Financial Advisor That Charges Monthly Fees?

earlgrey_3

jem16 wrote: »

So what does this say then?

Presumably when I wrote that I assumed you had paid on a commission basis and had stockmarket investments rather than some form of bond. I think you have since said it was on a fee-only basis and that the advisers will not receive commission. I assume you mean that any annual trail commission is also repaid to you in some way. Very wise if you have sufficient to invest so that someone will offer that arrangement.

dunstonh

And because of that encouraging someone who is looking for low risk to invest during an extremely turbulent period is also impossible to challenge.

No. Most complaints that the FOS do uphold on investments is because of the wrong attitidue to risk. If someone is identified as cautious then a cautious portfolio should be built. However, timing is only known through hindsight. For all we know the markets could be past the worst or the worst is to come. So, as long as the person knows the risks and the investments are in line with the risk profile then no wrong has been done. If you wait until the recovery has come and then invest at a peak following sustained periods of growth you can end up losing more in the short term. Hence why trying to time the markets is futile.

On this board you specifically discouraged someone who wanted to move his UK stockmarket investment to a cash ISA when the FTSE was at over 5000. I assume that's similar to advice you would give to clients.

Q Should I cut my loses, sell the shares and put the money in my Cash ISA (which will no doubt give a better return at the moment) or shall I keep feeding money in for the long term and spread my loses?

A. Selling after a stockmarket drop only crystallises your losses. However, the monthly payments you make now are buying units much cheaper. So, if you sell up you would crytallise a loss and miss a buying opportunity.

Clearly you don't have a crystal ball but some might put greater credence on your advice than they should so shouldn't you be a little more circumspect?

The person did not clearly want to move to cash. They were asking what they should do. I am quite happy with that response as its factual. This poster was a medium/high risk investor and they are now buying units cheaper than they have been for the last 3-4 years. If you can tell me that the units are going to be cheaper in 5, 10 or 15 years time then I will be happy to change that view. Of course, you cant and that is what a risk that a medium/high risk investor is happy to take.

Absolutely but there were plenty out there advising caution. It's fine if people understand the limitations of an IFAs advice which I would like to see more often highlighted. People need to understand the commission earning IFAs will almost always encourage investment for obvious reason. Don't expect to go to an IFA and be told to keep the money in the bank until the outlook is better.

That is your opinion. It may be right with some but it wont be with others. Clearly time will tell if those that have pulled out after the market has dropped will be better off than those that ride through it and come out the other side with a recovery. Or those that have rebalancing portfolios do well from the rebalancing or not.

The directors of a limited company have pay compensation rather than the company? Are you sure. How is their responsibilty in that respect any different from the directors of a large company?

The company pays it but as most limited company IFA firms are just 1-5 advisers, it is effectively the directors that are paying it or are passing it on to the advisers that work for them. Especially where the advisers are self employed but attached where there may only be 2-3 directors.

They are not on salary. They are self employed but attached. So if they don't persuade the prospects to invest they don't eat and pay all their own expenses? Do you feel that is less likely to lead to mis-selling than a fully employed arrangement with salary plus arrangement?

Yes i do. Those on salarys are not really on salaries. They get salaries based on performance. If they dont perform they lose bonuses, get dropped down pay scales and can be dismissed due to poor performance. They have sales managers giving them grief and targets to achieve. Those self employed advisers attached to my firm get paid for the advice. Not the product purchase. CAR doesnt mean you only get paid if the product is bought. Its just method of paying. If the fee is £1000 for the advice and the advice is to stick it all in NS&I then £1000 is still the fee. If you choose to totally disregard the advice, then £1000 is still the fee. it has to be paid by cheque thats all (and is subject to VAT which it wouldnt be on purchase of a product).

Certainly not evil Dunston. I'm just someone with reservations about financial advice from self employed reps working solely on commission as yours do. It's just my terribly cynical view of human nature when money is involved.

again you make reference to commission and again, I point out that where someone knows the fee in advance of getting advice, why is this a problem?

Also, why is it that you have reservations about self employed IFAs who are financially liable themselves for the advice they give, who work on an agreed in advance remuneration basis, with no product or provider bias possible a concern of yours yet you seem to prefer the tied sales rep with sales targets, sales managers, bonuses, usually lower qualifications, usually lower remit in advice (cannot recommend funds for example) and fear of the sack if they dont perform?

earlgrey_3

dunstonh wrote: »

again you make reference to commission

Dunston, when I read your posts earlier this year you made great play of being what you called an NMA, a "New Model Adviser".

But you said the basis you worked on was to return a part of the initial commission but keep all the ongoing trail commission from the product provider.

Are you now saying that you now only work on the basis of a fixed fee and return all commission to the client? Can I ask why and when you changed your method of charging?

yet you seem to prefer the tied sales rep

No Dunston that is untrue and I prefer to not be misrepresented. I said earlier in this thread:

earlgrey wrote: »

The most obvious problem with tied agents is the limitations of the products they can sell and for that reason should generally be avoided.

I would prefer there was not possible bias due to commission based advisers regardless of whether tied or independent.

dunstonh

Dunston, when I read your posts earlier this year you made great play of being what you called an NMA, a "New Model Adviser".

But you said the basis you worked on was to return a part of the initial commission but keep all the ongoing trail commission from the product provider.

Are you now saying that you now only work on the basis of a fixed fee and return all commission to the client? Can I ask why and when you changed your method of charging?

We do NMA style service as well as catering for those that dont. The choice is with the client.

No Dunston that is untrue and I prefer to not be misrepresented.

feeling is mutual.

Stavros_3

Nobody can predict the stockmarket, Warren Buffet said 12 months ago he was buying into stocks again and the market dived. You pays your money and takes your chance, its all about risk.

cloonmore1790

Dunstonh, here is a technical question for you. If it has been covered many times before, then my apologies:

Does an individual with a Sipp & a Transact wrapper actually HAVE TO HAVE a financial adviser, or is an individual allowed to manage their own affairs within pension rules?

I currently pay GE whether the fund goes up or down, I do the same with Transact and the same with the IFA. Everything seems to be charged as %'s on activity/time, but never on performance!

dunstonh

Does an individual with a Sipp & a Transact wrapper actually HAVE TO HAVE a financial adviser, or is an individual allowed to manage their own affairs within pension rules?

Transact allow you to deal directly with them. Whilst I am not a fan of their pricing, the "product" is very good for what it does and you can put transactions in as you wish. You dont need an IFA. If that is what you want then you will almost certainly find cheaper options as the IFA that set it up would have done so on the assumption that you were going to use them.

Everything seems to be charged as %'s on activity/time, but never on performance!

It appears that [if you wanted to use an adviser] you would prefer an adviser that is paid from the natural trail commission (which is based on fund value) rather than explicit fixed fee or hourly rate. With natural trail, the higher the value, the more the trail, the lower the value the less the trail. So the interests of the adviser are aligned with yours as they get paid more if the value goes up and less if it goes down.

ozzage

earlgrey wrote: »

Q Should I cut my loses, sell the shares and put the money in my Cash ISA (which will no doubt give a better return at the moment) or shall I keep feeding money in for the long term and spread my loses?

A. Selling after a stockmarket drop only crystallises your losses. However, the monthly payments you make now are buying units much cheaper. So, if you sell up you would crytallise a loss and miss a buying opportunity.

Link?

I'm not commenting on anything else in this thread, but this seems to me to be perfectly reasonable advice, unless the person posing the question stated that they were looking to dramatically reduce their risk.