Investment Bonds

EdInvestor

I've been meaning to ask you guys how Joe public would go about locating a "New Model Advisor" and how he would recognise that it was indeed such a modern version of the IFA beast (rather than an imposter of the Old Model variety) when it was sat in his living room?

dunstonh

EdInvestor wrote:

I've been meaning to ask you guys how Joe public would go about locating a "New Model Advisor" and how he would recognise that it was indeed such a modern version of the IFA beast (rather than an imposter of the Old Model variety) when it was sat in his living room?

Only way at the moment is to ask, perhaps before they get into the living room.

New Model charges can vary a bit but the principle is the same. For example, I did a hybrid SIPP on Monday and took no initial charge at all but took 0.75% fund based instead. So, the 1% plus 0.5% can still be played around with to suit different people but you get the idea.

It is quite important to look at the new model basis as the advisor business model is heavily financed by the performance of the investments. The more the values go up, the more the advisor gets paid. If it goes down, the advisor is paid less. Also, retention of that business is important as its your income stream. You tend to do work to keep what you have. Its not about policy flogging which the old model basis works on. i.e. sell a policy, get paid all the money up front and then move on to the next person. There is no incentive for servicing or performance. The Canada Life bond on this thread is being recommended on old model basis. If Mus was to see a new model advisor on 1% plus 0.5% p.a., they would find a saving of around £1000 straight away due to only 1% being taken. This would either result in less charges or increased allocation (in the case of bonds). Plus, the portfolio would usually be built better and information presented better.

Whilst we see many posts suggesting Cavendish or others as the best route, it is possible that an IFA giving advice at 1% plus 0.5% trail can beat Cavendish on nil advice basis with a number of products (especially if that 1% has a cap).

EdInvestor

dunstonh wrote:

... the (new) advisor business model is heavily financed by the performance of the investments. The more the values go up, the more the advisor gets paid. If it goes down, the advisor is paid less. Also, retention of that business is important as its your income stream. You tend to do work to keep what you have. Its not about policy flogging which the old model basis works on. i.e. sell a policy, get paid all the money up front and then move on to the next person.

This all sounds fine:) The key difference is that the advisor's interest is allied to the client's.That's what we all want to see.I'm found a few of these New Model types here.However as you can see, these advisors all seem to be focussed on very well-off people.:(

What about ordinary people? They seem still to be stuck with the duff old model advisors.If so, it's hard to see what a person of more modest means can do to avoid getting ripped off other than doing some research in places like this site and then going the execution/only Cavendish type route.

dunstonh

What about ordinary people? They seem still to be stuck with the duff old model advisors.If so, it's hard to see what a person of more modest means can do to avoid getting ripped off other than doing some research in places like this site and then going the execution/only Cavendish type route.

The example you link are to the award winners. That tends to be only companies with high turnover. The smaller independents, such as myself, never get a look in against the bigger companies. Its why I personally think these awards are pretty naff as its the same people voting for a small number of individuals that each time

So the ordinary client can still access them. That hybrid SIPP I mentioned was only 30k. The "award winning" firms are cherry picking thats all.

Chrismaths

Perhaps you ought to dump AIFA and start a new association, to distance the NMA from the Old Model Salesman. Any ideas for an acronym?

ATIFA? Association of Truly Independent Financial Advisors?

dunstonh

ATIFA? Association of Truly Independent Financial Advisors?

You would need to incorporate "independent" independents as those IFAs employed under a salesforce owned by a bank or insurer shouldnt be included (although they are usually the ones that are closer to the old model than the new). Although I am sure you would run out of space to have all the initials to cover the title

Chrismaths

Ok. Association of Truly Independent Financial Advisers With A Vested Interest in Their Clients' Best Interests?

ATIFAWAVITCBI?

Seriously though, a discriminating association, with high standards, a voice to counterbalance the ABI - and bulk buying power. That I'd like to see.

EdInvestor

How many of you New Model types are around now and are you in contact with each other?

I see there's a trade rag called something like New Model Adisor, published by Citywire, who seem to be promoting the concept.

https://www.citywire.co.uk

dunstonh

Its a growing concept. At a recent seminar, there was a presentation made highlighting the benefits of the new model advisor. It must have been a powerful presentation as the two advisors that came with me as guests are going to move to the new model basis over the coming 12 months and they are the typical recent ex tied salesforce advisor where upfront commission has been the norm. They are getting there initially by ceasing to take full upfront with no trail and move to initial plus trail. Then phase their initial amount down over time as. Its not a transition that can happen overnight unless you have significant capital reserves.

The citywire publication indicates there must be sufficient numbers to support a weekly mag and there is certainly some a lot of promotion of it going around. However, I cant tell you what the numbers are. I would guess a minority but a significant minority that is growing.

EdInvestor

Comment today from Gavin Lumsden, editor in Chief of Citywire:

Reading the write-up of the recent ‘Meeting of Minds’ conference* I was pleased to see a lot of the ideas and themes we have been promoting: I was particularly interested to see the observation that, ‘There is a need to promote the ‘New Model Advisor’ (sic) - there isn’t a voice for the forward-looking advisor.’ O yes there is! And it knows how to spell adviser too!

*Perhaps this was the one you attended?