brokers & their identity & PMs

EdInvestor

One problem we keep coming up against on the investment side is the clash between what you might call "advice guided" saving and investing and "execution-only" saving and investing.

Advisors for instance never or rarely advise people to buy individual shares, because it is supposedly "too risky" ( and of course shares are not products that advisers sell).Similarly advisors are not really very up on savings accounts.Whereas many (perhaps most) serious private investors do invest in shares or take a more complex approach than advisers do to fund investing.

IMHO advisers' views are very welcome on the kinds of products they sell, like pensions endowments, mortgages, insurance policies, and indeed investment.But they shouldn't try to argue that their products and their investment approaches are the ONLY way people can achieve their financial aims and that discussion of all other methods should be excluded/banned on the basis it is being conducted by "amateurs" .

In these other areas it is usually the advisers who are the amateurs. Particularly as this website features mainly execution-only methods of saving and investing and is frequented by Moneysavers who are almost all operating without advice, it seems to me that it would be helpful for there to be less tension over DIY type issues, particularly as the cost of regulated advice is now so high that most people on MSE won't be able to afford it anyway.


Actually I see payless has addressed this very issue in the mortgage context on the L&C thread:

I would suggest that when getting advice, some people/ situations are better suited to face to face situation , where a variety of avenues can be explored more easily

( I often suggest this to people , if I feel telephone route is not suitable- even though it means I don't take on the case due to distance)

Others are better doing own research/ decisions , and then going direct ( or via a place to get rebate of commission)

IMHO the same situation applies on the investment side and there should be room for, and respect for, both approaches on MSE.

dunstonh

Similarly advisors are not really very up on savings accounts.Whereas many (perhaps most) serious private investors do invest in shares or take a more complex approach than advisers do to fund investing.

Persoanally, I find that insulting. Many advisors invest millions of pounds a year or manage portfolios into the tens, if not hundreds of millions. Whilst some advisors may not have a high knowledge of investment portfolio planning, others will. To say advisors are not "very up" on these things is a disgraceful thing to say. If you had said "some", then I would have no issue with that.

The reasons shares do not get mentioned is that it is outside the scope of authorisation for advisors. Someone that follows shares closely would have a better knowledge on shares than most advisors.

IMHO advisers' views are very welcome on the kinds of products they sell, like pensions endowments, mortgages, insurance policies, and indeed investment.But they shouldn't try to argue that their products and their investment approaches are the ONLY way people can achieve their financial aims and that discussion of all other methods should be excluded/banned on the basis it is being conducted by "amateurs"

Investing is about personal preference. I personally disagree with your HYP approach. However, there is nothing wrong with it. It is your way to invest and you like it that way. I prefer a wider diversification. Asset Allocation is generally considered to be the most suitable way nowadays. However, 10 years ago With Profits was. So only time will tell.

I don't think you will find any experienced investor or decent advisor say that a one fund solution is the best way although that is something we often see on these boards. Was that wrong? I would say so. So you would say but the person still did it. They may have got lucky and chose Fid Spec Sits 20 years ago!!! So it turned out right for them.

The issue I have with some of the amateurs is the when it comes to tax wrappers. Often some of the tax wrappers have been dismissed because of out-of-date or incorrect assumptions and opinions on them.

The amateur (do not like that term at all but it is technically correct) advisors here tend to answer posts with the solution that is right perhaps 70% of the time. Professional advisors have to get it right 100% of the time. If they don't, it gets put right. How much protection does the consumer have who followed the amateur "unknown" advisor with no qualifications or authorisation?

al_yrpal

Having followed these boards for some months I think the advisors who post here do a pretty good job, especially on pensions which are a technical and precise field. I think they should make it plain they are IFA's

Savings are fairly easy, just direct people to a list of the best deals and suggest they read the small print.

On investments, I often note that the IFA's back off a bit, because of who they are. My approach is, if you give someone a fish, you feed them for a day, but if you teach them how to fish you feed them for life. Thats where us amateurs can come in and suggest courses of action. Either get an IFA from 'unbiased', read a good investment book, or, if asked about a specific type of investment direct them to a web based list of things that fit the bill with a few tips and pointers to help them make their own decisions. As to investment styles, or telling people how to get started with share investment, I don't think that any of us can possibly hope to instruct an individual on how to invest on these forums, that is is just plain stupid. In my opinion even The Motley Fool is a bit off beam with its investment recommendations, there are more styles than what they recommend, and at least one of their styles, to me, borders on lunacy.

I sense from many posts answered by IFA's in a cautious tone, that the posters are not getting the straightforward answer they want. If appropriate I often toss in an idea at that stage. I am happy with that. And, when I get something wrong, someone is always quick to point it out, so thats failsafe. Thanks chaps!

Although I have learnt quite a lot by reading and posting questions on these forums, generally, I don't think that any of the UK internet sites that I have seen are particularly useful to anyone who wants to invest a small sum of money, or who want to learn about how to do it effectively. Now thats a provocative statement ! Over to you guys!

dunstonh

On investments, I often note that the IFA's back off a bit, because of who they are. My approach is, if you give someone a fish, you feed them for a day, but if you teach them how to fish you feed them for life. Thats where us amateurs can come in and suggest courses of action.

It's not the reason why....

I sense from many posts answered by IFA's in a cautious tone, that the posters are not getting the straightforward answer they want. If appropriate I often toss in an idea at that stage. I am happy with that. And, when I get something wrong, someone is always quick to point it out, so thats failsafe. Thanks chaps

You will find the IFAs are more cautious in responses relating to investments as there are just so many products and funds available. Whilst some are happy jumping in with "suggestions", the advisors (here at least) will use a bit more common sense and either avoid giving a direct answer or give a range of areas to look at without being specific.

There are something like 13 tax wrappers in this country. Which tax wrapper is more appropriate will vary from person to person. If you asked the amateurs to list when the different wrappers should be used, most would not be able to give sufficient answers.

Different providers will offer different features which suit some but not others. For example, there is a wrap that will take into account the value of investments on all a families holdings (and that includes family at other addresses) and will charge based on the total value of all their portfolios. So, if the total value of the whole family portfolio is above x amount, they will get a reduction in the percentage charge applying to all of them. Now an individual with a small holding may find that provider more expensive. Whereas a large family would find that provider much cheaper than the ones you usually see mentioned here.

If you look at investment bonds, the best bond provider changes almost on a weekly basis. Sure, the main ones at the top seem to be consistent but you cannot just come out and say this one is best as it may not be.

So, whilst an individual may say "do this one as its very good". An IFA can't say that because it may be the best option but it may not be. You cannot tell with the limited information available. Look at the number of times you get the IFAs posting corrections to information posted by some of the amateurs. It can sometimes seem like the IFAs are being negative on a point but it's only because we are trying to balance out the comments with all the pros and cons and not just a few key advantages that often appear.

That is why you see the IFAs being more cautious in the answers.

EdInvestor

Look at the number of times you get the IFAs posting corrections to information posted by some of the amateurs.

This tends to be a two way matter, though I would not use the word "correction", because much of what is posted by both sides is a matter of opinion and comment.There is no such thing as right or wrong answers.

It would only be if you had full fact find information that you could take a view of what might be correct.And this would only be in the regulated advice context, which by no means covers all the issues we deal with on MSE.

It is often much better to just forget all about what the advice textbook says and cut to the chase.

dunstonh

It would only be if you had full fact find information that you could take a view of what might be correct.And this would only be in the regulated advice context, which by no means covers all the issues we deal with on MSE.

So are you saying it's alright to give out information/advice that may be incorrect here?

It is often much better to just forget all about what the advice textbook says and cut to the chase.

You make it sound so easy. In fact, isn't that the problem there was with financial advice 10-20 years ago. Sell the product first and don't worry if the advice is right?

EdInvestor

In fact, isn't that the problem there was with financial advice 10-20 years ago.

No idea. There seems to have been plenty of misselling in recent years.

It is not actually necessary to get "advice" or buy "products" to be a saver and investor, you know.

Indeed some might say that the danger of misselling with certain products ( particularly those provided by insurance companies) is so high that it is wise to avoid both the products themselves and any "advice" relating to them.

Some might also say (MSE says this and I agree) that you are likely to improve returns if you sidestep the advice-based distribution system and use execution-only because you don't pay high charges.

But both styles are of course legitimate.It's up to the individual to choose. Some will prefer one, some the other.

dunstonh

It is not actually necessary to get "advice" or buy "products" to be a saver and investor, you know.

Of course it isn't. However, when you get posters here saying they know nothing about a subject and we know nothing about their circumstances, giving them one solution which may or may not be the best solution isn't fair on them. The fact they are here asking for advice means that there is a good chance that they will act on that advice.

Some might also say (MSE says this and I agree) that you are likely to improve returns if you sidestep the advice-based distribution system and use execution-only because you don't pay high charges.

Some may say most people have real jobs and don't have the time to put into their investments and it's better to get an advisor to do it than be a "lazy" investor. Time being money, in which case an advisor can be a cheaper. What if the forum posters suggested a unit trust to someone when the better product was a investment bond (not unusual. Higher rate tax payers come straight to mind)? The unit trust could end up costing thousands if not tens of thousands in tax. The investment bond would not. Advice costing say £2000 to save £20,000 in tax is good value for money.

The direct route and pricing from it is great for people who know what they are doing or least have a fairly good belief that they do (although any advisor could highlight cases where an enthusastic amateur made a right pigs ear of it). However, people who haven't got a clue shouldn't be encouraged to go it alone unless they have indicated that they are willing to spend time researching on it.

How many times have we seen posters say "I need a pension" and they get "do a SIPP, here are some cheap providers". How do we know SIPP is best for them? How do we know they are able to select the right investments and spread? How do we know they have enough money? How do we know if they have the time to monitor it? (30 years down the road, they could end up with all the money in the cash element because they never realised they were meant to buy investments from it!).

So, don't get my responses mixed up by suggesting I believe that everyone should get advice. That is certainly not the case. I'm just saying that we shoudln't get everyone to take the non-advice route when they are not in the position to do things correctly themselves.