Record repayment for bad financial advice

jem16

Rollinghome wrote: »

Is the advice of any value if it can't be relied up due to the known problem of commission bias that the FSA states it wants to eliminate? No advice might be better than biased advice.

How does paying trail commission signify bias?

I can see what you are trying to say regarding initial commission but I wasn't talking about that. I'm simply referring to the payment of the natural trail commission of 0.5% found in virtually all funds against the payment of a retainer fee.

dunstonh

Can you quantify the different levels - i.e. above what would be better off, bleow what would be worse off and what is the middle?

Its subjective as it depends on the fees you are compring it against. For example, a regional fee based only IFA around here has a minimum £2500 fee. So, if you compare the typical collectives maximum of 3%, you would have to invest more than £83,333 to be better off on fee basis compared to commission.

If you took the FSA average of 1.8% then you are looking at investments over £138,888

They don't appear here day after day banging the drum pretending they're whiter than white as you do.

If I do that its only because you are on here banging your anti IFA drum.

Your excuse seems to be: "We may be bad but the other lot are even worse."

No. Your excuse is that you say they are all bad and none are any good.

So you'd rather not say. Do your clients know your background or do you keep it a secret from them too?

For most people here, this thread is not about me. Only you want to make it about me. You have been warned by the board and banned by them before for going down that route. Thought you would have learned by now.

Rollinghome

jem16 wrote: »

How does paying trail commission signify bias?

I can see what you are trying to say regarding initial commission but I wasn't talking about that. I'm simply referring to the payment of the natural trail commission of 0.5% found in virtually all funds against the payment of a retainer fee.

But the trail commission isn't the same in all funds Jem. The collapsed Arch Cru funds recently reported on Moneybox (http://news.bbc.co.uk/1/hi/programmes/moneybox/8501831.stm) offered double the trail you suggest. With TERs close to 3% pa,they were sold as cautious managed funds but that was clearly not the case from the outset. The suspicion must be that the generous commission played as much a part as stupidity in the IFAs enthusiasm.

Similarly many fee-based advisers are very keen on tracker funds, some of which such as those of HBSC have a TER of only 0.27% and no initial charge. No room there for 0.5% trails.

Now commission based IFAs may well genuinely believe that managed funds charging TERs six times as high and more that pay them at least 0.5% trail commission might be better - or not. How would we know when the FSA considers there to be a considerable problem of bias. Why should it be that while fee-based advisers may recommend low cost tracker funds that commission based IFAs would rather eat glass?

And finally, it might be the view that a client with a very cautious approach would be best to not to invest most of his savings. But if a commission based adviser has a client investing only 50% in investments he'll get trail commission on only 50%. Not quite what most would want - especially those who are employed by their companies without any salary and earn only commission.

Rollinghome

dunstonh wrote: »

For most people here, this thread is not about me. Only you want to make it about me.

I expect your clients would want to know your background too. I would for someone I used for financial advice, especially if it was something he was very ashamed of. Is it really true that you get this board to ban people just for asking you? Still that's all behind you and I expect you're very respectable now so I'll try to remember not to mention it again.



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jem16

Rollinghome wrote: »

But the trail commission isn't the same in all funds Jem.

You'll note I didn't say all funds.

Similarly many fee-based advisers are very keen on tracker funds, some of which such as those of HBSC have a TER of only 0.27% and no initial charge. No room there for 0.5% trails.

How many fee-based advisers have you seen to justify this statement?

Why should it be that while fee-based advisers may recommend low cost tracker funds that commission based IFAs would rather eat glass?

A decent adviser will use trackers and non-trackers where appropriate in a diversified portfolio. Unless you have first-hand experience of advice from many fee-based advisers and commission based advisers?

And finally, it might be the view that a client with a very cautious approach would be best to not to invest most of his savings. But if a commission based adviser has a client investing only 50% in investments he'll get trail commission on only 50%. Not quite what most would want - especially those who are employed by their companies without any salary and earn only commission.

Yes always the advisers to avoid - those who work for large salesforces.

However I doubt there is much evidence of the small partner/director firm doing just that. Advice has to be justified or it could be open to a missale.

Rollinghome

jem16 wrote: »

You'll note I didn't say all funds.

No of course you didn't. You said "the natural trail commission of 0.5% found in virtually all funds" whatever that might mean. But of course it doesn't apply to virtually all funds either (unless they taught you a different meaning for the word at your school). If all funds and investments did pay the same, which as you now agree they don't, there would be less room for commission bias.

How many fee-based advisers have you seen to justify this statement?

I suggest you google a few fee based advisers and many will tell you on their sites. In fact for some it's almost a crusade for passive investment.

A decent adviser will use trackers and non-trackers where appropriate in a diversified portfolio. Unless you have first-hand experience of advice from many fee-based advisers and commission based advisers?

And how many fee-based advisers (or commission based advisers) have you seen to justify this statement? Indeed how many advisers have arranged portfolios for you? Do you keep changing them? Ask Mr D what proportion of the business he does is for 0.27% TER trackers. He's pretty hostile to them on this board, or hadn't you noticed?

Yes always the advisers to avoid - those who work for large salesforces.

Even more advisers you used? Do tell us about them all, you obviously get around don't you?

However I doubt there is much evidence of the small partner/director firm doing just that. Advice has to be justified or it could be open to a missale.

Yes I expect the FSA have got it all wrong. No problem of commission bias at all and the RDR is a complete waste of their time. Perhaps you could have a word with them, explain how you've had vast experience of using oodles of IFAs and put them right. They'd love to hear from you.


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jem16

Rollinghome wrote: »

I suggest you google a few fee based advisers and many will tell you on their sites. In fact for some it's almost a crusade for passive investment.

Ok I shall do.

And how many fee-based advisers (or commission based advisers) have you seen to justify this statement? Indeed how many advisers have arranged portfolios for you? Do you keep changing them?

Even more advisers you used? Do tell us about them all, you obviously get around don't you?
Yes I expect the FSA have got it all wrong. No problem at all. Perhaps you could have a word with them, explain how you've had vast experience of using oodles of IFAs and put them right. They'd love to hear from you.

The usual response from you.

Answer all questions with a question and finish with an attempt to insult. Seems little point in trying to hold a discussion with you so I'll leave you to it.

Rollinghome

Sorry if you feel insulted Jem but you do let yourself down when you use such desperate arguments to justify what you've been led to believe. You asked one question and one rhetorical question and the question was replied to with a statement, not a question. You are the one who has chosen not to answer questions. Don't forget to check the meaning of virtual too, it could help you in your career.



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jem16

Rollinghome wrote: »

Sorry if you feel insulted Jem but you do let yourself down when you use such desperate arguments to justify what you've been led to believe.

You wouldn't have a clue what I believe or disbelieve. You're only interested in what you believe.

You asked one question and one rhetorical question and the question was replied to with a statement, not a question.

You replied with a statement telling me to look up Google - I asked how many fee-based advisers you had seen not googled.


If as you suggested I asked a rhetorical question why did you feel the need to reply? Or have you not looked up the meaning of rhetorical?

You are the one who has chosen not to answer questions.

Didn't see much point when you have already decided the answers anyway.

explain how you've had vast experience of using oodles of IFAs and put them right

Don't forget to check the meaning of virtual too, it could help you in your career.

Now which one would that be;

1. The term has been defined in philosophy as "that which is not real" but may display the salient qualities of the real.

2. Colloquially, 'virtual' is used to mean almost, particularly when used in the adverbial form e.g. "That's virtually [almost] impossible".

3. Computer Science Created, simulated, or carried on by means of a computer or computer network: virtual conversations in a chatroom.

Yes I expect the FSA have got it all wrong. No problem of commission bias at all and the RDR is a complete waste of their time.

I believe the FSA has targeted the wrong group which will not necessarily benefit the client.

For the record I also believe that any adviser working purely on commission is one to avoid. However I see no problem in using commission to offset an agreed fee - a fee that is agreed before any products are recommended will remove any element of bias. Any extra commission will be rebated to provide enhanced terms.

Unfortunately RDR in its enthusiasm to ban commission bias seems to have left the client with fewer options than those that already exist, especially for those with enough for an IFA to be interested but not enough to consider themsleves wealthy.

jamesd

Rollinghome, how does £100 fee, no commission (so annual charges of funds are reduced), no investment selection advice, for a personal pension seem to you as a charge?