Why the fees-free "mania" on this site?

spuds_2

We were badly advised by a mortgage consultant over an endowment many years ago and so are pretty wary of such advisors. I feel the best way is to do as much research as you can for yourself first before you see anyone.

Jellycat, these are helpful sites for anxiety sufferers:

http://www.nomorepanic.co.uk/default.asp?t=cms
http://anxietynetwork.com/helpcope.html#helpcop1

dunstonh

We were badly advised by a mortgage consultant over an endowment many years ago and so are pretty wary of such advisors.

This sort of comment really gets on my nerves. Using that same principle, as Harold Shipman was a murderer, that means everyone in the NHS must be as well.

Plus the comment is also technically incorrect. Mortgage advisers can discuss mortgages. They are not investment class advisers so couldnt arrange an endowment even if they wanted to or even if there were any retail endowments left to offer. To discuss an investment product would require investment class authorisation which is typically an IFA or tied adviser.

If you were badly advised, you would have got redress putting it right. If you do it yourself you get nothing. Seeing as the Consumers Association were encouraging people to do endowments years ago, DIY research would have no doubt included them and you would have been stuffed if you acted on that.

kenshaz

Calm down the poster was only relating her/his experience ,surely that is allowed.Bad experiences do alter perceptions.But I do agree,publicity,and television documentaries and the media ,tar everyone with the same brush ,mud sticks,the sophisticated understand,others become concerned,the fear of fear.

MortgageMamma

spuds wrote:

We were badly advised by a mortgage consultant over an endowment many years ago and so are pretty wary of such advisors. I feel the best way is to do as much research as you can for yourself first before you see anyone.

Jellycat, these are helpful sites for anxiety sufferers:

http://www.nomorepanic.co.uk/default.asp?t=cms
http://anxietynetwork.com/helpcope.html#helpcop1

Hi Spuds

Its unfortunate you feel the way you do but you are not alone there are many genuine people who have suffered as the result of endowment mis sales that now cannot abide the thought of using a financial adviser again.

However, one of the aims of this site is to broaden one's mind and increase the amount of power consumers have, - knowledge is power so to speak.

DunstonH makes a very valid point that not all advisers are to blame, and obviously you will see being "tarred" because of past actions of other advisers, prior to the levels of regulation we work within in todays financial services environment, is a very sore point with the modern and ethical advisers of today.

I think in your circumstances it would be beneficial to you to look into the levels of legislation our regulator imposes on us. The costs alone of adhering to these rules, and the punishment if they are broken will have forced a lot of less meticulous advisers out of the industry.

I'm sure if you voiced your real concerns to any established adviser they would set you straight on what can and cannot be done, and the level of paper based evidence/justification we have to produce to back up any sale.

MM

PoorDave

Leon_W wrote:

Martin

RE: Fees free mortgages.

I only found this site recently and very good it is too. It's just an impression I get when reading these threads that just because lender X has a deal with no arrangement fee, valuation fee, and is offering free legal fees that this has to be a "good" deal. They aren't. The larger your mortgage the worse they are. Just an observation.

Your point about whole of market, fee free brokers is spot on though.

Paying no fees is a false economy designed to attract people to mortgages where the rate is higher, and many are sucked in.

spuds_2

I am not against paying for any service. I just think it is a good idea to find out as much as you can about anything first - that includes finding out about illnesses and treatment if you are seeing a doctor. My husband has a pension advisor, but he still does a lot of research himself.

We did get 'redress' over our endowment, but it was a long and stressful process. I feel sorry for those who were left with big shortfalls who did not have the ability or perseverance to sort it out.

MM - you are quite right, the finance industry is much better regulated than it used to be. I certainly didn't intend to tar everyone with the same brush. I would use an IFA in certain circumstances after doing my own research first.

PoorDave - you seem to be right about 'no fees mortagages' costing more in the long run. I have recently been working out if we could afford to move and many no fee mortgages have cost more by the end of the first year.

MortgageMamma

The basic prinicples of a fee's free mortgage is

the lower the mortgage, the more worthwhile it generally is

The higher the mortgage, the better off you will be paying a fee to obtain a lower rate

you need to balance the fee's with the additional you would pay in interest and work out the best method that way

The reason there are not loads of fee's free deals about is that it attracts lower value business, which is not as important to a lender as higher value business.

Either way, the lender will still make what they need to out of you, so its a no win situaiton. One way other the other, fee's or not, they are still going to have your money.

dunstonh

Calm down the poster was only relating her/his experience ,surely that is allowed.Bad experiences do alter perceptions

Just because I disagree with that comment, doesnt mean I was losing my temper or attacking spud. Spud is entitled to say that as much as I was making my response.

I feel sorry for the mortgage adviser. It is impossible for a mortgage adviser to sell an endowment or any other regulated financial services product. So tarring them with that brush is highly unfair. It takes an investment class adviser to sell an investment product. Although I hate be tarred with someone elses brush, as an investment class adviser, I do expect it. If I was a mortgage adviser, I would hate being tarred by that brush because it has nothing to do with you.

Also, you are looking at these things in hindsight. As mentioned, Which? recommended endowments and had best buys (which are actually proving to be quite poor now which shows how much they knew!). If a body claiming to be a consumer champion can get it wrong, then blaming advisers, many of whom were not around back then, is rather unfair.

Then there is consumer greed. How many would complain if their endowments were paying surplus? well, some do and they are more upset they havent been paid a compensation because their product is doing well. Its like they wanted to have been sold a duff product as they would have got a free payout.

The FOS published the claims stats recently and it was something like over 80% of current advisers have never had a complaint and something like 12 companies represent the majority of all complaints. If you ever wanted a reason to keep it independent, that is it.

When you see an adviser, ask for the research, question the advice and consider the responses but dont go with the attitude that the adviser is a crook because someone else who is long gone from the industry may have mis-sold a product 15 years ago.

DavidLaGuardia

The key thing is most low cost endowments have performed well relative to what was invested and the returns in the years invested. The reason many are not meeting their target is that growth, interest rates, inflation etc. are all lower than when the targets were set. In a low inflation environment the rate of real returns can often be higher (5% earned with 2% inlflation is better than 10% earned with 8% inflation). Ask youselves why there are companies out there willing to buy endowments off people wishing to dispose of them...are they the new philanthropists? Of course not. They are out to make the money on your loss. Interstingly, one of the bigest markets for UK endowments is Germany.
An endowment, like any other investment should be reviewed and expectations moved to suit.

Leon_W

I've often wondered what would have happened if endowments HAD performed.

I can see the television ads now !

"Were you advised to take out a repayment mortgage"

"Have your neighbours paid their mortgage off early and had extra cash to spare to buy a new car"

"You were probably badly advised"

"You are a victim"

"Get the Compensation YOU deserve"

"blah blah"

Your damned if you do and damned if you don't really.