first time investing via financial advisor

jimjames

Unless your finances are exceptionally complex I'd be wary about anyone suggesting you need to have quarterly reviews. If structured correctly even yearly could be overkill unless your situation changes.

Monitoring an investment quarterly and changing on the basis of poor performance for example just seems a guaranteed way to lose money.

Andy

bigfreddiel

DiggerUK wrote: »

blewit, it gets worse.
IFA's do not even have to hold a GCSE exam pass in Maths, Economics, Business Studies or Basic Principles of Accounts.

On top of that they are not qualified in any aspect of Market Analysis, nor are they expected to be.
They really are just sexed up sales reps of financial services and products.

DiggerUK - my sentiments as well, IFAs are just money grabbing salesman, the only finance they are interested in is their own - avoid at all cost.

If you are intelligent enough to save £160k then you have the intelligence to invest it yourself, just needs a bit of research, a bit of learning and confidence.

fj

jimjames

hermionepotter wrote: »

Should I just choose my own investments or go with the IFA???

Personally I do all my own investments. The internet has completely changed the landscape compared to 15 years ago when I used an IFA to setup a pension that proved to be excellent for him but not very good for me!

The information and resources available if you are prepared so spend some time are vast and you will have more savings to grow as you've not paid out fees first. When the past is no predictor of the future for investment performance and funds appear and disappear off best buy lists with worrying regularity I'm not sure how much value an IFA could add to fund selection.

Having said that for complex financial matters and ensuring you minimise the amount of tax you pay now & in the future it is worth finding one you can trust.

Andy

Aegis

DiggerUK wrote: »

blewit, it gets worse.
IFA's do not even have to hold a GCSE exam pass in Maths, Economics, Business Studies or Basic Principles of Accounts.

I've asked you before: why does this matter?

All IFAs have industry-specific qualifications above GCSE level, a qualification which includes calculations (for example, relevant taxation) together with some principles of economics. On top of that, most IFAs have or are working towards a degree-level qualification in financial planning.

Your claim that not having GCSEs in Maths, Economics and Business Studies is somehow detrimental to an IFA's ability to conduct business is absurd.

On top of that they are not qualified in any aspect of Market Analysis, nor are they expected to be.

And why would they be? In the vast majority of cases, timing the market is pretty pointless compared to time spent invested in the long run. The work of market analysis to determine an effective current asset allocation is easily sub-contracted out to a firm which contains numerous chartered financial analysts. Obtaining such a qualification would be pointless for an IFA.

They really are just sexed up sales reps of financial services and products.

They aren't reps. Hence the term "independent". They do sell financial products, so in that respect they are salesmen, but so are the people running your local supermarket. Selling things doesn't make you evil, especially in an industry where the requirements for demonstrating the suitability of the advice and the specific product selection are so stringent.

feesarefare

DiggerUK wrote: »

IFA's do not even have to hold a GCSE exam pass in Maths, Economics, Business Studies or Basic Principles of Accounts.

A rare occasion that Digger has actually said something that is technically correct.

On top of that they are not qualified in any aspect of Market Analysis

Couldnt last- some arent qualified but many many are.

They really are just sexed up sales reps of financial services and products

Sexed up ! chance would be a fine thing - 90% are males over 50

Rollinghome

Aegis wrote: »

I've asked you before: why does this matter?

As you work for an IFA in an industry where qualification are generally fairly minimal, it’s understandable that you should insist that qualifications don’t matter.

In the wider world, qualifications tend to be used as a measurement of competence and often determine an appropriate level of remuneration. For that reason most would expect to pay more for the services of a qualified architect than a building technician; for a solicitor rather than a solicititor’s clerk or a ‘will-writer’. Qualifications are also regarded as indicative of the level of skill required.

As Mark Hoban pointed out, the QCF Level 3 for an IFA is the same standard as obtainable by a McDonald’s shift manager, or a teaching assistant, or a net-ball coach, but the fees asked by IFAs tend to be much higher than equivalently qualified trades.

Qualifications matter when overly large fees are demanded by people with minimal educational and vocational qualifications.

feesarefare wrote: »

Fees as a percentage of the amount invested are just commission- please dont let anyone tell you any different.

The point made by Feesarefare is also very valid. The most obvious test of whether an adviser is trustworthy is whether their fees are fair.

Due to the changes being forced through by the FSA, over the next few years we’ll see a lot of former commission-based IFAs, predominantly ex-bank and insurance salesmen, rebadging themselves as “fee-based” but wanting to keep as close to the old structures as they can by using their sales skills and working on a percentage basis.

The problem of percentage based fees for clients is that the remuneration to the IFA is still dependent on the advice given.

Telling a client to pay off a mortgage rather than invest or to stay as he is in savings will earn him less. Companies charging on a percentage basis will still reward IFAs with commission and/or bonuses for persuading clients to maximise the amount invested with them even if the commission doesn't come from the investment providers as now.

Far better to use someone who charges fixed fees, as does Feesarefare, or works on an hourly basis following an estimate. Then there should be nothing to gain from giving truely unbiassed advice.

feesarefare wrote: »

Sexed up ! chance would be a fine thing - 90% are males over 50

Such modesty.

cepheus

I wonder why there are no IFAs paid in proportion to the portfolio profits they recommend? :eek:

After all if the markets have a few bad years they can still look forward to performance over the long term

datostar

cepheus wrote: »

I wonder why there are no IFAs paid in proportion to the portfolio profits they recommend? :eek:

After all if the markets have a few bad years they can still look forward to performance over the long term

Interesting thread, this. Your post puts me in mind of the business model of racing tipsters who take a proportion of the profits on the winning bets. The client takes all the risk and only pays his adviser when he wins. Contrast with the IFA's client who takes all the risks and pays, win or lose. Is a racing tipster more ethical than an IFA?

DiggerUK

Aegis wrote: »

I've asked you before: why does this matter?
All IFAs have industry-specific qualifications above GCSE level, a qualification which includes calculations (for example, relevant taxation) together with some principles of economics. On top of that, most IFAs have or are working towards a degree-level qualification in financial planning......

You and yours have no qualifications above bottom level passes at GCSE.
Mathematical qualifications are all about calculations, and you do not regard maths as important?
If I had 160,000 pounds to invest I would feel a lot safer knowing my adviser could at least do basic sums!

As to the tish tosh of an IFA qualification at QCF level 4 being the rough equivalent of the first year of a bachelor’s degree. then please excuse me whilst I 'pea my pants laughing'
To get on a uni course you need at least three A levels, something IFA's don't need, and as anyone who has done a degree course can testify, the first years marks count for nothing, it's just to get you bedded in to academic disciplines.

dunstonh

I wonder why there are no IFAs paid in proportion to the portfolio profits they recommend? :eek:

You mean apart from those that are.

After all if the markets have a few bad years they can still look forward to performance over the long term

You average out the ups and downs. Short term losses dont make a bad portfolio and short term gains dont make it good. Those that are paid based on the valuation of the portfolio would get paid less if it goes down and more if it goes up which is just about the only way in reality to align interests.

You and yours have no qualifications above bottom level passes at GCSE.

That is wrong. Whilst there is a minimum level of qualifications, that doesnt mean all have the minimum.

Mathematical qualifications are all about calculations, and you do not regard maths as important?

It plays a very little part in what you do day to day in the real world.