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  • FIRST POST
    • jacob.uk
    • By jacob.uk 17th May 17, 8:21 PM
    • 10Posts
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    jacob.uk
    so confused after meetings with IFA
    • #1
    • 17th May 17, 8:21 PM
    so confused after meetings with IFA 17th May 17 at 8:21 PM
    I have recently received a very large compensation payment.
    I have sort the advice from an independent Financial advisory and I am left so confused, more confused than ever.
    I spoke to 3 separate companies, as that was the approach I read I should take on here.
    The amount we are looking to invest is in excess of £300k.

    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.

    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.
    * 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.
    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.

    Financial adviser B) 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

    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.

    Financial Adviser A) seems to good to be true
    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.
    C) Trustworthy, but is this right for me and should i take a small leap of faith.

    I am more confused and scared than ever of making the wrong choices
Page 1
    • dunstonh
    • By dunstonh 17th May 17, 8:59 PM
    • 89,599 Posts
    • 56,079 Thanks
    dunstonh
    • #2
    • 17th May 17, 8:59 PM
    • #2
    • 17th May 17, 8:59 PM
    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.
    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.
    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 an Independent Financial Adviser local to you.
    • jacob.uk
    • By jacob.uk 17th May 17, 9:11 PM
    • 10 Posts
    • 2 Thanks
    jacob.uk
    • #3
    • 17th May 17, 9:11 PM
    • #3
    • 17th May 17, 9:11 PM
    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.
    Originally posted by dunstonh
    I would be grateful for your thoughts on advisor A)
    • bostonerimus
    • By bostonerimus 17th May 17, 10:23 PM
    • 1,127 Posts
    • 634 Thanks
    bostonerimus
    • #4
    • 17th May 17, 10:23 PM
    • #4
    • 17th May 17, 10:23 PM
    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
    • By bostonerimus 17th May 17, 10:24 PM
    • 1,127 Posts
    • 634 Thanks
    bostonerimus
    • #5
    • 17th May 17, 10:24 PM
    • #5
    • 17th May 17, 10:24 PM
    I would be grateful for your thoughts on advisor A)
    Originally posted by jacob.uk
    Run a mile! Don't invest in what you don't understand.
    • DiggerUK
    • By DiggerUK 17th May 17, 10:51 PM
    • 2,794 Posts
    • 2,681 Thanks
    DiggerUK
    • #6
    • 17th May 17, 10:51 PM
    • #6
    • 17th May 17, 10:51 PM
    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..._
    I am not now, nor have I ever been, a Financial Adviser.
    Forward, to the 'British Spring'
    • serko
    • By serko 17th May 17, 11:37 PM
    • 45 Posts
    • 67 Thanks
    serko
    • #7
    • 17th May 17, 11:37 PM
    • #7
    • 17th May 17, 11:37 PM
    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
    • By dunstonh 18th May 17, 1:27 AM
    • 89,599 Posts
    • 56,079 Thanks
    dunstonh
    • #8
    • 18th May 17, 1:27 AM
    • #8
    • 18th May 17, 1:27 AM
    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.
    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 an Independent Financial Adviser local to you.
    • jacob.uk
    • By jacob.uk 18th May 17, 8:21 AM
    • 10 Posts
    • 2 Thanks
    jacob.uk
    • #9
    • 18th May 17, 8:21 AM
    • #9
    • 18th May 17, 8:21 AM
    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
    • By AnotherJoe 18th May 17, 9:39 AM
    • 7,599 Posts
    • 8,200 Thanks
    AnotherJoe
    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.
    Originally posted by jacob.uk
    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.
    Last edited by AnotherJoe; 18-05-2017 at 9:43 AM.
    • atush
    • By atush 18th May 17, 12:49 PM
    • 16,334 Posts
    • 10,082 Thanks
    atush
    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.
    • BananaRepublic
    • By BananaRepublic 18th May 17, 1:22 PM
    • 871 Posts
    • 623 Thanks
    BananaRepublic
    It is a large amount of money, and hence you might wish to do some background reading about investment, and think about the purpose of the money, if you have not already done so. One aspect though is key to the approach you will take, and that is the timescale. Do you want access to the money next year, if so you will need to use very low risk investments such as savings accounts. If you are happy to leave it, or a large portion, for 10 years or more, then so called higher risk investments such as unit trusts may well be the way to go. I know you feel uneasy with such investments, but you would need to do background reading to understand what they are and even then you might still feel uneasy with that approach.

    Alternatively, if you are prepared to lose quick access to the money, what about property? Do you own a home? Your own home has big tax advantages such as no capital gains tax, so you could move to a larger house, or a house in a nicer area, and enjoy the growth in value. This assumes of course that you live in an area that sees worthwhile house price growth.

    But if you do stick the money in savings accounts for 10 years, be prepared to see the value whittled away by inflation.
    • jimjames
    • By jimjames 18th May 17, 1:38 PM
    • 12,189 Posts
    • 10,706 Thanks
    jimjames
    It made me wonder, with all these charges, how the hell are they going to make me any money on a "cautious" investment portfolio.
    Originally posted by jacob.uk
    The only thing I'd suggest is that you seem to be considering the whole amount as one pot that has to be kept as such. There is no reason why part couldn't be kept as cash savings and part invested. How you arrange the proportion between the two will be down to your risk tolerance but if you had £90k in cash and £10k invested then even if the market drops 50% you'd still have 95% of your money.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • JohnRo
    • By JohnRo 18th May 17, 1:44 PM
    • 2,458 Posts
    • 2,213 Thanks
    JohnRo
    It's ironic how, when contemplating risk and reward a fear of short term red numbers often leads to long term red numbers.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • jacob.uk
    • By jacob.uk 18th May 17, 4:06 PM
    • 10 Posts
    • 2 Thanks
    jacob.uk
    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.
    Originally posted by atush
    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy
    • jacob.uk
    • By jacob.uk 18th May 17, 4:12 PM
    • 10 Posts
    • 2 Thanks
    jacob.uk
    It is a large amount of money, and hence you might wish to do some background reading about investment, and think about the purpose of the money, if you have not already done so. One aspect though is key to the approach you will take, and that is the timescale. Do you want access to the money next year, if so you will need to use very low risk investments such as savings accounts. If you are happy to leave it, or a large portion, for 10 years or more, then so called higher risk investments such as unit trusts may well be the way to go. I know you feel uneasy with such investments, but you would need to do background reading to understand what they are and even then you might still feel uneasy with that approach.

    Alternatively, if you are prepared to lose quick access to the money, what about property? Do you own a home? Your own home has big tax advantages such as no capital gains tax, so you could move to a larger house, or a house in a nicer area, and enjoy the growth in value. This assumes of course that you live in an area that sees worthwhile house price growth.

    But if you do stick the money in savings accounts for 10 years, be prepared to see the value whittled away by inflation.
    Originally posted by BananaRepublic
    I dont need the money for 10 years as I am going to be mortgage free after purchasing new home anyway.

    I dont need to earn an income from the money, I just wanted it to be somewhere safe, to possibly grow and in 10 years time I will either upsize on my property again, or I might move to partners home country.
    • badger09
    • By badger09 18th May 17, 4:37 PM
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    badger09
    I dont need the money for 10 years as I am going to be mortgage free after purchasing new home anyway.

    I dont need to earn an income from the money, I just wanted it to be somewhere safe, to possibly grow and in 10 years time I will either upsize on my property again, or I might move to partners home country.
    Originally posted by jacob.uk
    It will be safe if you deposit it among various banks covered by FSCS, or put it all in NS&I.

    However, if you do that with all of it, it will shrink, rather than grow, due to inflation.

    As jimjames and probably others have said, you don't need to do the same thing with all of it.

    Stick it in NS&I for the time being, or even put some in Premium Bonds, while you gather your thoughts. You really don't need to rush into anything you're not comfortable with.
    • atush
    • By atush 18th May 17, 6:00 PM
    • 16,334 Posts
    • 10,082 Thanks
    atush
    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy
    Originally posted by jacob.uk

    Well i personally would invest more, but if you were thinking of staying only in cash, I was saying you really should consider investing at least 20%. And dont confuse Bonds with equities.
    • bostonerimus
    • By bostonerimus 18th May 17, 8:00 PM
    • 1,127 Posts
    • 634 Thanks
    bostonerimus
    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy
    Originally posted by jacob.uk
    That's a lot in cash and low interest rate accounts....you are guaranteed to lose money to inflation. How much cash do you really need for other than psychological safety reasons. What is your investing time horizon and what is the money to be used for. If you expect to not need the money for 5 or 10 years or are saving for retirement or financial freedom then you should think about the stock market, I think you'll be well served by some cash in the bank, a savings bond ladder and a VLS fund......do you think you could sleep with 50% in equities.......even retired folks often have a high equity percentage if they are looking at a 30 year retirement and the need to keep up with inflation.
    • jimjames
    • By jimjames 18th May 17, 8:05 PM
    • 12,189 Posts
    • 10,706 Thanks
    jimjames
    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy
    Originally posted by jacob.uk
    There is zero point in my view putting any of the "investment" part in bonds if you are balancing it against 80% cash
    Remember the saying: if it looks too good to be true it almost certainly is.
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