Financial Advisor That Charges Monthly Fees?

Lokolo

MrMicawber wrote: »

Ah well, now I'm upsetting both of you. While I sympathise with you, would you talk to you great grandfather in the way you speak to Earlgrey - actually I just might!

I hope though that through your red mist you can see that I am actually being supportive of [fee based] IFA's and of dunstonh whose reponses to many a question I have found well balanced. But I don't want to make this sound like the dunstonh fan club. There are many others whose views I have also found very helpful.

It so happens, lokolo, that in my humble opinion, you have a very sensible approach to money. Read my last sentence again, count to 10, and then read it again 'reading out' rather than 'reading in'.

Haha oppsy :rotfl:

I'm watching Without a Trace / Doing work at the same time. This week I seem to be being a bit dopey, I thought 50 of 10,000 was 0.005% yesterday!!!

Um to be fair I don't think I would, I think I would just ignore him, but yeh its pretty sad sticking up for someone on an internet forum, however dunstonh has helped me invaluable so I like to repay him somehow

(also thanks for the humble opinion!)

earlgrey_3

MrMicawber wrote: »

Earlgrey - I don't think you actually read my post regarding what I feel about commisson based v fee based IFA's. I very clearly come down in favour of fee based.

You seem though to tar all IFA's with the same brush regardless of how they get their income.

And I assume you didn't read my posts which at all times refer to commission-based advisers.

There is far less room for bias when advice is on a strictly fee basis and obviously the safest course. Unfortunately people with small sums to invest will find that fee-based advisers typically charge around £160 an hour for their time and so are more likely to go the commission based route with the potential problems you seem to acknowledge. The temptation for the adviser is then to recommend products that will earn sufficient commission for the remuneration he expects.

The only rider to that is that there might be less guarantee of bias on a fee basis if the adviser also works on a commission basis. Similarly, when the arrangement is for a "fee" but one taken from commission payments if that means not recommending certain products would result in insufficient commission to cover the fees.

I don't dislike IFAs and even have the occasional drink with them. At the same time I do object to the constant propaganda that tied agents on salary plus commission are all incompetent crooks only out for commission until they become commission only IFAs when they suddenly become paragons of integrity. Most IFAs start out as financial salesman of some kind. So do be aware of the problems with tied advisers but don't be so naive as to believe those problems entirely evaporate by using a commission based IFA.

earlgrey_3

jem16 wrote: »

However it is rather hypocritical of you to say that you don't have a crystal ball and have made investment decisions whilst criticicising all IFAs who have not moved their clients into cash.

I haven't sold every investment I have, particularly S&S ISAs, though I am now predominantly in cash. What exactly is hypocritical about that?

The point being made was that advisers on commission to sell investments will typically continue to push those investments regardless of market conditions. Be aware of that and don't expect anything else. If investors do sell and move to cash the adviser will lose the annual kickback.

You obviously did not read my post where I answered all your questions last time. However to save time writing the answers all again perhaps you could read it.

Quite right I didn't but I see you did not say how much your investment was, when it was placed, or for that matter what the bond is invested in.

Can I ask what point you were making by saying I must have invested with H-L? I understand H-L have their own funds. I haven't invested with H-L in any of their funds, I have invested in other funds through them. Sorry if you think that pedantic.

whiteflag_3

earlgrey wrote: »

And I assume you didn't read my posts which at all times refer to commission-based advisers.

There is far less room for bias when advice is on a strictly fee basis

strange then that the UK's largest fee only "IFA" is completely biased towards putting clients into their weath management programme!

http://www.towrylaw.com/about/fees.aspx

dunstonh

Another Dunstonism:
"Salesforces are the spawn of evil in financial services. When you have people whose career is based on hitting targets then you have the risk of bias taking place." http://forums.moneysavingexpert.com/....html?t=906653
And:
"Whilst potential for bias exists on commission option with any type of adviser, you reduce the chances of it with an IFA." Of course. :rolleyes:

Also said advisers he takes onto his firm are expected to be capable of earning £100k pa in commission. Most of whom of course would formerly have been salesmen/tied agents on salary plus commission (as he was himself before becoming an IFA). Note that he didn't say new advisers must have a record of generating good returns for clients.

The FOS figures show that IFAs account for just 2% of complaints and most of those are not upheld. Yet salesforces account for the majority of advice complaints and have a higher upheld rate. You can never get rid of all the bad apples but you help your chances by seeing an adviser and not a sales rep.

Salesforce advisers are not financially responsible for the advice they give. Owner/partner firms and self employed advisers are. Limited companies will see the directors responsible so they too will take more interest in the quality of adviser they will employ.

As for recruitment, I dont ask if they have brown hair or good teeth either. I didnt list all the criteria I look for and I dont plan to now. However, Its not cost effective for me to employ low earners. So, I set a minimum. It is also not cost effective for me to take on those with a complaints history. So, I dont take on them either. I'm not interested in their past investment record as I have my own stance on that which they will follow. Their technical knowledge and planning ability are far more important.

earlgrey_3

MrMicawber wrote: »

Ah well, now I'm upsetting both of you.

No I'm not upset nearly that easily and more than happy to stand my ground.

The central point to be made here is that I don't believe one very prolific poster making a couple of hundred posts a week should be granted total control of the board with no one allowed to differ. I equally don't think that because that person is an IFA doing commission-based business that no one should be permitted to point to the limitations of such an arrangement.

Obviously you may take a very different view from me on users of this board being encouraged to invest borrowed money in the markets but that's entirely your privilege.

dunstonh

The central point to be made here is that I don't believe one very prolific poster making a couple of hundred posts a week should be granted total control of the board with no one allowed to differ.

No problem with that. However, finding reasons to disagree when there is nothing to disagree about is daft.

I equally don't think that because that person is an IFA doing commission-based business that no one should be permitted to point to the limitations of such an arrangement.

The majority of my business is done a fee agreed basis and not commission. The fact that I like customer agreed remuneration is mainly due to the simplicity and quite a lot of what I personally do is on pension business and that method works very well with pensions as the fee gets tax relief using CAR. Investment business doesnt really have commission as for most products fee and commission is the same thing. e.g. a £1000 fee is stilll a £1000 whether you pay by cheque or have it deducted from the investment and paid as a commmission. The net effect is the same.

MrMicawber_2

Earlgrey - please don't start getting silly. You pick and choose and purposely misinterprete. Debate like a rational person and that's fine but your last sentence is that of a spoilt child. It's the sort of biased rubbish that isn't fit for primary school. In fact your previous sentence isn't much better.

earlgrey_3

dunstonh wrote: »

The FOS figures show that IFAs account for just 2% of complaints and most of those are not upheld.

Isn't that because there's no comeback for poor returns or encouraging investors to invest at a bad time? Specific mis-selling has to be proved. That's one of the causes for complaint I hear from people who don't seem to understand the limits of the advice they can expect.

Yet salesforces account for the majority of advice complaints and have a higher upheld rate. You can never get rid of all the bad apples but you help your chances by seeing an adviser and not a sales rep.

That wasn't my experience some years ago. The tied agent was the most transparently honest of the people I saw. The problem was he himself said he thought the arrangements I had were reasonable and he couldn't offer any improvement. The most obvious problem with tied agents is the limitations of the products they can sell and for that reason should generally be avoided.

Salesforce advisers are not financially responsible for the advice they give.

But their companies with national reputations to protect are.

Owner/partner firms and self employed advisers are. Limited companies will see the directors responsible so they too will take more interest in the quality of adviser they will employ.

So just like the big companies with tied advisers then?

Many tied advisers are on a substantial salary schemes plus bonus. Someone the other day insisted that RBS advisers aren't on commission which would surprise me.

What's the salary to commission/bonus ratio of one of your people when he comes to my home to advise?

As for recruitment, I dont ask if they have brown hair or good teeth either. I didnt list all the criteria I look for and I dont plan to now. However, Its not cost effective for me to employ low earners. So, I set a minimum.

Does it concern you in any way how they managed to achieve that history of high commission earnings?

Sorry Dunston, I don't want to paint you as a baby-strangler and not suggesting you are any worse than others in the industry, just pointing out that investors should be fully aware of the motivation of any adviser and the advice they give. Would you disagree with that?

jem16

earlgrey wrote: »

I haven't sold every investment I have, particularly S&S ISAs, though I am now predominantly in cash. What exactly is hypocritical about that?

The fact that you expect my IFA to have advised moving my investments to cash yet you haven't for valid reasons. The same valid reasons that I have for staying put but reorganising within where appropriate.

Quite right I didn't but I see you did not say how much your investment was, when it was placed, or for that matter what the bond is invested in.

I don't just have one investment. I have various placed at varying times over the last 3 years.

Can I ask what point you were making by saying I must have invested with H-L?

I wasn't making any point. I don't receive any fliers from them persuading me to invest but presumably that's because i don't use their services. I was simply asking if you did in order to receive these fliers.

You have a lot of valid points to make but these get lost in the sea of hate that you seem to put across against IFAs.