Hargreaves and Lansdown Review

jamesblue

dunstonh wrote: »

Which isnt great, isnt cheap but ideally suited to the "lazy" investor.
You do realise that you dont invest with the IFA. The IFA chooses the platform/provider to use based on the criteria given by the client. If the person wanted online access then all they had to do is let the IFA know and the iFA would then eliminate those that dont give it.

I would take the Jupiter fund over the HL fund. The HL fund is expensive and inconsistent (probably as its been at the higher end of the risk scale compared to funds in the sector).

Its a good platform and very useful for those wanting to DIY. It wont be as cheap after 2012 when platforms unbundle the charges but thats a few years away yet. However, be wary on the "information". HL in respect of their platform are not acting as IFAs. They are acting as a product provider selling their product. No different to Aviva, Friends Provident or Scottish Widows selling their product. They have a reputation of marketing funds they want to sell and remember that fund houses do pay the platform.

Thanks for the advice, especially the about Jupiter. I have found http://www.unbiased.co.uk and will have look for more IFAs in my area.

Very interesting about the "unbundle", I presume this is something to do with the FSA and hopefully a good thing for the consumer?


Thanks

dunstonh

Very interesting about the "unbundle", I presume this is something to do with the FSA and hopefully a good thing for the consumer?

Its certainly something the FSA are driving. However, for many consumers they could actually be worse off. A the moment, HL rebate about half what the IFA would be paid. However, post 2012, there will be no IFA payment. Also, when unbundled (and if, as its still in consultation), the platform will not be able to accept marketing payments, fees or a cut of the AMC from the fund house.

So, you can see that without those, they will have to explicitly charge a platform fee. Now, if you use managed funds, you are not really likely to see any difference. However, if you use tracker funds or direct investments you will as currently they are subsidised by the managed funds and backhanders.

Rollinghome

jamesblue wrote: »

Very interesting about the "unbundle", I presume this is something to do with the FSA and hopefully a good thing for the consumer?
Thanks

It's as a result of the FSA's "Retail Distribution Review" which was undertaken to to end the long-standing problem of bad advice from financial advisers due to "commission-bias".

It will be fully implemented by 2013. See http://www.candidmoney.com/articles/article52.aspx and www.moneyweek.com/personal-finance/need-unbiased-advice-youll-be-lucky.aspx .

The current position is that the majority of IFAs are from direct sales backgrounds of some sort, frequently employed on an un-salaried commission-only basis. The commision is paid by the product providers with higher rates of commission generally paid for selling their most profitable products.

The review will also require proper levels of qualification rather than the very basic qualifications currently required.

Understandably, as can be seen from the IFA trade sites, the dodgier IFAs are not happy and have done their best to rubbish both the FSA and the review. IFAs who are unable to obtain the higher qualification will have to find other jobs.

Instead of being paid the initial commission plus annual trail commission by the product providers, using the customer's money, regardless of the level of service, any remuneration from 2013 will have to be agreed with the customer.

The exact outcome is currently unclear but it's probable that the cost of investment will be driven down overall. In the past, the commission system has worked well for the providers to sell their products but less well for the customers.

Instead of the absurd levels of sales commission that have been paid, often for very little expertise, fees will need to be justified by the service given. Those genuine advisers who are capable of giving good financial advice will prosper. Those IFAs who are very good at selling but less good at giving advice will need to go back to other sales jobs.

jamesblue

Thank for the really good response, it made understand it alot more.

Thanks

Rollinghome wrote: »

It's as a result of the FSA's "Retail Distribution Review" which was undertaken to to end the long-standing problem of bad advice from financial advisers due to "commission-bias".

It will be fully implemented by 2013. See http://www.candidmoney.com/articles/article52.aspx and www.moneyweek.com/personal-finance/need-unbiased-advice-youll-be-lucky.aspx .

The current position is that the majority of IFAs are from direct sales backgrounds of some sort, frequently employed on an un-salaried commission-only basis. The commision is paid by the product providers with higher rates of commission generally paid for selling their most profitable products.

The review will also require proper levels of qualification rather than the very basic qualifications currently required.

Understandably, as can be seen from the IFA trade sites, the dodgier IFAs are not happy and have done their best to rubbish both the FSA and the review. IFAs who are unable to obtain the higher qualification will have to find other jobs.

Instead of being paid the initial commission plus annual trail commission by the product providers, using the customer's money, regardless of the level of service, any remuneration from 2013 will have to be agreed with the customer.

The exact outcome is currently unclear but it's probable that the cost of investment will be driven down overall. In the past, the commission system has worked well for the providers to sell their products but less well for the customers.

Instead of the absurd levels of sales commission that have been paid, often for very little expertise, fees will need to be justified by the service given. Those genuine advisers who are capable of giving good financial advice will prosper. Those IFAs who are very good at selling but less good at giving advice will need to go back to other sales jobs.

dunstonh

Thank for the really good response, it made understand it alot more.

I didnt see the comments before but they have little to do with unbundling charges on platforms. Thats just rollinghome doing his usual anti IFA rant.

The FSA is proposing to unbundle charges on platforms by stopping all payments from product providers to platforms. Its view is that the payment of fees (typically 0.25%) to platforms by fund managers clouds the issue over whether the platform is a technology enabler or a distributor. Furthermore, it suggests that fund manager rebates paid into the client’s cash account could also influence advice or marketing of a fund, so it favours the creation of a single, simple fund-management charge with no rebates, alongside a transparent platform charge. This will change the business model of every platform (Although some are there already).


That means that platforms that currently rely on these marketing payments and a cut of the AMC to fund them will no longer get those payments. So, they will have to introduce explicit charges to the consumer which they currently do not have. In return the consumer will find the AMCs on managed funds gets cheaper. So, its a bit of swings and roundabouts there. However, on direct investments and tracker funds, the charges are likely to go up because they are currently subsidised by those using managed funds (and marketing payments).

Rollinghome

dunstonh wrote: »

I didnt see the comments before but they have little to do with unbundling charges on platforms. Thats just rollinghome doing his usual anti IFA rant.

As a former salesman yourself who like many others then became an IFA, it's understandable why you should regard any post welcoming the new FSA regulations ending the commission system as "anti-IFA".

There are however other IFAs with a different background from yours who welcome the end of sales-driven commission payments and wouldn't regard the comments as in any way anti-IFA. They would very much like to see the old salemen types out of their industry as much as the FSA.

Paul Lewis of the BBC's Moneybox programme describes commission as "the cancer at the heart of the investment industry".

I hope people like you will be able to adapt. I'd also point out that this site is for everyone, not just for salesmen pushing their vested interests.

dunstonh

As a former salesman yourself who like many others then became an IFA, it's understandable why you should regard any post welcoming the new FSA regulations ending the commission system as "anti-IFA".

You dont half talk a load of rubbish.

There are however other IFAs with a different background from yours who welcome the end of sales-driven commission payments and wouldn't regard the comments as in any way anti-IFA.

So, why did you post an anti IFA post that had nothing to do with the thread or platform unbundling of charges?

I hope people like you will be able to adapt.

I have nothing to adapt to.

I'd also point out that this site is for everyone, not just for salesmen pushing their vested interests.

Its also not for forum trolls to try and create trouble. You have been banned before for making false accusations like that. So, please feel free to continue as no doubt the site management will deal with it the same way.