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  • FIRST POST
    • username12345678
    • By username12345678 13th Sep 17, 10:13 PM
    • 134Posts
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    username12345678
    Meeting with my IFA and Wealth Manager
    • #1
    • 13th Sep 17, 10:13 PM
    Meeting with my IFA and Wealth Manager 13th Sep 17 at 10:13 PM
    They have requested a joint meeting after I gave notice of my intention to cease our 'partnership' at the end of the year. They are keen to show how they 'add value'

    Out of courtesy I agreed and i'll be open minded about what they have to say and if it's compelling i'm fully prepared to change my mind and continue for another 12 months.

    If I go on my own i'm comfortable with understanding my own risk tolerance and i'm happy with structuring my own OEIC/IT/ETF portfolio to diversify and match that risk level.

    I have a list of questions/challenges for them but I fully expect to get 'tag teamed' so I want to be as prepared as possible to stand my corner (in a non-confrontational way of course). So i'd appreciate drawing on the forums collective brain for a sensible approach to the meeting.
Page 1
    • dunstonh
    • By dunstonh 13th Sep 17, 10:31 PM
    • 89,602 Posts
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    dunstonh
    • #2
    • 13th Sep 17, 10:31 PM
    • #2
    • 13th Sep 17, 10:31 PM
    If you dont want the service then dont waste anyone's time. Cancel the meeting.
    it doesnt sound like there is much of a relationship there as you have a low opinion of them and clearly do not value the service. So, be honest and say you no longer want it.
    Last edited by dunstonh; 13-09-2017 at 10:33 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 an Independent Financial Adviser local to you.
    • username12345678
    • By username12345678 13th Sep 17, 10:48 PM
    • 134 Posts
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    username12345678
    • #3
    • 13th Sep 17, 10:48 PM
    • #3
    • 13th Sep 17, 10:48 PM
    If you dont want the service then dont waste anyone's time. Cancel the meeting.
    it doesnt sound like there is much of a relationship there as you have a low opinion of them and clearly do not value the service. So, be honest and say you no longer want it.
    Originally posted by dunstonh
    I didn't request the meeting - they did.

    As far as the relationship goes I don't have a low opinion of them at all, they are professionals and the WM goes back further than my family tree.

    The question is purely one of whether they can justify the 60% of my pension that I will pay them over 40 years (hopefully). Or put another way - around half of my projected required annual income each and every year.

    It isn't a breakdown in our 'relationship' to challenge them about these and other things - it's just good stewardship of mine and my families future.

    The flip side of that is whether good stewardship is actually employing somebody else to do what you can't - that's an argument I get.
    • dunstonh
    • By dunstonh 13th Sep 17, 11:13 PM
    • 89,602 Posts
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    dunstonh
    • #4
    • 13th Sep 17, 11:13 PM
    • #4
    • 13th Sep 17, 11:13 PM
    As far as the relationship goes I don't have a low opinion of them at all, they are professionals and the WM goes back further than my family tree.
    Sorry. I interpreted the tone of your post wrongly then. The term strong-armed is one that I thought meant there was a dim view of them.
    The question is purely one of whether they can justify the 60% of my pension that I will pay them over 40 years (hopefully).
    You wont be paying them 60%. That is just taking future money terms and pretending it has todays spending power.


    The flip side of that is whether good stewardship is actually employing somebody else to do what you can't - that's an argument I get.
    If its a long relationship, they may be requesting it to see what the issue is. However, people generally use an IFA becuase it saves them time (which they can then use doing things they enjoy) or because they have complicated affairs or they really just want someone else to do it. If you want to DIY and you enjoy the work you are going to put in and you can do it well, then go with DIY. Most IFAs I know have more work than time. So, whilst they may value longer standing clients and will miss you, your place will be filled quite quickly with someone else. You owe them nothing.
    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.
    • chiang mai
    • By chiang mai 13th Sep 17, 11:38 PM
    • 88 Posts
    • 17 Thanks
    chiang mai
    • #5
    • 13th Sep 17, 11:38 PM
    • #5
    • 13th Sep 17, 11:38 PM
    Your IFA should be charging 0.50% per year to manage existing investments and as much as 3% on new money that's you invest, all of that is separate of course from trading and platform fees which can vary significantly. My trading fees can be as low as one Pound per trade but my platform fees as high as 1% per year, it might help you perhaps to break down that 60% to see what it contains today.
    • bostonerimus
    • By bostonerimus 14th Sep 17, 12:19 AM
    • 1,131 Posts
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    bostonerimus
    • #6
    • 14th Sep 17, 12:19 AM
    • #6
    • 14th Sep 17, 12:19 AM
    I agree with dunstonh's initial comment; politely cancel the meeting. See how you go for a couple of years DIY and you can always go back if it becomes too much effort or worry. Frankly for most people I don't think IFAs, or worse still Wealth Managers, add much value. Set your portfolio up to be easily managed and enjoy the maybe 1% or 2% that you'll save in fees. It will be easy in good times, but you'll need discipline in hard times. FYI I DIYed 25 years in the accumulation phase and averaged 8.5% and have 4 years of DIY in retirement and a simple 70/30 index tracking portfolio that I check on quarterly has produced 10% annual return.
    Last edited by bostonerimus; 14-09-2017 at 12:33 AM.
    Misanthrope in search of similar for mutual loathing
    • chiang mai
    • By chiang mai 14th Sep 17, 12:36 AM
    • 88 Posts
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    chiang mai
    • #7
    • 14th Sep 17, 12:36 AM
    • #7
    • 14th Sep 17, 12:36 AM
    I disagree. One of the OP's suppliers has requested a meeting hence they are keen to keep him as a customer. The OP on the other hand is a dissatisfied customer hence it's a perfect opportunity to negotiate his costs down, but to do that he will need to understand in detail what those costs are, as of today.

    FWIW I'd happily pay reasonable fees if I could find an onshore IFA to manage my investments and financial affairs, I can't because I'm non-resident. The OP should not underestimate the amount of time, knowledge and effort required to successfully manage an investment portfolio, through changing times - and with all due respect to the OP's likely many and extensive talents, unless he's a trained IFA or broker he shouldn't over estimate his own brilliance in this area.
    • bostonerimus
    • By bostonerimus 14th Sep 17, 2:50 AM
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    bostonerimus
    • #8
    • 14th Sep 17, 2:50 AM
    • #8
    • 14th Sep 17, 2:50 AM
    FWIW I'd happily pay reasonable fees if I could find an onshore IFA to manage my investments and financial affairs, I can't because I'm non-resident. The OP should not underestimate the amount of time, knowledge and effort required to successfully manage an investment portfolio, through changing times - and with all due respect to the OP's likely many and extensive talents, unless he's a trained IFA or broker he shouldn't over estimate his own brilliance in this area.
    Originally posted by chiang mai
    This is not rocket science. I'd like to reverse your post ...don't overestimate the difficulty or the skills and knowledge required to manage a well constructed portfolio. Most people with a bit of education, some common sense and basic mathematics can do what an IFA would do for them. The most challenging part is to have the discipline to manage money through downturns, IFAs should have an advantage there as they are not as emotionally wedded to your money and might be able to make more rational decisions. So to DIY then you need some firm rules to help you weather the storm.
    Misanthrope in search of similar for mutual loathing
    • chiang mai
    • By chiang mai 14th Sep 17, 3:02 AM
    • 88 Posts
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    chiang mai
    • #9
    • 14th Sep 17, 3:02 AM
    • #9
    • 14th Sep 17, 3:02 AM
    I agree it's not rocket science but it's also not easy and straight forward. It's OK of course for us to have differing views on this because our respective experience teaches us different things. The only comments I can add to my argument is: a 0.5% fee or even a one time 3% fee is very cheap insurance, because; you don't know what you don't know until it's too late, and; I live in a country where people watch how something is done a few times, copy what they see and then sell themselves as experts, the country is full of people who know how to do things well between 20% and 70%. That's OK perhaps with some things but when it comes to managing your own money it needs careful consideration. But I'm 68 years old and will, of course, take a more cautious view on these things than will a much younger person who can earn enough to replace lost funds. Whatever the OP decides to do I wish him/her well.
    Last edited by chiang mai; 14-09-2017 at 5:07 AM.
    • aroominyork
    • By aroominyork 14th Sep 17, 7:27 AM
    • 283 Posts
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    aroominyork
    a 0.5% fee or even a one time 3% fee is very cheap insurance
    Originally posted by chiang mai
    No reason to pay 3%. The IFA I left a few months ago wanted 3% when I joined him and I negotiated him down to 1%. I am sure plenty of people, especially those with large amounts invested, pay no initial fee.
    • username12345678
    • By username12345678 14th Sep 17, 11:57 AM
    • 134 Posts
    • 57 Thanks
    username12345678
    You wont be paying them 60%. That is just taking future money terms and pretending it has todays spending power.

    If its a long relationship, they may be requesting it to see what the issue is. However, people generally use an IFA becuase it saves them time (which they can then use doing things they enjoy) or because they have complicated affairs or they really just want someone else to do it. If you want to DIY and you enjoy the work you are going to put in and you can do it well, then go with DIY. Most IFAs I know have more work than time. So, whilst they may value longer standing clients and will miss you, your place will be filled quite quickly with someone else. You owe them nothing.
    Originally posted by dunstonh
    The 60% was a rough ballpark based on 40 years and 1.5%pa in fees.

    The meeting isn't really about me directly I suspect. I'm one of many (50+ or so) who know each other and are working with only a couple of IFA's.


    I disagree. One of the OP's suppliers has requested a meeting hence they are keen to keep him as a customer. The OP on the other hand is a dissatisfied customer hence it's a perfect opportunity to negotiate his costs down, but to do that he will need to understand in detail what those costs are, as of today.

    The OP should not underestimate the amount of time, knowledge and effort required to successfully manage an investment portfolio, through changing times - and with all due respect to the OP's likely many and extensive talents, unless he's a trained IFA or broker he shouldn't over estimate his own brilliance in this area.
    Originally posted by chiang mai
    This isn't a 'bash the IFA and WM' thread.

    They do a vital job for the vast majority who do not want the responsibility of managing their own investments.

    The question for me personally is 'Can I do the job, enjoy it, and most importantly, have a positive expectation of results versus having it managed for me over the next 4 decades?'

    No reason to pay 3%. The IFA I left a few months ago wanted 3% when I joined him and I negotiated him down to 1%. I am sure plenty of people, especially those with large amounts invested, pay no initial fee.
    Originally posted by aroominyork
    I didn't pay an initial fee and the total comes in at around 1.3%pa plus fund fees.
    • BLB53
    • By BLB53 14th Sep 17, 12:11 PM
    • 1,156 Posts
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    BLB53
    If I go on my own i'm comfortable with understanding my own risk tolerance and i'm happy with structuring my own OEIC/IT/ETF portfolio to diversify and match that risk level.
    So why bother with advisers? Save their time and a whole heap of your investment returns and go DIY.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • chiang mai
    • By chiang mai 14th Sep 17, 12:15 PM
    • 88 Posts
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    chiang mai
    One last suggestion from me:

    Rather than think about this in long term future cost terms, even if only approximate, try to think about on a year by year basis, the key to that is understanding what your current costs are today, precisely.

    Now you've added some clarity by saying it's a group meeting, that's a horse of a different color, it sounds more like a group sell, think timeshares!
    • username12345678
    • By username12345678 14th Sep 17, 12:15 PM
    • 134 Posts
    • 57 Thanks
    username12345678
    So why bother with advisers? Save their time and a whole heap of your investment returns and go DIY.
    Originally posted by BLB53
    Is the correct answer.
    • username12345678
    • By username12345678 14th Sep 17, 12:21 PM
    • 134 Posts
    • 57 Thanks
    username12345678
    Rather than think about this in long term future cost terms, even if only approximate, try to think about on a year by year basis, the key to that is understanding what your current costs are, precisely.

    Now you've added some clarity by saying it's a group meeting, that's a horse of a different color, it sounds more like a group sell, think timeshares!
    Originally posted by chiang mai
    I've got a reasonable handle on the costs and tbh I think there is a danger in viewing those costs in annual isolation. Who cares about a percent here or there when your portfolio may have risen 10%. Cumulatively those costs do matter though and especially when you consider that you could be giving up half of your SWR in fees.

    I perhaps wasn't clear about the nature of the meeting...it isn't a group affair, i'm on my own. I just know many others who are in a similar position to me.

    And as much as i'm perhaps a 'difficult' customer I would never describe the IFA I work with in the same breath as a timeshare salesman!!!
    • coyrls
    • By coyrls 14th Sep 17, 12:26 PM
    • 919 Posts
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    coyrls
    The meeting isn't really about me directly I suspect. I'm one of many (50+ or so) who know each other and are working with only a couple of IFA's.
    Originally posted by username12345678
    I don't understand what you mean by this. You know 50+ people with the same IFA and they are all unhappy with the fees? That seems unlikely. As others have said if you want to stay with them and the only problem is the size of the fees, go into the meeting with an idea of what level of fees you would accept and then see if you can negotiate to that figure, if you can't and you will still be unhappy with the fees, leave.
    • username12345678
    • By username12345678 14th Sep 17, 12:36 PM
    • 134 Posts
    • 57 Thanks
    username12345678
    I don't understand what you mean by this. You know 50+ people with the same IFA and they are all unhappy with the fees? That seems unlikely. As others have said if you want to stay with them and the only problem is the size of the fees, go into the meeting with an idea of what level of fees you would accept and then see if you can negotiate to that figure, if you can't and you will still be unhappy with the fees, leave.
    Originally posted by coyrls
    Not just unlikely - it's not true. The majority wouldn't dream of taking on the risk of managing their own funds.

    However, what I was getting at (in a poorly phrased way) was that if I was an IFA I would probably rather self-managing didn't catch on in even a small part of the group.

    A couple of approaches I was considering was maintaining the present fee structure but splitting the pot 50/50 between myself and the WM. My problem with this though is that both of us will be making decisions based on wrong information about my financial position.

    The other route was to try and negotiate them down to 1%.
    • davieg11
    • By davieg11 14th Sep 17, 12:42 PM
    • 253 Posts
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    davieg11
    Check out the fund charges calculator to see how much an IFA will cost over 40 years.
    http://www.thisismoney.co.uk/money/diyinvesting/article-1633426/Isa-fund-charges-calculator-How-fees-affect-returns.html
    • davieg11
    • By davieg11 14th Sep 17, 12:50 PM
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    davieg11
    ''The 60% was a rough ballpark based on 40 years and 1.5%pa in fees''

    £100,000 invested for 40 years with a 7% return could theoretically generate £1.5 million. With an IFA taking 1.5% the return would be £821,000.
    • bostonerimus
    • By bostonerimus 14th Sep 17, 1:23 PM
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    bostonerimus
    I've got a reasonable handle on the costs and tbh I think there is a danger in viewing those costs in annual isolation. Who cares about a percent here or there when your portfolio may have risen 10%. Cumulatively those costs do matter though and especially when you consider that you could be giving up half of your SWR in fees.
    Originally posted by username12345678
    The cumulative drag on your money during accumulation is not immediately obvious, but it's huge over time. In drawdown it can be more directly seen. If you have a drawdown of 4% and 2% fees your spending will be significantly less than 4% as the fees are 50% of your initial drawdown and they need to be paid out of that 4%.
    Misanthrope in search of similar for mutual loathing
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