first time investing via financial advisor

A_nice_fellow

Lokolo wrote: »

The basics, yeh sure, its easy to buy and sell funds through a discount broker... but then again not everything is black and white.

They offer a service, people choose to use that service. If you think thats stealing then quite frankly you need to go back to school and learn the meaning of stealing

Well of course it is not stealing in the sense that it is legal.

But it is a fact that most clients would be far better off financially with a tiny bit of education than they would entrusting their savings to a financial advisor. Which is somewhat ironic, no?

dunstonh

You're completely missing my point by asking if I can do it "without looking it up"

Well look it up then. Lets see if you get it right. Its a simple question and part of the knowledge that you say IFAs only take days to learn (despite the learning requirements being in the thousands of hours)

Remember that when paying for someone to do work you are paying for their time and knowledge and consumer protection. If you know the answers before the questions are asked then DIY can potentially be a better option. However, if you dont know the answers to questions that you never knew existed then DIY can be damaging.

Linton

A_nice_fellow wrote: »

Well of course it is not stealing in the sense that it is legal.

But it is a fact that most clients would be far better off financially with a tiny bit of education than they would entrusting their savings to a financial advisor. Which is somewhat ironic, no?

Doesnt the same thing apply to most suppliers of skills to the general public? What about slagging off all plumbers because anyone with a small amount of training should be able to fix a tap - charging a £35 call-out charge is daylight robbery.

ISTM the problem is that the cost of providing a bespoke IFA service is only really financially justifiable to people with a lot of money to manage, as in Dunstonh's example.

As we see from these forums there are many people with relatively little money who havent got the faintest idea of what to do with it. What do you advise they do - get the advice they need from a mate in the pub?

cepheus

dunstonh wrote: »

As are anyone that thinks that.

A 50% taxpayer, has £300,000 of shares showing a gain of £150,000. He also owns an offshore assurance bond, with a 100 segments, valued at £300,000, showing a £100,000 gain. He wants to gift £150,000 to his daughter, with the smallest tax liability for himself. He has already used his Capital Gains Tax allowance. How best is this done and with what tax liability?

Depends if you mean cash, or as a bond, and over what time period

I think 50 segments of the bond could be gifted across potentially free of tax, since this would qualify as a potentially exempt transfer, so if the taxpayer survived for 7 years there would be no IHT liability?

Didn't some IFAs get a bad name for overselling these bonds with steep commissions (7-8%)

dunstonh

I think 50 segments of the bond could be gifted across potentially free of tax, since this would qualify as a potentially exempt transfer, so if the taxpayer survived for 7 years there would be no IHT liability?

50 segments is correct. You win a virtual speedboat (in the tradition of the old crummy game shows!)

Didn't some IFAs get a bad name for overselling these bonds with steep commissions (7-8%)

You shouldnt blame the product. What about the vast majority that didnt take 7-8%.

Rollinghome

dunstonh wrote: »

You shouldnt blame the product. What about the vast majority that didnt take 7-8%.

That some IFAs didn't rip off their clients hardly indicates that there wasn't a problem. (Whether they were in the majority or not is open to argument.)

veloo

blewitt wrote: »

Looking into investing via a financial advisor, we decided on fee based. We obviously expect to pay for someone to manage our finances, but after reading the full cost I wonder what is the normal amount one should expect to pay. Although it has been explained to us, when it is in black and white the fees seem extremely high.

As others have mentioned, I don't think there might be a "normal", unless we can define the work involved as normal. But, whether the cumulative charges are fair, depend on how much you make/lose based on this advice. If I made £150k profits purely on his advice, I would be happy to pay fees of £10k. But, I doubt if the said advice would make you this much in profit on £160k capital..

I totally agree that it is worth educating ourselves, and talking to like-minded people. We are responsible for our financial affairs ourself. If the IFA advice resulted in a loss, as with many of my friends, you can't really get any money back from them. You might still end up paying for advice ending up in you losing your entire capital.

If I was redecorating my home, every year or even every quarter, it is much better and cheaper for me to understand and participate in that process myself. If it was purely a one-off, then I would engage a professional.

I wonder if we can have a forum where IFAs or any other salesmen are not allowed? They completely skew up a discussion between consumers!

cepheus

It seems to me that the main value of IFAs is really as an accountant and the variety of ways one can minimise tax through investments rather than a straight investment adviser, it's no good being able to look these products up yourself if you don't know what your looking for.

No doubt IFAs would claim to be able to provide a portfolio to minimise risk in relation to potential profits as well (by mixing different beta's up) providing a Black swan isn't lurking around the corner.

Talking about Black Swans I presume such offshore products aren't covered by the UK financial protection scheme and therefore dependent upon the issuing organisation remaining solvent?

feesarefare

Rollinghome wrote: »

That some IFAs didn't rip off their clients hardly indicates that there wasn't a problem. (Whether they were in the majority or not is open to argument.)

Whats with the past tense?

Rollinghome

feesarefare wrote: »

Whats with the past tense?

Fair point.

As someone working in the industry who's been critical of the sales-driven mentality of most IFAs, what do you think the eventual outcome of the Retail Distribution Review will be? When it's implemented in 2013 will it solve the misselling problems as the FSA intend or will the salesmen turned IFAs who currently dominate the industry run rings round them and carry on much as before?