Are Independent Financial Advisers worth it? (UK)

January 4, 2008 9:25 AM

I'm in the UK. My wife has contacted an IFA. They want to charge us £270 for an initial meeting, which will be reduced by 77% if we proceed with a pension product (for me, self-employed) they recommend; or, they will produce a full report for us which will cost in excess of £1600. Are they getting money for old rope? How hard do they really work for this money? Are they worth seeing? We're not millionaires - we earn decent but unremarkable amounts, and that sort of fee would dent the savings we're trying to protect. What are your experiences?
posted by hatmandu to Work & Money (10 answers total)

Hmm... I've only used an IFA for a mortgage but he only charged me a percentage of the sum of money I borrowed, no fees etc. PM me if you want the name etc
posted by SpacemanRed at 9:28 AM on January 4, 2008

hatmandu posted "They want to charge us £270 for an initial meeting, which will be reduced by 77% if we proceed with a pension product "

Of course anybody can ask you to pay for just listening to you and meeting you, but usually an informal encounter shouldn't lead to a charge, exactly to encourage customers to visit an IFA, at least for an half-hour talk. I would refuse on the grounds there is no rational way to know if in the time you will spend with them they will babble nonsense for an hour or two.
posted by elpapacito at 9:32 AM on January 4, 2008

You'll find some useful information on IFAs here.
posted by essexjan at 9:37 AM on January 4, 2008

Charging for an initial meeting sounds a bit like a pig in a poke.
posted by rhizome at 10:44 AM on January 4, 2008

£270 is a lot of money for an initial meeting. Since they will knock it down to £62 if you buy something, it seems like they value their time a lot more than they value yours. It also appears that they are inflating the price of what they sell you to cover the other £200. Personally, I would keep looking.
posted by ubiquity at 12:06 PM on January 4, 2008

Hang on. They're going to reduce their fee if you go with their recommended product?

It sticks out a mile that they are receiving a commission (hence the discount). That doesn't sound very independent to me.
posted by i_am_joe's_spleen at 2:41 PM on January 4, 2008

Best answer: When I went to see an IFA (in London) they didn't charge anything for the initial consultation of about 45 minutes. The costs come if you buy products they recommend. £1,600 for a full report seems a huge amount and even £270 is rather a lot. If you shop around you will probably find other advisers willing to offer the initial consultation for free.
posted by greycap at 3:24 PM on January 4, 2008

Best answer: I think it's pretty obvious what the strategy is here.

If you're a great big mug, you'll pay 1600 for a report that won't have taken them more than half an hour to produce (they probably have half a dozen templates and paste your name in). If you are a Type A lesser mug, and fancy yourself as canny, you'll buy their recommended plan and they'll get a commission. If a Type B lesser mug, you'll pay hundreds of pounds for at most a couple of hours. Money for jam as far as they're concerned.
posted by i_am_joe's_spleen at 4:26 PM on January 4, 2008

Response by poster: Thanks everyone. It seems the IFA regarded a shortish phone conversation as the 'free initial consultation', which is a bit cynical. We're going to shop around.
posted by hatmandu at 2:27 AM on January 5, 2008

Not addressing the "initial consultation" issue, but there are some advantages to paying an IFA a flat fee rather than commission, since presumably they are then more likely to give you impartial advice that's not related to which products pay better commission.
posted by emilyw at 3:46 AM on January 5, 2008