Income And Growth Survey: If you're really sure...

Discount brokers can save you money - if you know your stuff.

BEING CAUGHT between the twin aims of income and growth can leave investors dizzy trying to find the right investment opportunities. If this rings any kind of bell with you, then it's time you made tracks for a financial adviser - someone who can explain what the different funds can offer, and how much risk they represent.

But if you know which investment you want to put your cash into, there's no need to pay for what can be expensive advisers. Instead, you can simply use a discount broker.

These are execution-only firms which will buy products for you saving you the cost of paying for someone's expertise. Even better, they can save you more money by rebating any commission paid out by the product providers.

The commission could be around 3 per cent, which on the maximum pounds 6,000 you can invest in a PEP amounts to pounds 180.

"There are a lot of people who don't realise this service exists and could benefit substantially from using a discount broker," claims Alan Penny, chairman of brokers Financial Discounts Direct. "If you know which product you want and from whom you wish to buy it, you can get the commission rebated back into your pocket or investment."

But if you end up in the wrong product you'll only have yourself to blame - and it could well be a costly mistake. "If you look at the mass of PEPs that have recently come on to the market, a consumer's going to find it very difficult to make the right choice," warns Simon Holt, managing director of IFAs Skipton Financial Services.

"This is especially true at the moment when there's just a limited time scale to buy a PEP. It's true investors could save 2-3 per cent up front by going to a discount broker, but choosing the wrong PEP could cost them dear," says Mr Holt.

"You've got to be absolutely certain in your own mind that you're able to do all the research that a qualified IFA can do, if you're going to use a discount broker."

There are a number of discount firms around and charges vary which means it's worthwhile shopping around. The amount of commission rebated also varies, so it's worth checking what share a discount broker will offer you.

Companies such as Hargreaves Lansdown and PEPwise charge no fee for investing your money in a PEP and fully refund any commission they receive. They actually make their money from the renewal commission they receive from the PEP provider in later years. Other discount brokers, such as The Pep Superstore, which is part of Chelsea Financial Services, splits the commission with customers while others, such as PEPDirect, refund all commission to the customer but charge a flat fee.

Another reason to consider discount brokers is that they may be able to negotiate unique deals for customers. Alan Penny says: "We can negotiate special deals with product providers and reduce the price still further."

Some IFA firms will offer you a choice of a cheaper execution-only service, or the more expensive advisory service. But, again, they warn of the dangers of choosing the cheaper route. "We offer discounts to those who know exactly what they're talking about," says Andy Harris, director of Maddison Monetary Management.

"If you've got the time to research the market then taking the discount is appropriate. But even confident investors should be wary. The market changes and new products appear and it's likely that only through a qualified adviser will people be able to ensure that they have the best products for their own needs. The fact is that most people aren't equipped to make the decisions for themselves," says Harris.

Anyone making their own investment decisions should ensure they read the small print of any product and understand the risks involved."

Financial Discounts Direct 0500 498 477 (the company offers a free `Guide to Buying Financial Products'); Hargreaves Lansdown 0117 988 9880; Pepwise 0345 573277; The Pep Superstore 0171 3516022; PEPDirect 0800 413186; Maddison Monetary Management 0800 074 2233

Alternatively, try the ISA Shop, which has dozens of PEPs to choose between, from its own comprehensive (and free) 64-page guide. Call 01777 839205

Suggested Topics
FootballGerman sparks three goals in four minutes at favourite No 10 role
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
New Articles
Life and Style
Couples have been having sex less in 2014, according to a new survey
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam