Knowledge- Advice -Advisers how much do I need

dunstonh

So do you mean don't have any client accounts now where you keep any of the commission?

What I do doesnt matter. Only you have this fetish over what I do. No-one else here is bothered. However, if it keeps you happy, I still have the odd commission case. Indeed, I have three on my desk at the moment which are on commission and all three are cheaper than fee basis. Hence why they are being done on commission.

You were saying on this board not long ago that you generally rebated part of the initial commission and kept the trail.

Most clients like the commission offset to pay the fee which most of the time involves rebating excess commission to match that fee. Most investments are explicit nowadays anyway so it doesnt matter.

I'm still interested why you prefer Blackrock. Especially as in another post you said you favoured Gartmore (apparently unaware that they underperformed competitors presumably because of the high AMC which included 0.5% trail commission).

I have never favoured Gartmore. I dont recall ever using it either.

But in suggesting UT trackers will always be average you seem to be ignoring the Morningstar research on tracker funds. They show that trackers can consistently deliver above average returns with only average risk. I assume you were aware of that?

On trustnet, trackers tend to be consistently around mid table.

I posted details of the L&G fund even though it's not likely to perform as well as the lower cost HSBC funds etc.

Yet many of the HSBC trackers underperform the others.

I know that some IFAs, especially smaller ones, aren't able to sell ITs but surely that doesn't mean they shouldn't at least have a reasonable understanding of them. I don't see how it's possible to tell a client that one investment is right for them without any knowledge of the alternatives - including ITs.

You will find the majority of IFAs cannot recommend ITs (or other direct investments that were previously under the stockbroker remit) unless they are packaged. The FSA has stated that it is considering allowing IFAs to recommend ITs and ETFs but no decision has been made yet.

Linton

Rollinghome wrote: »

What you will find me saying is that it is wrong for commission based based IFAs to misrepresent the facts on a board like this for their own interests and dismissing the possiblity that low cost trackers might suit some investors.

You must be reading a different forum to me! I dont see that anyone has ever denied that a tracker may be the right answer for some investors in some circumstances. What they deny - and I would certainly agree with them in this - is that a tracker is intrinsically the better option. In many cases it is not. You dont seem willing to accept this, particularly, if the person trying to explain this to you is an IFA.

One factor that hasnt been raised is that of diversification. Something simple like a FTSE100 tracker will automatically be significantly influenced by whatever is the latest bubble - that's how the FTSE index works. Buying an all-share tracker doesnt help much as the FTSE100 is something like 80% of the whole market. During the tech bubble the trackers held a rather risky proportion of tech stocks, just prior to the credit crunch they were heavily into finance. Just because something is labelled a tracker doesnt mean it is low risk.

I would therefore say that to recommend a tracker to new investors, purely on the basis of low charges, is most unhelpful. They are perhaps understandably very concerned about volatility and risk and dont have the expertise to put together a balanced portfolio. This is the area I think they need help with either via a forum such as this or from a paid advisor.