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Is 3.5 percent initial advice fee fair?

Investment | ISAs Helpful? 21

Asked by gessler43, submitted 30 May 2013.

Open Quote I have £59,000 to invest in ISA transfers (from cash to shares).My financial advisor, Finance Planning Group Ltd, tells me their charges will be 3.5% initially and 0.65% annually plus vat. This will make the first years charge nearly £3, 000. The adviser works with Legal & General Investor Portfolio Service. Does this seem a fair charge to you?End Quote

Answered by Justin on 13 August 2013

No, it sounds a lot - especially since Finance Planning Group is effectively tied to selling Legal & General products.

The overheads of running a financial advice business have been increasing of late, in part due to soaring regulatory costs, but charging £2,065 to give restricted initial advice on £59,000 seems rather excessive to me. The annual fee of 0.65% is more palatable provided you actually receive decent ongoing service and advice - a rare commodity in my experience.

Plus, of course, you will also need to factor in the costs of using the L&G service and funds recommended.

The Legal & General Investor Portfolio Service is a basic fund platform offering a limited range of funds. It might suffice your needs, but there seems little point restricting yourself to this limited offering when there are more comprehensive options available.

Assuming you are not comfortable taking matters into your own hands, opting for the diy investor route, I would seek out a good independent adviser and aim to pay no more than £1,000 for the initial advice.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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