Some way to go for financial awareness

ReportInvestor

This is a scary survey statistic.

http://www.thisismoney.co.uk/news/article.html?in_article_id=406095&in_page_id=2

"One in four of those surveyed said they would go to an independent financial adviser for help with their money, while 19% said they would prefer to talk to someone at a High Street bank :eek: ."

Deemy

"THE majority of Britons are worried that financial advisers would be motivated by the commission they earn when selling them products, a survey showed today. "


Theres hope for people yet

Tim_L

It's a dumb prejudice in my view. Anyone will gain by at least getting some ideas from an IFA (or several) which costs nothing, and even slightly marginal advice from an IFA will be better than the gut instincts most people will go with.

homersimpson_3

i think people are also worried by the fact that alot of the advice given has been wrong or poor with disastrous consequences for those receiving advice- e.g. endownment crisis. they've had their fingers burnt once. the advice i get from this forum is alot better than any of the ifas i have ever seen. alot of the time i know more than them and the ones i see are usually recommended by ifa - scary stuff!

EdInvestor

Actually there wasn't much wrong with the public's fund picks this year (though of course they may be choosing based on IFAs advice :

Amateurs beat the professsionals

What stands out from this is how important experience is: the public has chosen equity income funds and special situations funds run by the two longest standing fund managers in the UK with strong performance records, plus the JF commodities fund which has been going under various names since the year dot.

The strategy has been discussed here as well, of course

ReportInvestor

I wasn't intending to have a dig at IFAs here. It is the 1 in 5 whose first port of call would be a bank that concerns me.

As dh says elsewhere,

dunstonh wrote:

Banks are tied for advice and products so you only get their expensive and poor performing range. You need an IFA to get access to the whole of market product range.

Both IFA advice and sensible DIY is likely to yield better results than going to a bank.

But this would worry me if I were an IFA.

Financial_Survey wrote:

Among those who had spoken to a financial adviser, 28% said they felt much happier about the general state of their finances.

dunstonh

Financial services suffers a bad rap and doesnt do much to help itself. However, to assume all advisors are the same is stupid. You are far less likely to get bad advice today than 5 years ago let alone 10 years ago. The regulator hasnt helped one bit in improving the reputation.

Getting advice from a bank tied salesman is just foolish and its scary that 1 in 5 think thats the best option. Maybe its linked to people not realising the potential differences between independent and tied advice.

A tied advisor will offer advice on a restricted range of products, often cut down versions of the IFA version (where outside insurer is used). The products are more expensive and investment funds tend to be much weaker. They cannot make fund recommendations, only present the funds suitable within the risk profile for the individual to choose one and the whole process is sales driven. They are also spoon fed on how good their products are. Its almost brainwashing as most believe it. How can that be better than independent?

There was another survery last year that showed a large percentage of people getting advice from tied agents thought they were seeing an independent. That has appeared on here a number of times when people post saying their IFA did something, only for it to turn out to be a tied agent.

I wouldnt recommend anyone sees an advisor, tied or independent, from any large firm. They will have a salesforce mentality and that could lead potentially to commission bias. League tables and jobs dependent on certain levels of turnover put pressure on people and some cannot handle that pressure.

Just like any service industry, if you dont like the service, then shop around. There are enough quality advisors out there. Just do not make the assumption that we are all the same.

Also, as for amateurs beating professionals, it should be noted that fidelity post the top ten most used funds on a regular basis. That list includes investments from all sources, direct, portals and IFAs. The vast majority coming from IFAs. So, my assuption is that the article is incorrect in its title. Also, the article makes no more reference to amateurs beating professionals elsewhere. Typical media spin. Stick a "trendy" headline on it and write an article that doesn't match.

carnet

Never felt the need to seek advice from an IFA personally - would rather do all my own research and make all my own investment decisions. Learnt from the many mistakes made along the way (who's to say the "professionals'" advice would have been any more rewarding ?) and much prefer having no-one but myself to blame/thank for the results.

As for the "amateurs beating the professionals" article all I can say is that my natural inclination is to be a contrarian when it comes to investment decisions/timing.

This, to me, also means studiously avoiding all those funds deemed "popular" by the press and public alike, aka those that the masses pile into until they're too large and unwieldy - and performance tails off - or have to be soft-closed - yes, there are a few exceptions to this (Neil Woodford being the most obvious but there are precious few others). I've seen it happen time after time over the last 20 years of fund-watching - even Anthony Bolton has now had to concede with the recent decision to split his Spec. Sits - and the soft-closing of George Luckraft's UK Eq. Inc.).

Most of the investing public would probably not have heard of many of the funds currently in my portfolios as they are either too young to have a long enough publishable track record or too obscure to even merit inclusion in the performance tables of many of the mags. (S&P/Lipper stats. have even missed some of them in the past )

There are probably as many different investment strategies as there are investors. The important point is to find one which you are comfortable with, and seems to work, and "stick to the knitting".

Long ago I discovered that fund research was much more enjoyable (and, subsequently, rewarding) for me than anything else so I have concentrated on that ever since. With investments, it is vitally important, IMHO, to specialize and stick to what you know.

The average return over the period on all my investment portfolios (which includes long-term core holdings as well short-term "satellites" was, at 37.7%, almost double the 20.9% quoted in the article so all the effort does reap rewards.


IMHO, there is just no substitute to DYOR.

sneekymum

EdInvestor wrote:

the public has chosen equity income funds and special situations funds run by the two longest standing fund managers in the UK with strong performance records, plus the JF commodities fund which has been going under various names since the year dot.

Think we've got a slice of most of those listed - sadly I sent only £1000 to Natural Resources on March 31st - today it's worth £1394. :rotfl:

The UK Small Business Sector did not perform as predicted and I had to do some shuffling half way through the year - generally I prefer to ride things out though.

The main thing to remember is that 95% of people don't even know what I'm talking about. And with average return of 20% last year quoted a lot of people are missing out - many even keeping money in non-ISA high street savings accounts at pathetic percents.