A new financial advisor

jem16

whiteflag wrote: »

jem16 wrote: »

So if you do my plan and it shows I should make ISA provision of £300pm to attain my retrirement goals, you will then allocate funds from your multi-manager range of funds - is that correct? If so the amc will be around 1.7% to 1.85%?

Yes thats correct

OK, thanks. So presumably, as the adviser, the 0.5% trail commission included in that approx 1.8% amc goes to you?

whiteflag wrote: »

jem16 wrote: »

So I would be paying roughly 1.8% amc plus whatever your monthly fee is? What is the monthly fee again?

Its excellent value for money.

I'm sure it is at £140pm.

whiteflag wrote: »

jem16 wrote: »

Do you mean 0.5% to 1% on top of the 1.5% of the standard fund so 2% to 2.5%?

yes - in fact I have recently seen an IFA down your neck of the woods that takes 2% on the fund switches as well.

Now that is greedy.

whiteflag_3

jem16 wrote: »

OK, thanks. So presumably, as the adviser, the 0.5% trail commission included in that approx 1.8% amc goes to you?

yes, unless its rebated to the client.

I'm sure it is at £140pm.

Not far off

Now that is greedy.[/QUOTE)

Its daylight robbery
Point that out and its easy to gain a new client.

jem16

whiteflag wrote: »

yes, unless its rebated to the client.

When would you rebate the trail commission and when would you not?

Not far off

So have you put your prices up or down since you told me that in April?

Its daylight robbery
Point that out and its easy to gain a new client.

Fortunately it's not the adviser I see.

dunstonh

For example; for some people it may be better to place their corporate bonds inside an ISA rather than their equity investments due to their tax advantages. When the corporate bonds are a component of a multi-manager fund there is no way to do this.

Yep. do it all the time. Fixed interest should be prioritised in the ISA. Also, higher yield funds when you have a higher rate taxpayer.

if IFA's aren't qualified to pick fund managers what makes them qualified to pick fund of fund managers?

They are qualified and authorised and are required to. The issue is that some believe that some IFAs are not able to from a quality point of view.

I guess you could say that IFA's don't have the expertise to make dynamic asset allocation decisions whereas fund of fund managers may do. However, I feel that if the asset allocation is to be changed based on economic conditions then this should only be done with the objectives of the individual investor in mind.

This is why there are various firms that provide asset/sector allocation data to IFAs which get updated based on economic events.

whiteflag_3

Please take not Lokolo-

I would like to disagree with Dunstonh's last point for the following reason.

Most IFAs only hold the basic FPC1,2 & 3 qualification, which does not include any specific detailed fund selection questions. There are no questions about sharpe ratios, risk analysis etc etc. While they may be authorised they hold no more formal qualifications than the man in the street.

There are of course some who have higher qualifications.

Lokolo

whiteflag wrote: »

Please take not Lokolo-

I would like to disagree with Dunstonh's last point for the following reason.

Most IFAs only hold the basic FPC1,2 & 3 qualification, which does not include any specific detailed fund selection questions. There are no questions about sharpe ratios, risk analysis etc etc. While they may be authorised they hold no more formal qualifications than the man in the street.

There are of course some who have higher qualifications.

Doesn't CF2 cover the basics of needing to know how to build a portfolio depending on risk profile?

I thought it would, and although I haven't looked in details, I'm pretty sure I can do CF1 2 and 3.

Also, whats equity release?

fg22

whiteflag wrote: »

Fair point, so how just to clarify you are saying that someone age 40 with a balanced attitude to risk retiring age 65, would have a completely different portfolio to a 45 year old with the same risk profile and retirement date?

No probably not markedly different but I would expect to see some difference between someone who's 55 and someone who's 60. How many different funds do you use to allow for these differences?

whiteflag wrote: »

Possibly but its not something I come across very often.

Others such as dunstonh obviously do

whiteflag wrote: »

Nice idea in theory but there are not many IFAs who can do this in practice.

I wasn't necessarily suggesting they should, I'm just trying to understand your rationale for choosing multi-manager funds. As I see it there are a few arguments for doing so but none are really convincing for me.

1. That the fund provides the "correct" long term strategic asset allocation?

I would expect an IFA (perhaps with the help of some software) to be able to do this and rebalance when necessary. In fact, if he's not able to do so how does he know that the asset allocation of the fund he has chosen is actually suitable?

2. That the IFA feels unable to choose funds in each sector.

The IFA still needs to choose a manager and if they can choose 1 from the 100 balanced funds why can't they choose 1 from 100 European funds? The process should be the same just repeated for 10 different sectors.

3. That the fund manager can deviate from the strategic asset allocation to maximise returns.

The more actively managed funds do this and is where I feel that multi-asset funds can add value. However, it does add more risk and may not be suitable for everyone - especially with their whole portfolio.

4. It saves the IFA time and the above can be done more efficiently by the fund manager.

This makes sense but only if the IFA charges are reduced and the cost of the multi-manager is not being passed on in addition to the standard charges.

whiteflag wrote: »

Ps are you only talking about fund of funds or manager of managers as well , because as you know they are quite different.

Both - I think my points are equally valid whenever a single multi-asset fund is used for the entire portfolio.

EdInvestor

Lokolo wrote: »

Also, whats equity release?

Equity release is another name for a lifetime mortgage, where a retiree takes out a loan against his/her home with interest rolling up and repayable on death or admission to care.The plans these days come with a no negative equity guarantee and cash can usuaully be taken as a lump sum or on a drawdown basis.

jem16

whiteflag wrote: »

yes, unless its rebated to the client.

When do you rebate the commission and when do you not?

I'd still like an answer to this whiteflag - hopefully you just missed it rather than ignored it.

I'm trying to understand what your service offers over that of an IFA but I have to admit I'm struggling on a few points.

1. Whilst you point out that some IFAs have ridiculously high charges such as 2%/2.5% amc and 2% amc, your charges can be almost as high (if not higher depending on fund size) with 1.8% amc and a monthly fee of around £140.

2. You told me earlier in the year that you rebate the trail commission as you charge a monthly retainer fee. Now you say that you sometimes take that 0.5% trail commission yet you are not doing anything as far as fund picking/rebalancing is concerned. I would have assumed that you would always rebate it hence my question.

3. You say that IFAs are not qualified to choose funds but the only choice of funds you offer are from your multi-manager range. As fg22 mentioned this does not necessarily allow for the choosing of funds and placing them in the correct wrapper where there might be the best tax advantage.

IMHO there is room for both services and it really all boils down to what you are looking for and the size of your investment. What does disturb me is your persistent attempts to run down the service offered by IFAs as being practically useless and no better than what I would get if I walked up to someone in the street and asked them to arrange an investment for me.

Fortunately this has not been my experience of an IFA service.

whiteflag_3

jem16 wrote: »

When do you rebate the commission and when do you not?

It depends on the client and the retainer they sign up to. We aim to have all our clients paying the same for the same service.

I'd still like an answer to this whiteflag - hopefully you just missed it rather than ignored it.

bit unnecessary but never mind-i havent been in the habit of ignoring you Jem so why would I start now.

I'm trying to understand what your service offers over that of an IFA but I have to admit I'm struggling on a few points.

1. Whilst you point out that some IFAs have ridiculously high charges such as 2%/2.5% amc and 2% amc, your charges can be almost as high (if not higher depending on fund size) with 1.8% amc and a monthly fee of around £140.

The retainer pays for the advice not the product as explained quite a few times recently.

2. You told me earlier in the year that you rebate the trail commission as you charge a monthly retainer fee. Now you say that you sometimes take that 0.5% trail commission yet you are not doing anything as far as fund picking/rebalancing is concerned. I would have assumed that you would always rebate it hence my question.

correct , however we were still refining our client service agreement at that time and after involving our clients we altered our client service agreement to offer another option. (see point 1)

3. You say that IFAs are not qualified to choose funds but the only choice of funds you offer are from your multi-manager range. As fg22 mentioned this does not necessarily allow for the choosing of funds and placing them in the correct wrapper where there might be the best tax advantage

.

But thats where we add value , by doing the planning and chosing the correct wrapper. For example deciding a client is going to go into drawdown at 45 and choosing the wrapper to take them to 75 now etc.

What does disturb me is your persistent attempts to run down the service offered by IFAs as being practically useless and no better than what I would get if I walked up to someone in the street and asked them to arrange an investment for me.

At least we appear to agree on something - its disturbs me no end . We havent spent the last 18 months ( over 200hrs which is alot for a small business) completely re-engineering the way we work and the way we get paid, for nothing. The FSA hasnt come up with TCF and the RDR for nothing.

Fortunately this has not been my experience of an IFA service

Jem I hope I answered your questions so perhaps you will good enough to outline the "service" your IFA offers you and what he charges.