What would a IFA recommend?

a7man

If the IFA was good as you said though he would make you comfortable with the investment and warn you of any potential percentage drops involved. IFAs cant make the markets move, but they can help you take advantage of when they do, whether up or down.

GeorgeHowell

whiteflag wrote: »

GeorgeHowell wrote: »

What the typical IFA would call quote]

So what your definition of a "typical IFA" ?

I am also interested in just how many IFAs you have seen to allow to make such a judgement.

Well of course by definition I haven't consulted any. I do however read quite widely in the media about investment advise when IFAs and professional fund managers are often quoted or invited to express a viewpoint. Almost invariably their view of a 'cautious' portfolio for older people with funds that are never going to be replenished if lost is substantially less cautious than my definition of cautious.

I don't think most people need an IFAs if they are willing and able to use the vast amount of useful information now available in the printed, electronic, and broadcast media (the exception would be the seriously wealthy who may need advice on unusual investment opportunities, particular with a view to tax avoidance). If people do still decide that they want to invest in equities or equity and other typs of funds (and there's nothing wrong with that provided that they are going in with their eyes fully open) then there are all sorts of data and advice available in order to help to choose. I am very sceptical about the notion that IFAs are somehow better placed to make such choices than the experts who write in the media -- it comes back to the Bahamas theory that I mentioned earlier.

It's not necessarily about IQ and status either. I was talking to an acquaintance a few months ago -- an extremely bright and knowledgable person who had recently part sold his business and used an IFA to help decide where to put the money. He was dismayed about how much he had already 'lost' on the back of stock market dives, and of course the IFA when challenged had fallen back on the 'reality of the markets' etc. But it is clear that the attendant risks had not been spelt out to my friend in a way that prepared him properly for such an eventuality. I have no doubt that the IFA had complied with all the FSA requirements and had fully covered his a**e. But given the FSA's performance in monitoring anf regulating the banks, do we really have any confidence that their 'light touch' approach is worth a salt in terms of protecting us as consumers either ?

dunstonh

Well of course by definition I haven't consulted any.

So, in other words you dont know.

I do however read quite widely in the media about investment advise when IFAs and professional fund managers are often quoted or invited to express a viewpoint. Almost invariably their view of a 'cautious' portfolio for older people with funds that are never going to be replenished if lost is substantially less cautious than my definition of cautious.

How long is a piece of string. What is cautious on a 1-5 scale? What is cautious on a 1-20 scale? What is cautious to someone with £500k in the bank and looking to invest £50k and what is cautious to someone with £5k in the bank?

The word "cautious" doesnt matter. Investing within your profile does.

I don't think most people need an IFAs if they are willing and able to use the vast amount of useful information now available in the printed, electronic, and broadcast media (the exception would be the seriously wealthy who may need advice on unusual investment opportunities, particular with a view to tax avoidance).

In some areas bits are easy. In others its more complicated. A lot of the time DIY investors do ok and other times they make a right pigs ear of it. Most use advisers for a mixture of convenience and lack of their own knowledge.

I am very sceptical about the notion that IFAs are somehow better placed to make such choices than the experts who write in the media

Media coverage is pretty much generic. A lot of it is written by unqualified journalists who get quotes from fund houses, IFAs, tied agents, insurers, retailers etc. Some of whom have an agenda or come from their bank of advertisers.

He was dismayed about how much he had already 'lost' on the back of stock market dives, and of course the IFA when challenged had fallen back on the 'reality of the markets' etc. But it is clear that the attendant risks had not been spelt out to my friend in a way that prepared him properly for such an eventuality. I have no doubt that the IFA had complied with all the FSA requirements and had fully covered his a**e.

This highlights exactly what has been mentioned higher up. Markets go down, blame the IFA. Your friend clearly isnt as bright and knowledgeable as you suggest.

But given the FSA's performance in monitoring anf regulating the banks, do we really have any confidence that their 'light touch' approach is worth a salt in terms of protecting us as consumers either ?

Part of the problem with the FSA is that it has spent so long and so much money on hammering IFAs for the last 20 years that it didnt concentrate on the big issues.

IFAs (and other advisers in that class) pay more in levies to the FSA than the banks (levies cover the cost). Adair Turner from the FSA has said "The IFA community has paid too much for too long" and follows on from "“One of the regulator’s rationales for these budget proposals is to increase consumer trust. However, it has been proven that IFA firms are the most trusted in the sector and enjoy levels of consumer confidence that are at an all time high. "

IFAs only account for 2% of complaints at the FOS last year. Its been falling every year for many many years. Even when it was back at 11% many years ago, the FOS stated that the levels of complaints (which are only upheld in about 1/3rd) are very good for the level of transactions undertaken by IFAs. The FOS also pointed out that media perception did not match reality.

Your problem George is that you want the advisers to have a crystal ball and turn in positive returns every year. That isnt going to happen. That isnt how it works. Never has, never will.

whiteflag_3

GeorgeHowell wrote: »

whiteflag wrote: »

Well of course by definition I haven't consulted any.

LOL , a real expert then!

It's not necessarily about IQ and status either. I was talking to an acquaintance a few months ago -- an extremely bright and knowledgable person who had recently part sold his business and used an IFA to help decide where to put the money. He was dismayed about how much he had already 'lost' on the back of stock market dives/quote]

Doesnt sound to bright and knowledgable to me, then perhaps you get your definition of bright and knowledgable from the media!

Heres a tip for you Dod, stop reading the Mail .

dunstonh

It does mean they need to steer punters towards collective managed funds that pay them commission rather than investments that don't.

So you would rather see an adviser that breaks the rules and recommends investments they are not authorised to recommend?

Listen to any IFA and it's always a good time to buy something that pays them commission.

IFAs are the biggest introducers to NS&I products out there. There is even an NS&I site for IFAs. Yet NS&I dont pay a penny. So, how do you explain that?

Your comments sound like the typical misinformation that comes from a Daily Mail reader.

ten.sbih

To me the answer is simple.

Find a Chartered (or Certified) Financial Planner who is remunerated by fees and not commission.

dunstonh

We are touchy aren't we?

No. You posted assumptions and myths which are wrong.

As you say, by and large, IFAs can only sell and get commission on certain managed funds such as unit trusts etc. which is why they push them rather than for example investment trusts which don't pay commission to IFAs and generally have much lower management costs.

Investment trusts are direct investments and not available to most IFAs to recommend. If you want a discretionary invesment manager or a stockbroker then employ one. Expecting an IFA to do those roles when they are not authorised to do so and then criticising them for not breaking the rules is rather silly.

Find a Chartered (or Certified) Financial Planner who is remunerated by fees and not commission.

Yep. Fee or agreed remuneration in advance (hybrid fee/CAR) is the way to go.

It still wont stop the people who have never used an IFA from saying how biased or wrong IFAs are though

Stavros_3

Just as an aside. What is the usual Fee% for commission based investments through an IFA

dunstonh

I wonder how long the commission-only salesmen used by Dunstonh's firm would keep their jobs if they persuaded the prospects to stay in cash? Not long.

New login i see. Same old rubbish and lies though. What commission only salesmen?

Dont you think that it is a bit stupid to come back and start making these sorts of comments again after you were banned by the forum before?

They can only sell a very narrow range of investments - such as unit trusts.

over 30,000 funds through the various investment wrappers and access to DIMs when required. So, a very narrow range if you consider 30,000 and access to direct for those that want it.

They will still be able to employ commission-only salesmen with no basic wage.

How do self employed survive with no basic wage? Don't see you accusing them the same way.

Just as an aside. What is the usual Fee% for commission based investments through an IFA

Fee will depend on what is agreed. Typically its a lot less than commission for larger cases but commission remains cheaper for smaller cases or at least has a longer break even point.

Average commission on collective investments (UT/OEICs) is 1.8% of the initial invested plus 0.5% fund based trail.

whiteflag_3

ten.sbih wrote: »

To me the answer is simple.

Find a Chartered (or Certified) Financial Planner who is remunerated by fees and not commission.

Yep , like the UKs biggest fee only adviser , Towry Law.

Ironic then that Towry Law's business plan is to get as much money as possible into their own funds. They have to be the proof that fees dont mean the advice is going to be any better.