Need advise, saw Barclays financial planner

dunstonh

Wouldn't your money (investment) be safer if it is done by your bank?

The same level of consumer protection exists whether its independent or Tied. However, the independent has tens of thousands of products available compared to the 10-15 products the tied agent has. Also, the IFA is usually cheaper (with regards to product charges being obtained) and IFAs can portfolio plan unlike most tied agents who's employer doesnt allow them to do it. Under FSA classifications, the IFA works for the client. The tied agent works for the insurance company they are tied to. IFAs have just 2% of complaints at the FOS despite being the largest distribution channel. Banks have over 50% of complaints. You decide which is best.

And just for clarification, the Barclays product is available through IFAs if we wanted to use it and I know that it can be retailed cheaper by IFAs. Not that you would want a lot of their products.

asdv

Ideally only use an IFA who charges by the hour. Otherwise you could be sold only the products that give them the best commission. There are exceptions to the rule but no way to find them out from the rest.
Moneyweek.co.uk has a policy of only listing those IFAs that will work for you without commission but there are very few sadly.
The DIY route is growing with the advent of the web. See John Kay's 'The Long and the short of it'.

dunstonh

Ideally only use an IFA who charges by the hour.

Or fixed fee. That is increasingly common nowadays as a lot of clients dont want an open ended charge.

A small top up of say £5000 would probably cost around £300-£500 by the hour but £50-£150 on fixed fee. Even on commission you would typically be looking at £150 at 3% (IFA average is 1.8% = £90).

Moneyweek.co.uk has a policy of only listing those IFAs that will work for you without commission but there are very few sadly.

Moneyweek is highly flawed if it is presenting that as an example. Under current rules, an IFA would be daft to rule out commission as a viable option. Too many consumers prefer at the moment. Mainly on smaller cases where commission is still cheaper than fees.

Also, under current rules, the increasingly common hybrid fee option where you agree a fee but use commission to offset that fee (with any surplus being rebated or used to improve terms) is technically classed as commission. It will be classed as fee from 2012. So any IFA presenting themselves as fee only wouldnt be able to use that method if they were true to their presentation.

The important thing is knowing what you are going to pay and what you are going to get for it. The method of payment is not as important as £1000 by cheque is the same as £1000 via the commission system (unless on pensions where tax relief can make using the commission system cheaper than cheque Also the commission system doesnt result in VAT being charged. Some transactions incur VAT and that can be avoided by collecting it via the commission system).

It is expected that Customer Agreed Remuneration (it will have a different name when formally launched for 2012) will be the most common method of payment but it will be fee structured and agreed in advance.

GeorgeHowell

I can't see any advantage to sitting down with people from banks to discuss one's investment strategy and plan. In fact, the next time I am invited to do so, I'm going to say something along the lines of "Why should I think that an organisation that patently cannot run its own finances can have anything useful to say about how I run mine". And yes of course they don't have your best interest at heart, only their own in terms of what they can sell you. They go through the motions of questionnaires etc because they have to, but when we remember that these alleged consumer protection measures were drawn up by the FSA, what confidence can we have that they are going to protect us one iota.

Independent IFA's, whether on commission or not, are likely to be a lot more objective than the banks. But they will still tend to try to guide people towards a more risky porfolio than many want to, or should, undertake. If what they recommend just does not 'feel right' then don't feel obliged to go along with it, because they "know best". If they had really cracked the investment condundrum then they would be just living in the Bahamas raking in the ackers wouldn't they ?

darrelcartrip

all banks want your cash currently and now more than ever, they also want it to be tied in..

if you can afford to tie up cash for such a long term then its your call, i for one wouldnt lock into anything long term currently, and that includes property and equities, unless i can afford to lose

asdv

dunstonh

Glad to hear that reforms in the way IFAs will charge are in the pipeline but there would need to be much more change than you describe, to make me buy any product arranged by one. The advent of the internet really has changed things rapidly in the last few years.

The commission fee that most people misjudge the cost of is not the upfront one but the annual 'trail' fee because it involves a compounding percentage calculation that few people would know to do and even fewer would believe the results of.
eg. A 2% extra commission on a 250,000 investment would cost an average of 8000 a year over 10 years if the growth was 7%/yr. Colossal costs by any measure but pretty standard practice.

The level of tie-in IFAs arrange for themselves was well illustrated to me recently when after a rather good tax year (I am self-emplyed) I sent for the first time a top-up of 9000 to my Personal Pension plan and was notified of a 650 commission out of it to go to the IFA that set up that pension 15 years ago and who has never contacted or advised me since. Needless to say I cancelled it.

I'm not sugggesting the extra 2% is what IFAs get. Rather illustrating the sorts of costs charged by the combination of IFA and Funds and Funds of funds etc.

hhh316

Hey guys

Today I got 3 missed calls from the Barclays Financial Adviser and a message reminding me about our appointment on Monday. Wow he is desperate!

Thanks guys I will see a IFA instead.

Reaper

GeorgeHowell wrote: »

the next time I am invited to do so, I'm going to say something along the lines of "Why should I think that an organisation that patently cannot run its own finances can have anything useful to say about how I run mine".

:rotfl:
I might have to use that line myself.

dunstonh

The level of tie-in IFAs arrange for themselves was well illustrated to me recently when after a rather good tax year (I am self-emplyed) I sent for the first time a top-up of 9000 to my Personal Pension plan and was notified of a 650 commission out of it to go to the IFA that set up that pension 15 years ago and who has never contacted or advised me since. Needless to say I cancelled it.

I'm not sugggesting the extra 2% is what IFAs get. Rather illustrating the sorts of costs charged by the combination of IFA and Funds and Funds of funds etc.

Commissions are nothing like what they were 15 years ago. However, on commission terms, pensions typically pay no trail commission. The fee structure can be changed to pay for servicing but on standard terms, nothing is paid the IFA annually.

Paying for advice is always going to involve a cost that doesnt exist if you DIY but an awful lot of people need advice. DIY if you know what you are doing can save you money. However, people can make a right pigs ear of it and for many the they dont have the time to spare. Its like anything though. You can save money if you service your car or do your own decorating. Doesnt mean you can do those things well or that you even want to. Its a choice people make.

DIY is not always cheaper either. Just take a look at the stakeholder pensions offered by the likes of Virgin and the supermarkets. They are either full retail cost or with a tiny discount (that is lower than the FSA published average that IFAs take). The Virgin pension is truely awful yet its aimed at the DIY individual and there are plenty of people that buy these things without realising that an IFA would be cheaper and better.

However, given the choice between IFA or tied agent, then its pretty much an obvious one.

nearlyrich

I don't like paying interest to banks etc but I have no problem with my very good IFA taking a fee for the advice he gives me, he is proactive and has definitely mitigated the losses on my portfolio by his prompt attention recently.