so confused after meetings with IFA

jacob.uk · 17 May 2017 at 8:21PM

[FONT=&quot]I have recently received a very large compensation payment.[/FONT]
[FONT=&quot]I have sort the advice from an independent Financial advisory and I am left so confused, more confused than ever.[/FONT]
[FONT=&quot]I spoke to 3 separate companies, as that was the approach I read I should take on here.[/FONT]
[FONT=&quot]The amount we are looking to invest is in excess of £300k.[/FONT]

[FONT=&quot]I explained my circumstances that I think I am a Cautious Investor, I am not comfortable with risk at all, Actually I would go as far to say I am a defensive investor and just want to offset losses to inflation.[/FONT]

[FONT=&quot]Financial Adviser A) produced a report that says that I should invest everything with a Discretionary Fund Manager through a Offshore Bond, he says that the use of the offshore investment bond would provide protection of 90% of the funds held in a long term insurance plan under policyholder protection.[/FONT]
[FONT=&quot]* He explained that I would be entirely protected under this insurance policy and so if everything went wrong, the most I stand to lose is 10% of my funds.[/FONT]
[FONT=&quot]That seems to good to be true, I said the same to the FA, I do not understand how any investment that includes investing in stocks and shares can offer protection for 90% of your capital. though he assures me this is the case.[/FONT]

[FONT=&quot]Financial adviser

had me in for a free consultation which lasted almost 2 hrs, which was really a fact finding mission for the FA, who at the end told me that to proceed I needed to pay £500 just to see their written advice. There was not even a hint of a suggestion of how I would invest, how much risk and potential gains / losses to expect as a cautious investment portfolio[/FONT]

[FONT=&quot]Financial adviser C) I only spoke to on the phone, lovely lady, who through just discussing my circumstances on the phone, felt that I was a cautious Investor and I should really just consider products that I can access through high street banks, though she suggested spreading my money through various banks to ensure i receive the maximum FSCS through a variety of banks. She felt I should wait until I got my head around receiving such a large amount of compensation and become comfortable with that before making any rash long term decisions.[/FONT]

[FONT=&quot]Financial Adviser A) seems to good to be true[/FONT]
[FONT=&quot]B) I am furious that he wasted my time and got me to his office under false pretences, how this was a free consultation I have no idea.[/FONT]
[FONT=&quot]C) Trustworthy, but is this right for me and should i take a small leap of faith.[/FONT]

[FONT=&quot]I am more confused and scared than ever of making the wrong choices
[/FONT]

dunstonh · 17 May 2017 at 8:59PM

I am furious that he wasted my time and got me to his office under false pretences, how this was a free consultation I have no idea.

The initial free meeting rarely contains any advice. Its concepts and ideas and whether you can work together style meeting.

C) Trustworthy, but is this right for me and should i take a small leap of faith.

Based on your other thread, it probably isnt. However, you were not very open minded to investments and the different types of risks. So, this may end up being the only suitable option even though its not a very good one.

jacob.uk · 17 May 2017 at 9:11PM

dunstonh wrote: »

The initial free meeting rarely contains any advice. Its concepts and ideas and whether you can work together style meeting.

I did not expect them to say which companies they would invest in, however, I did expect them to give a rough guide to the kind of returns / risks I should expect. But to get told nothing and told that I would have to pay £500 to read his evaluation, which for all I know could have said, go to jail, go directly to jail, do not pass go, do not collect £200.

needless to say I will not be seeking further advice from this company

Based on your other thread, it probably isnt. However, you were not very open minded to investments and the different types of risks. So, this may end up being the only suitable option even though its not a very good one.

I would be grateful for your thoughts on advisor A)

bostonerimus · 17 May 2017 at 10:23PM

Don't combine insurance and investments. It's expensive and complicated....keep it simple and cheap!

Put 6 months living expenses in the bank. If you want some conesrvative guaranteed return that will let you take advantage of increasing interest rates then fund a 5 years savings bond ladder. Next fund an ISA/LISA and then put the rest in a regular investment account with an asset allocation that reflects your investing philosophy You might want to check out Vanguard as they have low fees

bostonerimus · 17 May 2017 at 10:24PM

jacob.uk wrote: »

I would be grateful for your thoughts on advisor A)

Run a mile! Don't invest in what you don't understand.

DiggerUK · 17 May 2017 at 10:51PM

I'm from a faction on the forum that regard financial advisors as 'sexed up sales reps'. You can make up your own mind.

Buy time. Put your money in highest bearing interest rate accounts you can find for now.

Then consider Premium Bonds. Boring, safe, and maybe no prizes.
Also look at the merry go round bank accounts, were you open multiple accounts and, by moving the money around the accounts, get rates above inflation......for now. Regular Savers can still be found beating inflation.

Then sit back, relax, and find out about managing money. Not quite the rocket science that expensive snake oil sellers make it out to be..._

serko · 17 May 2017 at 11:37PM

In what time period do you want to access this investment? If it's more than 10 years I would seriously consider putting a good chunk of it in stock market index linked funds. Over this time period you should outperform more conservative options.

dunstonh · 18 May 2017 at 1:27AM

I would be grateful for your thoughts on advisor A)

Some of what you say about A makes sense but some of it does not. Offshore bonds are heavily used with trusts. There are regulatory protections in place but they will be different to the FSCS as they are not in the UK but offshore. There are onshore versions which can be used which do have FSCS protection.

However, I really dislike DFMs personally. It allows the adviser to pass the buck to a third party who then adds another layer of charges and usually ends up with lower returns. it's more of a business model where you end up fitting the adviser rather than the adviser fitting you.

I dont think A sounds right for you. However, I really dont think any adviser is going to be right for you as you really want deposit options as you prefer to accept shortfall risk and inflation risk. You dont typically use an IFA for such things.

jacob.uk · 18 May 2017 at 8:21AM

Thank you each and everyone of you.

I do really value all the time and advice you have given.

It's a lot to think about.

@ dunstonh
"I really dislike DFMs personally. It allows the adviser to pass the buck to a third party who then adds another layer of charges and usually ends up with lower returns. it's more of a business model where you end up fitting the adviser rather than the adviser fitting you."

Thank you for this comment, with my very limited understanding, this was very much my my first instincts, I would have been paying the original adviser 3% of my investment pot at the out set, I would have then been paying whatever the fee's are for the DFM, on top of that I would have been paying a further annual charge of 0.5% of my total investment to the Financial adviser, as well as further charges to the DFM I should imagine.
It made me wonder, with all these charges, how the hell are they going to make me any money on a "cautious" investment portfolio.

AnotherJoe · 18 May 2017 at 9:39AM

jacob.uk wrote: »

Thank you each and everyone of you.

I do really value all the time and advice you have given.

It's a lot to think about.

@ dunstonh
"I really dislike DFMs personally. It allows the adviser to pass the buck to a third party who then adds another layer of charges and usually ends up with lower returns. it's more of a business model where you end up fitting the adviser rather than the adviser fitting you."

Thank you for this comment, with my very limited understanding, this was very much my my first instincts, I would have been paying the original adviser 3% of my investment pot at the out set, I would have then been paying whatever the fee's are for the DFM, on top of that I would have been paying a further annual charge of 0.5% of my total investment to the Financial adviser, as well as further charges to the DFM I should imagine.
It made me wonder, with all these charges, how the hell are they going to make me any money on a "cautious" investment portfolio.

Well, that is of course your dilemma, by being so cautious, you are causing yourself a problem because the uncomfortable (for you) fact is that long term the only way of keeping pace with inflation is investments. Savings accounts dont cut it.

So I suggest you follow what (C) said and then revisit in a year.
You can also calculate at the end of the year when you see how much inflation is, what you lost.
Ballpark, if you are getting 1.5% average and inflation is 3%, you are down £4,500 each year. ten years, kiss goodbye to £45k because you are cautious and dont wish to lose money.
Catch 22.

I think you'll have to dip your toe in the water very gingerly, start with looking at it and considering over the next year.

I think adviser (C) had it summed it up best, for the time being spread it around as many higher interest accounts and short term bonds as you can until you get a bit more comfortable with the idea of investing some of your money.

One issue I forsee is, in a years time, lets say the market is down 20% you'll think "oh that proves i was right and I'm certainly not risking losing another 20%" but you then wont take the step of investing some money even though investments are 20% cheaper than now. OTOH if they've risen 20% you'll say "oh they are too expensive". So I'm not sure what will break the impasse.

atush · 18 May 2017 at 12:49PM

Going forwards, if you meet other IFAs, I would expect to pay not 3%, but a fixed fee, In your case, probably not more than 3-4K max.

I would at least look at investing 20% of your money, to cover inflation risk long term. The savings ladder looks good for you as well.

But really it will be hard to keep up with inflation in your case.

so confused after meetings with IFA

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