australian term bank account returns 6.5% with no risk at all to the capital (10% tax withheld)

You can open one through HSBC.

You are looking at far too small a return on your money ...... 12% would be better IMHO.

My IFA takes no commission from me, he earns from the fees paid by the investment companies.

When I lived in the UK, the fees always were paid by the other side ... I was warned to stay away from people trying to take fees from your end as well.

It's a little bit more complicated than that, first of all, the bank you quote refers to an AUD account hence there is currency risk and I want to keep all of this in GBP.

Secondly, under UK FSA rules an IFA may charge commission OR fees OR a combination of both, as long as the client is made aware and accepts them, commissions paid by the product company are by far the worst way to as they can be hideously expensive. It's for those reasons that I've decided to go on a fee paid basis but there has to be some structure to those fees, hence the need to provide a sliding scale of incentives. You say that you pay no fees and that the investment companies pay the IFA - well yes, but that's just another way of saying the word fees and I might add, the more expensive route. In my particular case I could allow my pension provider to pay my IFA commission and he would get 4% of my pension fund value, I would not have to pay him a penny more. But as already discussed I can go the fee paid route which will reduce the payment from 4% to 2% (I still pay no matter which way I go) and that is a 50% savings. The question now is having done those things, how to maximise his performance and the return on my fund hence the sliding scale based on performance.

[wordchild]

My initial thoughts on the commission for advice are that for any return below 2.99% he gets nothing for the advice he gave, thereafter his remuneration increases as a percentage of the total net return, starting at 20% commission for a net increase of between 3% and 3.99%, 22.5% commission for any increase of between 4% and 4.99% up to a maximum of 30% commission on any return equal to or greater than 7%. If the returns stated above are compared to his flat rate quote of 0.5% of total fund he can achieve a 300% increase in commission fees and I can consider him fully incentivised! Thoughts?

frankly i think your initial thought was right, get this guy out of the picture and do it yourself. do you have any reason to believe this guy has any particular skill? otherwise it sounds like you maybe overpaying for a bit of market luck or giving an average operator an incentive to take risks with your savings!

[wordchild]

it is not that difficult to to find blue chip uk plcs with dividend yields in excess of 4% + eg shell ,sainsbury,vodafone, legal and general, aviva,land securities, national grid , marks and spencer, severn trent, british telecom, etc etc etc; and probably all of these will grow their dividends over the next 5 years

Edited October 28, 2010 by wordchild

[chiang mai]

My initial thoughts on the commission for advice are that for any return below 2.99% he gets nothing for the advice he gave, thereafter his remuneration increases as a percentage of the total net return, starting at 20% commission for a net increase of between 3% and 3.99%, 22.5% commission for any increase of between 4% and 4.99% up to a maximum of 30% commission on any return equal to or greater than 7%. If the returns stated above are compared to his flat rate quote of 0.5% of total fund he can achieve a 300% increase in commission fees and I can consider him fully incentivised! Thoughts?

frankly i think your initial thought was right, get this guy out of the picture and do it yourself. do you have any reason to believe this guy has any particular skill? otherwise it sounds like you maybe overpaying for a bit of market luck or giving an average operator an incentive to take risks with your savings!

He's actually not bad and is a part of a decent sized network of IFA's (google Positive Solutions) hence he has access to an advisory team of analysts. My logic suggests that if my current pension provider can only make a return of 2.6% on my fund, the IFA will need to exceed this level before he gets paid anything and frankly, 0.5% on a fund of £55k is very small change and hardly worth much effort. But if I can incentivise him in such a way as to make him work at getting a decent return, I have nothing to loose. the weak link in all of this however is, as you correctly allude to, he could get it all seriously wrong and there are no penalties possible if he actually looses money - having said that, there's nothing to say that I might do the same thing if I keep the control so I suppose I am reducing my risk somewhat by leaving it in the hands of people who earn their living from such things.

[wordchild]

My initial thoughts on the commission for advice are that for any return below 2.99% he gets nothing for the advice he gave, thereafter his remuneration increases as a percentage of the total net return, starting at 20% commission for a net increase of between 3% and 3.99%, 22.5% commission for any increase of between 4% and 4.99% up to a maximum of 30% commission on any return equal to or greater than 7%. If the returns stated above are compared to his flat rate quote of 0.5% of total fund he can achieve a 300% increase in commission fees and I can consider him fully incentivised! Thoughts?

frankly i think your initial thought was right, get this guy out of the picture and do it yourself. do you have any reason to believe this guy has any particular skill? otherwise it sounds like you maybe overpaying for a bit of market luck or giving an average operator an incentive to take risks with your savings!

He's actually not bad and is a part of a decent sized network of IFA's (google Positive Solutions) hence he has access to an advisory team of analysts. My logic suggests that if my current pension provider can only make a return of 2.6% on my fund, the IFA will need to exceed this level before he gets paid anything and frankly, 0.5% on a fund of £55k is very small change and hardly worth much effort. But if I can incentivise him in such a way as to make him work at getting a decent return, I have nothing to loose. the weak link in all of this however is, as you correctly allude to, he could get it all seriously wrong and there are no penalties possible if he actually looses money - having said that, there's nothing to say that I might do the same thing if I keep the control so I suppose I am reducing my risk somewhat by leaving it in the hands of people who earn their living from such things.

A good IFA can be helpful from a technical point of view but i would not expect too much in the way of investment expertise however big the network , frankly many of them dont have a clue when it comes to investment.You also need to keep a check on any renumeration (eg upfront charges and ongoing trail commision) he may be getting from any investment product that he puts you into. Tell him you want to invest at discounted prices (ie without any upfront commision) and any other product charges/commisions refunded as you are already paying him a fee.(get this confirmed in writing)

If you dont want to do the investment yourself have a look at something like invesco perpetuals excellent "monthly income plus fund" (a mixed bond/equity fund) this should give you an income return well in excess of your target , again you would be better off investing in this through something like the HL platform.

[121Advice]

As an IFA with in excess of 20 years experience (10 with HL as Investment Manager) I would suggest using the HL Vantage platform ONLY if you know what you are doing!!

IFA's can 'add value' when it comes to investment performance, but as the previous blogger states correctly, most do not have the expertise to do so.

The 55K portfolio size also limits the amount of activity as one must always consider the dealing charges involved when actively trading a portfolio. I would suggest looking at a straightforward mix of UK Equity Income and UK Bond funds to provide an adequate yield, perhaps with a couple of absolute return funds for added spice (depending on your appetite for risk of course). A handful of well picked funds that do not need to be actively traded all the time should do much better than most IFA's messing about from time to time and costing you dear.

An alternative would be to use a fully managed platform, such as the Portfolio Management Service. The UK MD is actually based in Bangkok and the company is the holder of Life & Pensions 'Large IFA of the Year 2010' and regularly quoted in the FT. (Yes - Me!)

Whether you trade yourself or involve a third party - ENSURE they are fully UK FSA authorised and not offshore registered where compliance, solvency and liquidity margins are limited and there is little (if any) investor protection. Even as a UK Expat you can benefit from strict UK investor protection if you make sure you deal with a FULLY authorised and registered individual (not just the firm they may represent).

I do like - Schroder Income Maximiser, M&G Optimum Income and the holy man who can walk on water that is Neil Woodford - Invesco Perpetual Income (always opt for income units with income reinvested if you can rather than accumulation units - I shan't bore you with the reasons why here..

Edited November 24, 2010 by Maestro
Removed link to commercial website.

[fletchsmile]

I'm negotiating with my UK based IFA his fees for a transfer into the HL SIPP draw down and have decided to link his fee to his performance, there are two aspects:

The first is his fee for the transfer, if paid on a commission basis he would receive 4%, his flat fee quote works out to be 3% and I think we'll likely end up at around 2% or £1,200.

But I'm also going to buy advice from him which he quotes at 0.5% per year, I want to link that to his performance on a sliding scale and am quite happy to split profits above a certain level although I don't see there should be any fee unless he achieves a certain threshold. I have it in mind to offer 0.5% for anything over a 2.5% return but then I want to tier his remuneration so that the better his performance, the more he gets paid - anyone have any experience of negotiating/compiling such a beast since I want to present both parts to him as a package.

On transferring into the HL SIPP, I dealt with them directly. Very easy to use. I told them I was overseas, and they would scan and email what I needed to sign, and I posted back to them. Also real people to talk to if you call them via Skype etc. Not call centres.

Basically aside from signing the docs they send and providing addresses and details of your existing funds there's little else for you to do. It takes a few weeks as the companies you are transferring out of vary and sometimes drag their feet. Not worth paying someone 1,200 quid for. HL do it all for you and all the chasing for free.

Paying for investment advice is a reasonable idea if you're unsure what to do. Another option with HL is they have some Multi Manager Funds, eg HL MM Growth and Income. They are simply their view on the best dozen or so funds in a sector, i.e fund of funds. Each fund may have say 80 investments so you're looking at a reasonably diversified portfolio. Reasonably cheap too.

[chiang mai]

Many thanks to those have replied above, I'm grateful for your input and experiences. I had decided which way to go on this subject but then substantial health issues came into play and changed the profile of how I should sensibly proceed, as a result I have put the subject on hold until I resolve my current challenges. Many thanks to all regardless.

[wordchild]

Many thanks to those have replied above, I'm grateful for your input and experiences. I had decided which way to go on this subject but then substantial health issues came into play and changed the profile of how I should sensibly proceed, as a result I have put the subject on hold until I resolve my current challenges. Many thanks to all regardless.

good luck with those challenges Chiang Mai

Edited November 24, 2010 by wordchild

[coastman]

why use an ifa in the UK ..... I use one in Chiang Mai

its a lot easier ..... pm me if you want his details

He uses Mitchell Hornbuckle as the SIPP overseer

Hi

would be grateful if you could provide me with the details of your IFA

in Chiang Mai as I live there and am in need of one to sort my pension

arrangements out.

Many thnack

[Kwasaki]

why use an ifa in the UK ..... I use one in Chiang Mai

its a lot easier ..... pm me if you want his details

He uses Mitchell Hornbuckle as the SIPP overseer

Hi

would be grateful if you could provide me with the details of your IFA

in Chiang Mai as I live there and am in need of one to sort my pension

arrangements out.

Many thnack

Yes I would like that too, to get a straight answer about private pensions seems to me to be a minefield, I am in the proceed of asking a pension adviser.

To the original post my is a small private pension as well.

[ESB7]

Why transfer to a SIPP? A PP allows drawdown options