IFA vs DIY Investing UK 2026: Costs, Evidence and Which One Actually Wins
- Alpesh Patel
- Apr 13
- 3 min read
Updated: Apr 25
I have worked professionally in financial markets for more than two decades. I have met hundreds of IFAs. Some are exceptional. Many are competent. A few are not. But even the exceptional ones face a structural problem that no amount of skill can fully overcome: the fee compounds against you from day one, in exactly the same way that returns compound for you.
The question of IFA versus DIY is not about whether you should seek knowledge and guidance. It is about whether the specific structure of ongoing percentage-based fees - taken every year from your total assets is a rational arrangement for a self-directed investor who is willing to develop and apply a systematic investment framework.
Alpesh Patel OBE is a hedge fund manager, Bloomberg TV alumnus, Financial Times author, and former Visiting Fellow at Corpus Christi College, Oxford. The GIP framework was developed specifically for investors who want to take control of their own investment decisions without relying on ongoing professional management.
What an IFA Actually Costs: The Real Numbers
A typical IFA charges an initial advice fee (often 1–3% of assets on setup) plus an ongoing annual fee (typically 0.5–1.0% of assets per year). On top of this, the funds they recommend typically charge 0.5–1.5% per year. The total annual cost of ownership for an advised portfolio is often 1.5–3.0% per year.
On a £300,000 portfolio at 2% total annual cost over 20 years, the cumulative fee paid to the IFA and fund managers (at 8% gross market return) is approximately £270,000. That is money that would otherwise have compounded in your portfolio. On the same portfolio at 0.2% total cost (self-directed with a low-cost platform), the cumulative fee is approximately £27,000. The difference is £243,000.
What an IFA Actually Provides
An honest answer is that a good IFA provides several genuinely valuable things: holistic financial planning across pensions, protection, tax, and estate planning; behavioural coaching (stopping clients from panic-selling at the bottom); accountability and structure for people who would otherwise not engage with their finances at all; and regulatory protection (FCA regulated, FSCS covered, PI insured).
A good IFA does not typically provide superior investment returns. SPIVA 2024 shows 87% of active funds fail to beat their benchmark over 10 years. Most IFAs do not construct portfolios that outperform a simple index tracker. They construct portfolios that are adequate and appropriate, hold clients’ hands through volatility, and provide comprehensive planning. These are valuable services — but they are not the same as investment outperformance.
The Case for Self-Directed Investing with a Systematic Framework
The GIP framework exists precisely because the evidence shows that a systematic, rules-based quantitative approach - applied consistently by a self-directed investor can outperform the average IFA-recommended portfolio without the ongoing fee drag. The five screens (CROCI, PEG, Sortino, Sharpe, Calmar) replace the role of ongoing active management with a quarterly, reproducible process.
The self-directed GIP investor spends approximately 2–4 hours per quarter on portfolio review and rebalancing. The cost is a platform fee (0.15–0.35% per year) and dealing commissions. The IFA investor pays 1.5–3.0% per year and has their decisions made by someone else. The tradeoff is time and engagement against cost and control.
When an IFA Is Worth It and When DIY Is the Right Choice
IFA genuinely earns the fee: complex estate planning, business sale proceeds, defined benefit pension transfers (regulated advice required by law), protection planning, tax structuring across multiple entities. These are areas where the planning value is real and the regulatory protection essential.
IFA fee difficult to justify: straightforward SIPP or ISA management where the IFA’s contribution is selecting a model portfolio of funds, monitoring allocation, and rebalancing annually. This is a task a self-directed investor with a systematic framework can do themselves at a fraction of the cost.
The hybrid approach: use an IFA for one-off planning events (pension consolidation, retirement planning, inheritance planning) at a fixed fee, and manage the investment portfolio yourself using a systematic framework. This captures the genuine planning value while eliminating the ongoing fee drag.
To understand what a self-directed GIP approach would look like for your current pension and ISA, and how it compares to your current IFA arrangement, book a free portfolio review here
Sources & Further Reading
S&P Dow Jones Indices — SPIVA UK Scorecard 2024. Active fund underperformance data. spglobal.com/spdji/en/research-insights/spiva
FCA — Retail Investment Advice: Assessing the Costs and Opportunities. fca.org.uk
Financial Times — Do you need a financial planner? The honest guide to IFA fees and value. ft.com/personal-finance
Disclaimer: This article is for educational purposes only. Some financial decisions require regulated advice by law. This does not constitute a recommendation to use or not use a specific IFA or financial planning service.
Alpesh Patel OBE
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