IFA - paid for advice or non-charging, which is best?

spa_3

I personally am not against the idea of paying an advisor an annual fee or monthly retainer style (with the thinking that they are not solely motivated by commission??).
Is this foolish and a waste, can I get just as good advice from using a commission only?

As a footnote - I recently saw an advisor from Ablestoke (formerly Perfect Day consulting) but have not heard good things from this outfit. But it did get me thinking about getting paid for advice.

moana

IMO it is better to do some groundwork yourself.

You will learn about some things and you won't have to depend on anyone who really doesn't have your best interests at heart and will only let you down at some time.

You will soon become as expert as most of the so called IFAs.:eek::D

Aegis

moana wrote: »

You will soon become as expert as most of the so called IFAs.:eek::D

I find that a little unlikely! I've been doing my own research for some time now and I'm still far behind the board's IFA posters in terms of knowledge.

Edit to add: You also get no protection from the FSA/FOS against mis-selling if you decide to go alone. You can invest entirely in the wrong risk profile and without proper attention to long term tax planning, and you have no-one to blame but yourself. If this isn't an issue, then self-learning for a fairly long time before making your decisions can work if you're patient enough.

dunstonh

You will soon become as expert as most of the so called IFAs.

three exams to become mortgage qualified, 5 exams to get to certificate level and 4 exams to get to Diploma level (the minimum standard from 2012 for existing IFAs and 2010 for new IFAs). I very much doubt you would come even close to passing the simplest mortgage exam let alone the rest.

Is this foolish and a waste, can I get just as good advice from using a commission only?

It depends on the size of the portfolio and the service you want. There are three options available generally.
1 - Commission
2 - Fee
3 - hybrid fee (known currently as Customer Agreed Remuneration where you agree a fee but use the commission method to pay for it)

2 and 3 are usually the best options for all but the very smallest transactions and from 2012 option 1 will no longer be available.

If the retainer means that future transactions are carried out on nil commission basis and you get free fund switches and portfolio rebalancing then it can work out good value for money. I would only pay a retainer though if there is no natural trail being paid on the investments as the IFA shouldnt get both. It should be one or the other.