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  • FIRST POST
    • HarryFlatters
    • By HarryFlatters 8th Oct 16, 12:12 PM
    • 36Posts
    • 9Thanks
    HarryFlatters
    IFA advice...good, bad or indifferent
    • #1
    • 8th Oct 16, 12:12 PM
    IFA advice...good, bad or indifferent 8th Oct 16 at 12:12 PM
    My first post here so please be gentle with me

    Really don't want this to be another I have £....... but this is inevitably going to involve asking for advice on top of your thoughts on the IFAs recommendations, I have tried to read through previous threads but am still not clear in my head how to proceed.
    If I could give a brief financial summary, Mr & Mrs, mid 50s, no mortgage or loans, no dependents, £130k in pension pot (not currently adding to this) and 500k currently in easy access assets, approx 100k of this within ISA wrappers, this is primarily as a result of a recent downsize in property size.

    Both in manual roles and aiming to only work part time for approx 5 years then stop manual work, no point getting to retirement with a body not fit to enjoy it !!

    Aiming for approx 10-15k pa from current investments from now if possible, then add pension income from age 60.

    IFA advice is to make one off payment of £50k into pension to cover last 3 years allowances.
    Invest £440k in OIECS, all multi manager funds with annual charges of 1-1.7% on Elevate platform. For this we pay the IFA 8k

    I have been researching and reading various sites, primarily HL & II, are there others good for newbie investors.

    We have our own thoughts on the IFA advice but would welcome yours, the daunting aspect for us are the long term ramifications for our financial health of our hard earned but previously unavailable wealth.

    Over to you, many thanks in advance.
Page 2
    • DrSyn
    • By DrSyn 9th Oct 16, 4:12 PM
    • 421 Posts
    • 196 Thanks
    DrSyn
    Dunstonh & Bowlhead99, thank you for the information.
    • HarryFlatters
    • By HarryFlatters 9th Oct 16, 5:21 PM
    • 36 Posts
    • 9 Thanks
    HarryFlatters
    Thanks to all for their advice, as you all have correctly stated I am new to investing in this sphere, whilst my work is "manual" I have successfully owned and run a company in the building sector for 30+ years so budgeting, forecasting etc have been necessary. It is the manual aspect I am trying to restrict. Personally I am happy to research how and where to invest and am able to apply myself to this.
    The links to Monevator etc are just what I am looking for, I was using HL & II for their guides to new investors to give me a little insight on how to proceed, the Vanguard costs for example do highlight the premium charges of the IFAs chosen funds, which do not include the platform charge. A nett 3.5% yield would be my preferred aim and to diversify into passive with its significant cost saving makes sense, guess its the dilemma of the worth of man v machine.
    Whilst I am prepared to pay for professional advice when necessary there is also an aspect of looking for a fresh challenge and to retain control would certainly provide this, realistically I don't need to invest the whole amount from day one so could break myself in gradually. Should I decide to follow this course is there a clear winner in providing such services, is a platform required or does this add another layer of fees.
    Appreciate this is the wrong forum but what do you think of adding to the pension pot, the tax saving adds to the pot but isn't this just returned to HMRC later ?
    Thanks to all for your replies again, you have helped me considerably in such a short time, it is the weekend after all
    Last edited by HarryFlatters; 09-10-2016 at 5:29 PM. Reason: missing info
    • coyrls
    • By coyrls 9th Oct 16, 5:40 PM
    • 804 Posts
    • 799 Thanks
    coyrls
    Thanks to all for their advice, as you all have correctly stated I am new to investing in this sphere, whilst my work is "manual" I have successfully owned and run a company in the building sector for 30+ years so budgeting, forecasting etc have been necessary. It is the manual aspect I am trying to restrict. Personally I am happy to research how and where to invest and am able to apply myself to this.
    The links to Monevator etc are just what I am looking for, I was using HL & II for their guides to new investors to give me a little insight on how to proceed, the Vanguard costs for example do highlight the premium charges of the IFAs chosen funds, which do not include the platform charge. A nett 3.5% yield would be my preferred aim and to diversify into passive with its significant cost saving makes sense, guess its the dilemma of the worth of man v machine.
    Whilst I am prepared to pay for professional advice when necessary there is also an aspect of looking for a fresh challenge and to retain control would certainly provide this, realistically I don't need to invest the whole amount from day one so could break myself in gradually. Should I decide to follow this course is there a clear winner in providing such services, is a platform required or does this add another layer of fees.
    Appreciate this is the wrong forum but what do you think of adding to the pension pot, the tax saving adds to the pot but isn't this just returned to HMRC later ?
    Thanks to all for your replies again, you have helped me considerably in such a short time, it is the weekend after all
    Originally posted by HarryFlatters
    You will require a platform.

    On the tax question, for a pension 25% of what you take out will (currently) be tax free. Also there can be a difference in the tax rate applied on the way out vs. the way in (e.g. 20% vs 40% or 0% vs 20%).
    • dunstonh
    • By dunstonh 9th Oct 16, 6:51 PM
    • 88,357 Posts
    • 53,576 Thanks
    dunstonh
    Platforms are not required. You can invest without them. However, in most cases, you would use them for convenience. Especially when holding multiple tax wrappers. It makes life easier.
    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.
    • HarryFlatters
    • By HarryFlatters 9th Oct 16, 6:54 PM
    • 36 Posts
    • 9 Thanks
    HarryFlatters
    Just ordered Tim Hales book, 2nd hand of course, don't want to waste money
    Subscribed to the Meaningful Money podcasts to listen to while I work.
    • andrewm1981
    • By andrewm1981 10th Oct 16, 1:14 AM
    • 124 Posts
    • 31 Thanks
    andrewm1981
    You must talk to an advisor they know what you need. Pay them at least 1%, probably more like 5% of the sum you're investing.

    They will find you the best deals and look after it all for you so you don't have to.

    You cannot do it yourself, advisors have access to information and investment vehicles that us newbies do not have.

    You can't go wrong, and don't forget that advisors have extensive training and qualifications equivalent to a first class degree. They also have insurance shoulda tying go wrong and you de ide to seek recompense.

    Just make sure you explain your objectives and expectations very clearly and that the advisor understands.

    Good luck fj
    Originally posted by bigfreddiel

    I'm no expert, and indeed have never used an IFA, but paying an IFA £25k for this financial advice seems an awful lot of money. Is this the correct advice to be giving? I would certainly suggest not paying that much otherwise a reasonable amount of potential profit would get eaten up in charges (never mind how much the ongoing fee would be!)
    • AnotherJoe
    • By AnotherJoe 10th Oct 16, 6:43 AM
    • 6,904 Posts
    • 7,341 Thanks
    AnotherJoe
    I'm no expert, and indeed have never used an IFA, but paying an IFA £25k for this financial advice seems an awful lot of money. Is this the correct advice to be giving? I would certainly suggest not paying that much otherwise a reasonable amount of potential profit would get eaten up in charges (never mind how much the ongoing fee would be!)
    Originally posted by andrewm1981
    Big Freddie is being sarcastic as part of his ongoing campaign against IFAs but it's going to be too subtle for most people who aren't familiar with that.

    I think the fees on the ongoing investments are too high as is the IFA fee. Whether they are par for the course I don't know but if I ever took IFA advice I'd want it to be on the basis of time spent, fixed fee, after all if you have say £440k of investments or £220k or £880k it's the same amount of work yet the IFA would presumably charge 4K or £16k if they had those respective amounts.
    • bowlhead99
    • By bowlhead99 10th Oct 16, 7:06 AM
    • 6,501 Posts
    • 11,497 Thanks
    bowlhead99
    I'm no expert, and indeed have never used an IFA, but paying an IFA £25k for this financial advice seems an awful lot of money. Is this the correct advice to be giving? I would certainly suggest not paying that much otherwise a reasonable amount of potential profit would get eaten up in charges (never mind how much the ongoing fee would be!)
    Originally posted by andrewm1981
    The subtlety you missed is that freddie is famously dismissive of IFAs and has often drawn criticism for using any opportunity to throw disparaging remarks at them as a group if he smells a headline that someone has a complaint about one.

    So, his post should be read in an entirely sarcastic tone, and he is not actually suggesting that the OP should pay £25k of advice fees (not that anyone else is suggesting that they should, nor has anyone proposed to charge that much).

    The £8k from the OP's advisor was about 1.3% of the proposed £440k of OEICs and £130+50k of pension ; and Dunstonh as an advisor suggested it was high (while acknowledging we've only had a very bare outline of the OP's circumstances).

    Obviously the initial setup fee is a larger amount of money if it is literally a fixed percentage on the amount invested, but you usually find it is not a fixed percentage because the IFA business will have a cost element for the workload (complexity is probably not much different between 400k or 600k) and an element for liability (higher on greater sums). So IFAs would usually not charge one standard percentage for every level of assets, even if they may give a quote on a percentage basis because percentages help you put things in context with pot size.

    Others have suggested to simply DIY, suggesting that building a personalised portfolio is as simple as picking what Lifestrategy fund you want out of five choices available, none of which are targeted to a particular level of risk or volatility, being a static selection of trackers. That sounds an extreme view to me, given the OP's lack of experience, but they say they are willing and capable of learning.

    I would be surprised if their learning resulted in buying just one multi-asset fund for half a million quid, but if they are winding down their career they do have some time to spare to devote to serious study and research.
    Last edited by bowlhead99; 10-10-2016 at 7:10 AM.
    • HarryFlatters
    • By HarryFlatters 10th Oct 16, 7:41 AM
    • 36 Posts
    • 9 Thanks
    HarryFlatters
    A quick reply from me re fees, its 3% on 100k, 2% on second 100K and 1% on further 300k, existing pensions are not included. Thinking on this subject we already have 60k stocks and shares ISA previously arranged on Elevate platform, would seem somewhat greedy as this has been added to the total for fee purposes.
    • TheTracker
    • By TheTracker 10th Oct 16, 8:40 AM
    • 1,060 Posts
    • 1,057 Thanks
    TheTracker
    Others have suggested to simply DIY, suggesting that building a personalised portfolio is as simple as picking what Lifestrategy fund you want out of five choices available, none of which are targeted to a particular level of risk or volatility, being a static selection of trackers. That sounds an extreme view to me, given the OP's lack of experience, but they say they are willing and capable of learning.
    Originally posted by bowlhead99
    The charge that the lifestrategy funds are not "targeted to a particular level of risk or volatility" resembles a repetition of a canard I recall dunstonh floating. What tripe. In a well balanced portfolio, the overriding influencer of risk/volatility is the equity/bond ratio. It seems to me terribly patronising to presume a punter can not comprehend the funds are sold with equity/bond ratio labels but have underlying risk/volatility characteristics. A fact hammered home with the plain english factsheets. Then again, as I reflect, perhaps it is not surprising that an (I)FA (I forget which dunstonh is, this year) is swayed by marketing brochures.

    I would be surprised if their learning resulted in buying just one multi-asset fund for half a million quid, but if they are winding down their career they do have some time to spare to devote to serious study and research.
    Originally posted by bowlhead99
    Really? I've more than half a million quid in a small collection of funds which 90% resemble a lifestrategy product. Yes, I've chosen to have a small but separate tilts toward property and emerging markets for example, but these are mere baubles on the side. And I built my own as I could do so for 2/3 the fees, but regular rebalancing doesn't suit everyone.

    Personally, I expect I'd need to devote a lot more "serious study and research" to buy into an IFAs basket of active funds than to buy into a passive fund product like LifeStrategy.
    • bowlhead99
    • By bowlhead99 10th Oct 16, 8:47 AM
    • 6,501 Posts
    • 11,497 Thanks
    bowlhead99
    A quick reply from me re fees, its 3% on 100k, 2% on second 100K and 1% on further 300k, existing pensions are not included. Thinking on this subject we already have 60k stocks and shares ISA previously arranged on Elevate platform, would seem somewhat greedy as this has been added to the total for fee purposes.
    Originally posted by HarryFlatters
    So by adding them to the amount being reviewed and charged for, rather than not trying to provide any advice on them, they are incrementing the fee by 1% of £60k, right?
    (£600).

    If you were previously a £60k investor and are now a 500k investor, it might make sense to consider whether the old ISA holdings are still sensible investments to hold in the new context, as the solutions would likely be different with a significantly different pot size.

    It is probably easier for the IFA to incorporate them into your overall planning than have to work around them not knowing what's in them or what you're doing with them.
    • bowlhead99
    • By bowlhead99 10th Oct 16, 9:23 AM
    • 6,501 Posts
    • 11,497 Thanks
    bowlhead99
    Personally, I expect I'd need to devote a lot more "serious study and research" to buy into an IFAs basket of active funds than to buy into a passive fund product like LifeStrategy.
    Originally posted by TheTracker
    Well, that is perhaps because you have already done your homework and your homework said use passive trackers, and then you did some extra-credit homework and it said build LifeStrategy yourself with cheaper components and change the mix, and at no point did it scream "employ someone to help".

    It would be a cold day in hell before you paid money to someone to change what you have already determined is the best thing to do, from your research which you're happy with, because of x study and y study etc. We can tell that from your username - like we can tell Dunstonh will advocate buying advice for those who don't know how to effectively DIY, because of his "I'm an IFA" signature.

    However, someone who fell for the red kool-aid suggesting active management and advice served by the management and advisory industry, might have their research turn them towards that, rather than what they get if they instead drank the blue kool-aid of passive investment.

    No point in rehashing the taste test here, but the OP seems to be making a good start by being inquisitive, along questions, being willing to devote some time to investigating their options and so on - all those things will stand them in good stead no matter what cocktail they end up with.
    • dunstonh
    • By dunstonh 10th Oct 16, 11:24 AM
    • 88,357 Posts
    • 53,576 Thanks
    dunstonh
    The charge that the lifestrategy funds are not "targeted to a particular level of risk or volatility" resembles a repetition of a canard I recall dunstonh floating. What tripe.
    You may call it tripe but they are not risk targeted. They are return focused. That is a fact. Not something that can be debated either way. All multi asset funds decide which route they are going to use.

    Then again, as I reflect, perhaps it is not surprising that an (I)FA (I forget which dunstonh is, this year) is swayed by marketing brochures.
    Nothing to do with marketing. It is to do with risk acceptance (which includes behaviour as well as capacity for loss). Risk targeted will adjust the allocations ongoing to meet a target volatility level that the individual investor is happy with. Return focused will allow the fund to move around the risk profile. This may not be an issue for an adventurous investor but for a new cautious investor it could be. Most complaints about investments happen when the value falls and most of those are because it fell by more than they accepted. We have seen DIY investors post on this board how they investing in VLS or other things only to return later (sometimes just a week later) as they are concerned about losses and are talking about pulling out. Risk is not something that is just an advice thing. It affects DIY investors as well and it is important to know the risks of the investments you are using.

    A quick reply from me re fees, its 3% on 100k, 2% on second 100K and 1% on further 300k, existing pensions are not included. Thinking on this subject we already have 60k stocks and shares ISA previously arranged on Elevate platform, would seem somewhat greedy as this has been added to the total for fee purposes.
    You would want it around the £2500 or less mark.
    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.
    • andrewm1981
    • By andrewm1981 10th Oct 16, 9:36 PM
    • 124 Posts
    • 31 Thanks
    andrewm1981
    Thanks for the clarification about Freddie. It's been bugging me as he's been spamming a lot of threads with a blanket "use an IFA, no matter what posts", as every different person has needs that are different and an IFA isn't for everyone.

    My concern is that I use this forum everyday, and hadn't spotted his subtle reverse psychology posts. So what about the newbie who may well look at his high post count and take his advice at face value?

    Messing about with "in" jokes is one thing, and I'm not trying to be a kill joy, but this "subtle joke" could end up costing someone a ton of money.

    Highly irresponsible if you ask me!
    • HarryFlatters
    • By HarryFlatters 10th Oct 16, 10:08 PM
    • 36 Posts
    • 9 Thanks
    HarryFlatters
    Ok could I recap please

    I have lots of research to undertake, taken from links/books highlighted which will give me a broad picture of the rudiments of diy investing, if there are other worthwhile articles etc could you just let me know where.

    With some more info I can decide whether I feel comfortable starting, possibly in a lo cost tracker fund on a platform such as II, or use my existing Elevate ? and add to this as and when I feel confident.

    Dunstonh thank you for clarification on expected fees from someone the other side of the fence, much appreciated. I have looked at existing and proposed funds, all existing funds have additional investment with an additional 6 new chosen, hope this helps clarity. I have known this IFA for a number of years through a shared leisure interest and hoped I would be treated fairly.

    Having moderated forums (in a completely different sphere ) in another past life I did pick up on BigFreddies wit
    • EdGasket
    • By EdGasket 11th Oct 16, 9:38 AM
    • 3,456 Posts
    • 1,444 Thanks
    EdGasket
    It can be as simple or complicated as you want. At a simple level you could open an account at say x-o (£5.95 a trade) and buy a few Vanguard ETFs and iShares Core series ETFs; both of which have low charges. That would cover most markets and job done.
    • HarryFlatters
    • By HarryFlatters 25th Oct 16, 6:25 PM
    • 36 Posts
    • 9 Thanks
    HarryFlatters
    Update time

    I've read through Tim Hales book, he does set a strong case for passive investing, though by buying 2nd hand I only got the early edition which missed out the latest updates.
    I've listened to various podcasts on my travels and read soooo much on t'internet
    The overriding factor to come shining through is that no one has that magic consistent foresight and reading some of the "experts" predictions for 2016 from late 2015 are quite funny if they are believed
    I do think I have increased my knowledge but still have a long long way to go......
    My portfolio I hope would comprise approx 65% equities/35% bonds, I would like to draw approx 2-3% over the next 5 years then use both pension and fund to allow an earlier retirement continuing with a 3% total fund payment, hopefully retaining the overall fund size, with this in mind I aim to move my existing pensions into a SIPP along with a one off payment to bring my contributions up to date. I will fill up my ISAs each year, and Mrs F will invest similarly as joint accounts seem to have problems ?
    I am still a little confused on tax differences between ETFs & OIECs, I currently use dividends through a Ltd Co as a portion of income and am unsure which would best suit ?
    On looking through the various platforms IWeb seem to be the most cost efficient for my needs and have looked through their available funds.
    Could I ask the resident experts to run through the following and give me their thoughts/alternatives please as a portfolio mix, these are taken from the funds available through IWeb though don't include ETFs
    UK Equity 30%
    Black Rock 100 UK equity tracker fund D Acc
    Black Rock UK equity tracker fund D Acc

    Other Equity 35%
    Vanguard US equity index Inc
    Legal & General Euro Index ex UK trust 1 Dist
    Vanguard emerging markets stock index gbp Inc
    Black Rock Japan equity tracker fund D

    Bonds 35%
    Legal & General sterling corp bond index fund C Dist
    UBS sterling corp bond indexed fund class C shares Inc
    Legal & General all stocks gilt index trust1 Dist

    I have read another thread regarding bonds and did try to pick those with a reduced volatility but I've probably made a hash of it. I haven't set out the individual percentages but would aim for a small exposure to Japan & Emerging Markets concentrating more on the US.

    All help gratefully received
    • dunstonh
    • By dunstonh 25th Oct 16, 6:40 PM
    • 88,357 Posts
    • 53,576 Thanks
    dunstonh
    Could I ask the resident experts to run through the following and give me their thoughts/alternatives please as a portfolio mix, these are taken from the funds available through IWeb though don't include ETFs
    UK Equity 30%
    Black Rock 100 UK equity tracker fund D Acc
    Black Rock UK equity tracker fund D Acc
    Class D are the more expensive ones. Your IFA should be able to access cheaper. As you would be able to on different platforms.

    Why FTSE100? (given its awful and consistently bad record and poor diversification)

    Other Equity 35%
    Vanguard US equity index Inc
    Legal & General Euro Index ex UK trust 1 Dist
    Vanguard emerging markets stock index gbp Inc
    Black Rock Japan equity tracker fund D
    Where is Asia?

    Bonds 35%
    Legal & General sterling corp bond index fund C Dist
    UBS sterling corp bond indexed fund class C shares Inc
    Legal & General all stocks gilt index trust1 Dist
    Why two similar corp bond funds? Where is high yield bonds? Where are global bonds?

    What is the volatility rating of the portfolio you have built and does it match your risk profile and capacity for loss?
    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.
    • bigfreddiel
    • By bigfreddiel 25th Oct 16, 8:33 PM
    • 4,225 Posts
    • 1,953 Thanks
    bigfreddiel
    Thanks for the clarification about Freddie. It's been bugging me as he's been spamming a lot of threads with a blanket "use an IFA, no matter what posts", as every different person has needs that are different and an IFA isn't for everyone.

    My concern is that I use this forum everyday, and hadn't spotted his subtle reverse psychology posts. So what about the newbie who may well look at his high post count and take his advice at face value?

    Messing about with "in" jokes is one thing, and I'm not trying to be a kill joy, but this "subtle joke" could end up costing someone a ton of money.

    Highly irresponsible if you ask me!
    Originally posted by andrewm1981
    Come on Andrew, if you don't know what you're doing you get an IFA. It's a no brainer.

    After all, if you want your highly expensive car kept in tip top condition you pay a mechanic. Their hourl fee is probably the same as an IFA

    Cheers fj
    • bigfreddiel
    • By bigfreddiel 25th Oct 16, 8:37 PM
    • 4,225 Posts
    • 1,953 Thanks
    bigfreddiel
    And another thing, no one is allowed to give advice on MSE.

    This has been stated many times.

    All we do is give our point of view, not advice.

    Good luck everyone, after all everything we do is just a game where you need to follow the rules, usually unwritten fj
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