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  • FIRST POST
    • Matt002
    • By Matt002 11th Aug 17, 5:21 PM
    • 44Posts
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    Matt002
    Finding an IFA you can trust...
    • #1
    • 11th Aug 17, 5:21 PM
    Finding an IFA you can trust... 11th Aug 17 at 5:21 PM
    Over the last 6 months or so I have met two IFAs from unbiased / vouched for. Sadly they both reminded me of shiny suited second hand car sales men that are purely driven by their own profit rather than whats right for me. Or at least thats the impression I get, I certainly don't trust them with the 150k I have to invest. An opening gambit where you say how massive your house is and expensive your car is doesn't work for me.

    They both said they were whole of market and independent but then start talking about things from some other company that their advice comes from. One of which was called 2plan which had various funds based on different risk levels. What is the IFA doing in this situation apart from taking 3pc of my investment up front and 1pc a year to talk to 2plan?

    I get the feeling I'm missing something so don't flame me, I really would just like to know what they do as the explanation I got from them was more than vague.
Page 2
    • bigadaj
    • By bigadaj 12th Aug 17, 4:48 PM
    • 9,587 Posts
    • 6,101 Thanks
    bigadaj
    I don't know anything about networked IFAs; I have used three stand-alone firms. Instead I'll offer a health warning: what seems like informed advice on this forum might be from people who are only a small step ahead of you in their research/understanding. The advice might be from people who joined the forum to seek advice and then start offering it. (I am basically giving a health warning about anything I write )
    Originally posted by aroominyork
    It's never advice on the forum, only comment and opinion.
    • dunstonh
    • By dunstonh 12th Aug 17, 4:53 PM
    • 88,783 Posts
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    dunstonh
    My point is that they could invest anywhere in the market, but in practice they put you into one of their in-house constructed portfolios.
    In house portfolios are fine as long as the research that leads to that outcome is from the marketplace and with no restrictions.

    It is common for IFAs to use model portfolios and give them a name. That is fine.

    The client has to best-fit into their portfolios (cautious, moderately cautious etc.), rather than the firm creating a bespoke portfolio.
    Not sure why you see that as a problem. The portfolio still has to be researched and you have typically around 1-10 on risk scale. Every client should fall within that range. There will always be some bespoke element though. One client may go with Royal London, another with Elevate, another with Aviva etc etc. You cannot mirror portfolios across the providers/platforms. Some will be multi-asset. Some will be model portfolio.

    So what the general verdict on Networked IFAs like the 2plan chap
    If the adviser of advisory firm puts any restrictions in place then they should not using the title IFA. So, in that case, you avoid them as they are not working with honesty and integrity. Most networks have gone restricted as the network is the principal. Not the adviser. So, the network carries liability and has to control risk.

    v directly authorised IFAs?
    That is where most IFAs sit nowadays.

    Is a directly authorised chap likely to be a sole trader or will they nearly always be a few guys operating out of an office?
    Could be either of those. Most IFA firms are small local firms. Maybe one office or two. Quite a lot are home office run.

    I think the we come to you bit is a bit I dislike quite a lot, I'd rather see some one in an office!
    That makes you unusual. Most prefer home visits. However, if that is your filter, then pick a firm with an office.
    Last edited by dunstonh; 12-08-2017 at 4:55 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Matt002
    • By Matt002 12th Aug 17, 5:23 PM
    • 44 Posts
    • 4 Thanks
    Matt002
    That makes you unusual. Most prefer home visits. However, if that is your filter, then pick a firm with an office.
    Originally posted by dunstonh

    Really? Its all a bit double glazing sales man and in my opinion would have a psychological effect on some people of "well they have done me the favour of comming all this way to see me, I feel obliged to go with their advice". When really you are just paying for their time and mileage to come to you on top of their advice. This may well work for people who are cash rich and time poor I guess.

    You comment about most IFAs being directly authorised doesnt seem to be the case at all from my search. Maybe its just my poor searching skills though.
    • Audaxer
    • By Audaxer 12th Aug 17, 5:28 PM
    • 308 Posts
    • 99 Thanks
    Audaxer
    It does seem difficult and time-consuming trying to find a good IFA that will provide what you want. It may be worthwhile learning and researching as much as you can about investing on here and sites like Monevator and then try DIY investing - you don't need to invest it all at once. I'm glad I went down that route rather than go through an IFA.
    • dunstonh
    • By dunstonh 12th Aug 17, 5:58 PM
    • 88,783 Posts
    • 54,122 Thanks
    dunstonh
    Really? Its all a bit double glazing sales man and in my opinion would have a psychological effect on some people of "well they have done me the favour of comming all this way to see me, I feel obliged to go with their advice"
    That may be your view but that is how most UK consumers expect to receive their advice.


    You comment about most IFAs being directly authorised doesnt seem to be the case at all from my search. Maybe its just my poor searching skills though.
    Most networks are FAs. Most IFAs are directly authorised. Especially since RDR. It used to be the other way around.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Matt002
    • By Matt002 12th Aug 17, 6:07 PM
    • 44 Posts
    • 4 Thanks
    Matt002
    I guess we don't know if thats how consumers expect to get their advice or its all thats offered as its the way its always been done!
    • charoniv
    • By charoniv 12th Aug 17, 6:33 PM
    • 65 Posts
    • 17 Thanks
    charoniv
    I wouldn't want an IFA to come to my house. I meet them at their office or a coffee shop.

    You need to decide whether the fees are worth the service.
    For investments you are probably paying for a risk profile allocation - which is probably a tick box exercise. From that probably you will be invested in a preset selection - maybe decided by the IFA or some provider but probably no individual service. On top of that there should be a periodic review - which probably won't do much and might not happen.
    There will probably be questions about how much you think you can afford and statements about it should be more.
    You have to decide whether it is worth the fees when there are good DIY options available - and you can make quick ad-hoc payments to them so may end up with more invested (but you could always IFA initially and DIY for ad-hoc). Downside is the possibility of quick ad-hoc withdrawals.

    Pensions
    Here is the minefield of regulations - which may tempt you to avoid them. Whatever the fees are to get independent advice is probably worthwhile here especially when retirement comes round.

    I find it a bit odd that most questions look for binary solutions. IFA, DIY, ISA, Pension, Cash, funds, passive, managed.
    Why not think of it as balancing so decide on a percentage for each and do them all. Then look to change allocations with future inputs.

    So in my situation - I thought pensions were too high risk so went for S&S & cash ISAs, NS&I, property mainly. Pensions look less risky now (especially for over 55s) so I've stepped that up but still use the other mechanisms. But I still think of it in proportions rather than either/or.
    • aajax42
    • By aajax42 12th Aug 17, 7:05 PM
    • 51 Posts
    • 5 Thanks
    aajax42
    Previous thread where I asked for ideas on evidence based practice. No one came up with any answers, but quite a lot of smoke and mirrors to defend the profession
    • HappyHarry
    • By HappyHarry 12th Aug 17, 7:16 PM
    • 375 Posts
    • 444 Thanks
    HappyHarry
    Worth having a read through if you're not sure what an IFA does or where they can help.

    As mentioned previously, if anyone is just looking for a fund-picker, an IFA might not provide best value.

    As a side note, I estimate that I see 2/3 of clients at home and 1/3 in the office.

    For annual reviews, about 1/2 at home, 1/4 office, 1/4 Skype or telephone.

    Really, its down to what the client prefers.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • bowlhead99
    • By bowlhead99 12th Aug 17, 7:32 PM
    • 6,586 Posts
    • 11,646 Thanks
    bowlhead99
    I find it a bit odd that most questions look for binary solutions. IFA, DIY, ISA, Pension, Cash, funds, passive, managed.
    Why not think of it as balancing so decide on a percentage for each and do them all. Then look to change allocations with future inputs.

    So in my situation - I thought pensions were too high risk so went for S&S & cash ISAs, NS&I, property mainly. Pensions look less risky now (especially for over 55s) so I've stepped that up but still use the other mechanisms. But I still think of it in proportions rather than either/or.
    Originally posted by charoniv
    You're right that generally, everything about investing / wealth management and asset allocations is about having proportionality rather than binary either /or.

    However, deciding to employ an IFA is something that gets more efficient with more pounds invested.

    If you decide you will do your own thing for all of your money except £50k, the IFA is going to have to spend a couple of hours of discussing your goals for that £50k and considering solutions and presenting them to you, as well as a couple of hours documenting the rationale for the solution and implementing it. So he spends 4 hours and the cost of running his business including a profit margin might be £250 per chargeable hour, so it costs you £1000 which is a hefty 2% on your £50k

    However, if instead you give him £250k to manage, it doesn't take him 5x as long to discuss with you and consider and evaluate and propose and implement the solution. Maybe the solution is more complex, so it takes him 8 hours instead of 4, and the liability insurance and FCA fees are 5x higher, but overall it does not warrant a 5x fee to the customer. Perhaps you end up paying 1% on the £250k instead of 2% on the £50k. Which is a much more affordable implementation cost. Likewise the ongoing monitoring and servicing cost would be lower.

    So if you want to have a bit of everything and do a proportion IFA and a proportion DIY, that's going to be relatively expensive for the IFA bit. Also, you might expect the IFA to be relatively less effective if he is not responsible for, or in control of, the whole set of assets you have.

    For example, say you want an overall "medium" amount of risk for your wealth as a whole. You tell him you are going to invest £200k in index trackers (60:40 equity index: bond index) yourself, in ISAs, and want him to advise on just the remaining £50k with the goal of creating an overall medium level of volatility. So, he builds a small £50k portfolio to do that.

    However, when you meet up after a year you mention that actually you read something on a forum that encouraged you to change to a higher equity concentration so you did that part-way through the year on "your" £200k DIY piece but didn't go back to him to give him extra instructions on the £50k bit - because you thought it would cost you more - so you just went extra risky on your bit to average it out. Then after a good year in global equity markets you think your portfolio (in high risk assets and wrapped in ISAs and unencumbered by the 2% implementation fee) did much better than the IFA portfolio so you are going to dump the IFA - even though he came up with s sensible solution for the original remit.

    Or maybe you don't max out your pension and ISA allowances and dividend allowances like the IFA assumed you would, so the IFA solution misses out on taking advantage of using them; and the IFA is buying medium assets all the way but you change your own DIY piece once a quarter on a whim based on your personal convictions -so whatever the IFA portfolio plus DIY mix produces overall, it ain't "medium". So, asking an IFA to take account of certain allocations but not actively monitor or advise on or manage them, seems like a poor compromise.

    Personally I can't imagine feeling confident about dealing with a big portion of my portfolio handled on a DIY basis but then giving the IFA a small isolated piece just to see what he does, as part of my overall wealth. Either I can DIY the lot (which at the moment, I can) - or I need help - at which point I would seek help on my personal financial affairs, to make sure I'm not missing a trick; not merely engage him on some residual bit of my wealth while assuming I know best for a big chunk of it and accepting a really inefficient fee scale.
    Last edited by bowlhead99; 12-08-2017 at 7:38 PM.
    • dunstonh
    • By dunstonh 12th Aug 17, 7:50 PM
    • 88,783 Posts
    • 54,122 Thanks
    dunstonh
    As a side note, I estimate that I see 2/3 of clients at home and 1/3 in the office.

    For annual reviews, about 1/2 at home, 1/4 office, 1/4 Skype or telephone.

    Really, its down to what the client prefers.
    I would say about the same. Most of the clients of the firm have been with the same adviser for over 20 years. Many would refer to us as the family IFA. We know them. They know us. We have seen each others children grow up. Some clients bake us cakes when we see them or give us pots of jam or honey. Even making us lunch when we turn up. One routinely drops in runner beans, cabbage or whatever is in season. Anther drops in some bedding plants. One has recently started making his own wine and drops in a bottle or two a week. We have people who ask how much they can spend that year on their holiday and refer to us for all their main spending needs. We more or less control their capital purchases. Despite all the effort, we put into their investments, that is often the least focused area they use us for.

    Not sure the OP is looking for an old fashioned business relationship of that style. And I am not sure the more clinical boutique style would fit either.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • TheTracker
    • By TheTracker 13th Aug 17, 10:07 AM
    • 1,068 Posts
    • 1,062 Thanks
    TheTracker
    I would say about the same. Most of the clients of the firm have been with the same adviser for over 20 years. Many would refer to us as the family IFA. We know them. They know us. We have seen each others children grow up. Some clients bake us cakes when we see them or give us pots of jam or honey. Even making us lunch when we turn up. One routinely drops in runner beans, cabbage or whatever is in season. Anther drops in some bedding plants. One has recently started making his own wine and drops in a bottle or two a week.
    Originally posted by dunstonh
    That's nice.

    What lovely gifts do you bestow upon them, apart from the 20x annual invoices for 0.5% of their lifetime savings?
    • HappyHarry
    • By HappyHarry 13th Aug 17, 10:17 AM
    • 375 Posts
    • 444 Thanks
    HappyHarry
    That's nice.

    What lovely gifts do you bestow upon them, apart from the 20x annual invoices for 0.5% of their lifetime savings?
    Originally posted by TheTracker
    Peace of mind that their financial affairs are in good hands and they do not need to worry about their financial future maybe?

    Maybe a portfolio that they are comfortable with, retuning an average of 4% per year instead of the 1% per year that they previously had in their savings accounts?

    Maybe the knowledge that their care costs in the future can be provided for?

    Maybe knowing that they can retire three years before their normal retirement date on a good level of sustainable income?

    My clients see their annual fee as very good value.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • bigadaj
    • By bigadaj 13th Aug 17, 10:19 AM
    • 9,587 Posts
    • 6,101 Thanks
    bigadaj
    That's nice.

    What lovely gifts do you bestow upon them, apart from the 20x annual invoices for 0.5% of their lifetime savings?
    Originally posted by TheTracker
    Didn't you watch normal for Norfolk?
    • Matt002
    • By Matt002 13th Aug 17, 10:23 AM
    • 44 Posts
    • 4 Thanks
    Matt002
    I would say about the same. Most of the clients of the firm have been with the same adviser for over 20 years. Many would refer to us as the family IFA. We know them. They know us. We have seen each others children grow up. Some clients bake us cakes when we see them or give us pots of jam or honey. Even making us lunch when we turn up. One routinely drops in runner beans, cabbage or whatever is in season. Anther drops in some bedding plants. One has recently started making his own wine and drops in a bottle or two a week.
    Originally posted by dunstonh
    Just my opinion but that seems like a bit of a blur on the professional boundaries front. If I had a dodgy heart I wouldn't expect my cardiologist to nip around my house so that I could supply them cake and if I did offer I would expect them to turn it down. I don't want him to be my best buddy I just want him to be a damn fine cardiologist and provide the best possible advice.

    We have people who ask how much they can spend that year on their holiday and refer to us for all their main spending needs. We more or less control their capital purchases. Despite all the effort, we put into their investments, that is often the least focused area they use us for.
    Originally posted by dunstonh
    Wow, I had no idea people relinquished that much control! Certainly quite an eye opener on what the chap on the other side of the table might be expecting to have to provide. Very interesting, thanks dunstonh.
    • dunstonh
    • By dunstonh 13th Aug 17, 11:45 AM
    • 88,783 Posts
    • 54,122 Thanks
    dunstonh
    What lovely gifts do you bestow upon them, apart from the 20x annual invoices for 0.5% of their lifetime savings?
    Generally, we don't give them any gifts. We give them the services they employ us to do. Although the one we saved £24,000 for last week may think of that as a gift.

    Just my opinion but that seems like a bit of a blur on the professional boundaries front. If I had a dodgy heart I wouldn't expect my cardiologist to nip around my house so that I could supply them cake and if I did offer I would expect them to turn it down. I don't want him to be my best buddy I just want him to be a damn fine cardiologist and provide the best possible advice.
    I said in my earlier post that you sounded like the sort of person that didnt want that. A city firm may be more appropriate for you. However, most IFAs will adapt to what you want. If you prefer a clinical, more remote service then that will be fine. Some firms, particularly boutique firms, can be focused on a certain model type and will only take on clients that fit their model.

    It is also a generational thing and a rural vs city mentality. The older clients have different expectations and a different business relationship than the younger ones. Turning down a gift or a cake that has been baked especially would be rude.
    Last edited by dunstonh; 13-08-2017 at 7:25 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Audaxer
    • By Audaxer 13th Aug 17, 3:07 PM
    • 308 Posts
    • 99 Thanks
    Audaxer
    Maybe a portfolio that they are comfortable with, retuning an average of 4% per year instead of the 1% per year that they previously had in their savings accounts?
    Originally posted by HappyHarry
    Is the 4% pa income after your IFA fees and platform fees are deducted? I looked at an IFA website which showed income portfolios with about a 3.8% yield, but that was before their platform fee of 1.2% and it said other additional portfolio charges were not taken into account, which I assumed it meant IFA ongoing fees for annual reviews etc.

    If your clients are receiving 4% pa after all charges, is the capital value of their portfolios also expected to continue to grow over the long term?
    • Reaper
    • By Reaper 13th Aug 17, 3:31 PM
    • 6,088 Posts
    • 4,156 Thanks
    Reaper
    I don't really understand those who complain about IFA fees. Paying an accountant an eye watering hourly rate seems to be perfectly acceptable but an IFA receiving payment is not?

    You have the option of managing your own financial affairs or paying somebody else to do it. Like almost everything in life.
    • dunstonh
    • By dunstonh 13th Aug 17, 3:38 PM
    • 88,783 Posts
    • 54,122 Thanks
    dunstonh
    I looked at an IFA website which showed income portfolios with about a 3.8% yield, but that was before their platform fee of 1.2% and it said other additional portfolio charges were not taken into account, which I assumed it meant IFA ongoing fees for annual reviews etc.
    Yield is only one part of the return.

    but that was before their platform fee of 1.2%
    Perhaps they meant all in charge of 1.2% as that is more typical of the total. No just the platform charge (not aware of any platform that charges anywhere near as much as that.

    If your clients are receiving 4% pa after all charges, is the capital value of their portfolios also expected to continue to grow over the long term?
    That was a hypothetical figure thrown into a conversation.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • charoniv
    • By charoniv 13th Aug 17, 5:30 PM
    • 65 Posts
    • 17 Thanks
    charoniv
    I would say about the same. Most of the clients of the firm have been with the same adviser for over 20 years. Many would refer to us as the family IFA. We know them. They know us. We have seen each others children grow up. Some clients bake us cakes when we see them or give us pots of jam or honey. Even making us lunch when we turn up. One routinely drops in runner beans, cabbage or whatever is in season. Anther drops in some bedding plants. One has recently started making his own wine and drops in a bottle or two a week. We have people who ask how much they can spend that year on their holiday and refer to us for all their main spending needs. We more or less control their capital purchases. Despite all the effort, we put into their investments, that is often the least focused area they use us for.

    Not sure the OP is looking for an old fashioned business relationship of that style. And I am not sure the more clinical boutique style would fit either.
    Originally posted by dunstonh
    Sounds a bit Atticus Finch. Probably depends on the area. My parents (and I) did something similar when I was in Suffolk but don't do it in London. There always seemed to be more time available. Also our family would always know the family of the tradesmen so it wasn't so much just a commercial transaction. You knew you weren't going to get ripped off because it would affect more than just the business - equally keeping dealings within the community was useful for your own prosperity (I can remember my father explaining why I had to use a local car dealer). The Christmas visits to anyone we had had dealings with tended to take quite a long time.
    Last edited by charoniv; 13-08-2017 at 5:37 PM.
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