first time investing via financial advisor

debbie42

veloo wrote: »

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!

I'd find this forum a much less useful (and interesting) place if that was the case.

Using the earlier plumber analogy: I'm quite capable of changing a tap washer, but wouldn't want to install a complete central heating system. I wouldn't personally use an IFA to work out the best paying cash ISA, but would certainly use one for large, long term investments.

jimjames

cepheus wrote: »

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.

I think this is a really good point and something that isn't mentioned enough - if you have a large portfolio/assets/cash and are looking to minimise your tax bill now and in the future you can probably get some good advice and save money with an IFA. I'm just unsure whether someone starting out or with a small portfolio would actually benefit compared to what they could find out themselves when the charges are taken into account.

feesarefare

Rollinghome wrote: »

Fair point.

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?[/

QUOTE]

I dont think it will change much. You just have to look at these forums to see that the current commission disclosure rules are ignored by many advisers - they have been ripping the back pages off quotes since 1994.

Post 2013 theyll just "take" their "fee". As you know they get away with what they do because the bulk of the public are ignorant and that wont change on 1st January 2013.

feesarefare

debbie42 wrote: »

I wouldn't personally use an IFA to work out the best paying cash ISA, but would certainly use one for large, long term investments.

What criteria would you use in selecting an IFA?

cloud_dog

feesarefare wrote: »

What criteria would you use in selecting an IFA?

What criteria would you use in selecting a plumber?

feesarefare

cloud_dog wrote: »

What criteria would you use in selecting a plumber?

One that disclosed the full cost of the job up front, put in writing exactly what they we going to supply and that could prove they had the relevant qualifications to carry out the work.

Yourself?

Rollinghome

cloud_dog wrote: »

What criteria would you use in selecting a plumber?

I'm not sure that unrealistic similes help much but there's an obvious difference between a plumber and a financial adviser you might want to consider.

If a plumber fits a new washer and that stops a tap leaking then even if he does overcharge that doesn't effect the required outcome. The tap stops dripping.

When someone seeks advice to improve their financial situation, if the cost is too high that could result in actually worsening their returns and financial situation and so negating the whole point of the exercise.

cloud_dog

Rollinghome wrote: »

I'm not sure that unrealistic similes help much but there's an obvious difference between a plumber and a financial adviser you might want to consider.

If a plumber fits a new washer and that stops a tap leaking then even if he does overcharge that doesn't effect the required outcome. The tap stops dripping.

When someone seeks advice to improve their financial situation, if the cost is too high that could result in actually worsening their returns and financial situation and so negating the whole point of the exercise.

I would disagree. The similies are identical - well, perhaps not identical but certainly 'similar' .

You (a person) is selecting a person to carryout a service on their behalf without actually having the skills tho do the service themselves. Financial loss will come about from a bad IFA or plumber; the only difference is the degree.

feesarefare wrote:

One that disclosed the full cost of the job up front, put in writing exactly what they we going to supply and that could prove they had the relevant qualifications to carry out the work.

Excellent. So you have proven you have the ability to ask appropriate questions whether it be to an IFA or a plumber.

The risks, or their effect may vary but, the position you are in is no different all you can do is to ask approapriate questions and review past history (work).

Rollinghome

cloud_dog wrote: »

Financial loss will come about from a bad IFA or plumber; the only difference is the degree.

The difference is that IFAs are employed to improve a financial position. If because of costs, regardless of how competent they may be, they worsen the financial position then their service will have been totally pointless. The costs of a plumber do not in themselves effect the outcome of the job they were required to do. The costs of an IFA do effect the required outcome.

cloud_dog wrote: »

The risks, or their effect may vary but, the position you are in is no different all you can do is to ask approapriate questions and review past history (work).

And how would you suggest the past history of a financial adviser is "reviewed"? Would you ask to see examples of previous work? I am not aware of any IFA who provides performance figures or would offer to show details of work done for other clients. If you would care to point me towards one who does provide such details I'd be grateful. One who posts to this board perhaps? Have you ever used one?

cloud_dog

Rollinghome wrote: »

The difference is that IFAs are employed to improve a financial position. If because of costs, regardless of how competent they may be, they worsen the financial position then their service will have been totally pointless. The costs of a plumber do not in themselves effect the outcome of the job they were required to do. The costs of an IFA do effect the required outcome.

I understand what you are saying but you are missing the point.

Rollinghome wrote: »

And how would you suggest the past history of a financial adviser is "reviewed"? Would you ask to see examples of previous work? I am not aware of any IFA who provides performance figures or would offer to show details of work done for other clients. If you would care to point me towards one who does provide such details I'd be grateful. One who posts to this board perhaps?

I would ask to review the past performance over a number of timeframes of the portfolio they have suggested. If they are unable or unwilling to provide it then they wouldn't be for me.

So based on the information provided I would make a choice as to whether I am happy with the charges. If I am and they turn out to be higher than others might have been well.... its my fault. Perhaps I should have put more effort in to obtaining more information or gone through the same process with more IFAs.

Rollinghome wrote: »

Have you ever used one?

Nope.

We live in a world where we must call on professionals, plumbers, dentists, garage mechanics, to provide services for which we are not qualified / know anything about. How do you ensure the advice provided by your garage to replace your engine is correct, as this will have a significant finacial outcome on your effort to fix your car.

Wrt IFA's, yes the implication can be more significant but the process you must go through to ensure you are comfortable with the advice / recommendation is no different. The actual is different but not the process.