Meeting with my IFA and Wealth Manager

If it doesn't then its a poor index and anyone, including an IFA, that bought it isn't too bright.

But that is a management decision. You are not meant to allow management decisions in your passive world.

If the IFA can't promise that then I see no reason to use one.

That suggests you do not understand investing as you know full well that no investment, whether passive or managed carries any guarantees.

HappyHarry wrote: »

You are being unnecessarily flippant.

No, I'm being serious.

You do, however, still seem to be struggling with a couple of concepts;
(i) What an IFA does. (You seem to think they are predominately fund pickers).
(ii) The fact that many people do not want to risk getting their investment decisions completely wrong and hence put their futures at risk.

Very few, if any, of my clients are interested in maximising their returns regardless of anything else. They pay me for the security they get with the knowledge that their long-term financial future is being cared for.

I understand that an IFA can be useful when navigating the strategic complexities of finaces, but I don't think they are useful once someone is on track.

Many people don't have the skills, the knowledge, or the desire to DIY their long-term finances. Those people find the use of an IFA invaluable.

There is a general lack of financial knowledge, but it's not difficult to acquire and there is a large industry invested in keeping the consumer dumb. Most people can quite easily manage their finances given the right regulatory frameworks, education, tools and services....and they largely exist in the UK now.

In the same way, if I knew how to fully service my car, build an extension or tailor a suit, then I could save money. However, I don't, and neither do I have any desire to do so. Many people have the same view when it comes to their long-term financial planning; they would rather pay an expert to help them.

The skills required to invest successfully are mostly basic common sense. Also you don't need any expensive specialized tools. So with a little reading and a spreadsheet for the more sophisticated and web tools you can DIY.

I'm now wondering if there is a forum somewhere where posters ask about suit fitting and repair, and rogue posters pop up with comments like "you could learn how to sew yourself" or "it would only take five year's practice to know how to tailor a really good suit, it's not rocket science you know".

There will be some times when expert knowledge is required and there will always be people who want to pay for someone else to take responsibility for the strategic and tactical management of their finances. But the vast majority of people can handle pension and ISA investing themselves and don't need an IFA on an ongoing basis.

Aegis wrote: »

How about:

• Assisting with cash flow forecasting
• Balancing the various tax wrappers to minimise the impact of income, capital gains and other taxes
• Planning for inheritance tax mitigation
• Looking at the risks of morbidity and mortality and how those can best be dealt with
• Advising on the right types of asset/wrapper to use within trusts
• Briefing on any legislative changes which might impact existing investments or plans

None of this requires beating a passive portfolio of investments.

These are an excellent accounting of the value financial advice can provide. I may even avail myself sometime of such services. But there are IFAs, at least one on this board, that parade their ability to beat index investing deliberately and confidently over extended periods. It's just not helpful to your profession to make such wild claims.

TheTracker wrote: »

These are an excellent accounting of the value financial advice can provide. I may even avail myself sometime of such services. But there are IFAs, at least one on this board, that parade their ability to beat index investing deliberately and confidently over extended periods. It's just not helpful to your profession to make such wild claims.

I agree, some of the items listed are genuinely complex and when people are lucky enough to have to worry about inheritance tax and trusts then professional advice might be necessary. Personally, I'm thinking about estate planning. My basic approach is to keep my estate under the inheritance tax limits with regular charitable contributions and gifts to relatives and if things get out of control I'll put some stuff into a trust .If someone lives in London and has seen the value of their estate jump because of house price appreciation it's easy with a little planning to pass that onto your children without any inheritance tax and for most people that will significantly reduce the size of the estate.

So as with all things you need to be a good consumer and only buy what you really need and then try to get quality at a good price....IFAs can be useful, but most people should not really need them. Going by the posts on this forum they are used far too much in the UK and given far too much money, much like the rest of the UK personal finance industry.

Linton wrote: »

If I remember correctly the claim was to have consistently beaten VLS100, a much easier task as that fund consistently under performs the FTSE World Index. Whether you should class VLS100 as "Index investing" is a matter perhaps better left for the theologists.

Whether returns do or don't beat some index isnt of much practical significance as concern of risk and whether one's objectives are met are more important to most serious real life investors. The reason to advertise that one has consistently beaten one of the passive movements favourite funds with a portfolio containing managed funds is to demonstrate the point that asset allocation is more important for constructing a portfolio than whether a fund is active or passive.

You don't need to find a theologist to tell you that VLS100 isn't index investing. VLS100 is a fund of funds, which involves management decisions by Vanguard as to which of its in-house funds it invests in, and in what proportions. VLS100 doesn't follow an index, so clearly isn't "index investing".