Do You Need Financial Advice? When To Get It, When Not To Get It Discussion Area

dunstonh

saverjustice wrote: »

2012 "Dear Mr Bloggs, I will receive 5% of your money when you invest in this"

2013 "Dear Mr Bloggs, I will receive 5% of your money when you invest in this"

Spot the difference.

You are ignoring the fact that at the moment that 5% is shown on an illustration and often not paid directly but factored into charges. Post 2012, it can no longer be factored and the person has to sign a fee agreement saying what the charges will be in advance.

If after all that, someone agrees to pay 5% on a large amount (as 5% may not be unreasonable on a small amount) then that is their choice to make.

saverjustice

You are ignoring the fact that a percentage paid for the advice given is the same cost to the consumer whichever way you skin the cat.

dunstonh

saverjustice wrote: »

You are ignoring the fact that a percentage paid for the advice given is the same cost to the consumer whichever way you skin the cat.

You are ignoring the requirement for a scaled reduction and/or cap. That doesnt exist on commission option currently.

If someone is willing to sign a fee agreement with a monetary amount that equates to 5% then more fool them. (FSA recorded average is 1.8% on collectives. 5% would require factoring on most products and that wont be allowed post 2012). If they have had advanced disclosure of the fee and are willing to pay a fee that equates to around 5% when another firm down the road has a fee that equates to 1% then that is their choice to make. Much in the same way you get builders quotes that can vary by £20,000 for the same job.

lordlucanfornow

Not sure what you mean. Thought Cofunds was a site that I look at to see any changes in value to funds . So if/when I transfer existing funds to PMG - it just means I can look at values (daily if I feel inclined). I realise I'm a complete ignoramus about investments!

needhelpIFA

I have £100,000 to invest, having sold an investment property. I have been in discussion with an IFA recommended by a friend, who wants a fee of £3000 up front and £1000 pa to advise on investing this sum. I don't really want a lot of advice, as I am financially-literate in broad terms (understand risk etc) and I'm happy to put it in a UK FTSE tracker (I have other investments with which this fits). So far, the IFA has been less than impressive. It has taken him 6 weeks after each contact to respond, and he has made suggestions that don't meet what I wanted (eg suggesting overseas shares when I've told him I'm overweight in non-UK already). To be fair to the man, I haven't paid him anything yet, and maybe if he had been paid he would be more focussed. But if he only responds after 6 weeks when he is trying to get my business, is he going to do a decent job? Is that a reasonable timeframe for responding?

Should I hand over my £3000 or tell him no thanks? He seems to be saying it doesn't really cost me 3000, because I save on commission, but presumably I could go to a discount broker and save anyway?

I don't see £1000 pa value in having ongoing advice, but am I right in thinking this would be covered by an annual fee I would be charged anyway, and which no fund rebates, so it wouldn't really cost anything?

saverjustice

I would ask you whether you have answered all your own questions.

dunstonh

I have £100,000 to invest, having sold an investment property. I have been in discussion with an IFA recommended by a friend, who wants a fee of £3000 up front and £1000 pa to advise on investing this sum.

First off, that is expensive. 3% plus 0.5% is the typical commission figure. So, you have been quoted above the commission option. On fee basis you would expect something around £1000-£2000 plus 0.5% p.a. (although 1% p.a. on smaller investment amounts is becoming more common and 100k is at the bottom end for many IFAs).

o be fair to the man, I haven't paid him anything yet, and maybe if he had been paid he would be more focussed.

Possibly. It is unfortunate but we do get a lot of people who try and tap you for information and "free" advice with no intention to use you. It can mean that you may prioritise elsewhere if you think the person is not serious about using your services. Human nature being what it is.

I don't see £1000 pa value in having ongoing advice, but am I right in thinking this would be covered by an annual fee I would be charged anyway, and which no fund rebates, so it wouldn't really cost anything?

Ongoing servicing typically means things like rebalancing the portfolio, bed&ISA and bed & pension, review risk profile, tweak investments if sector allocations have changed etc. Normally, it means doing that at no extra cost as the servicing charge covers it.

Part of that charge may well be covered by commission if commission investments were used. However, there are not many investments that pay 1%. Most common is 0.5%.

Reaper

needhelpIFA wrote: »

he has made suggestions that don't meet what I wanted (eg suggesting overseas shares when I've told him I'm overweight in non-UK already)

I am surprised he is giving you anything specific at all without an agreement in place. I wouldn't if I was him.

He seems to be saying it doesn't really cost me 3000, because I save on commission, but presumably I could go to a discount broker and save anyway?

A discount broker is cheaper than an IFA for the initial charge. Many funds reduce the initial charge all the way down to 0%.

I don't see £1000 pa value in having ongoing advice, but am I right in thinking this would be covered by an annual fee I would be charged anyway, and which no fund rebates, so it wouldn't really cost anything?

You can get a small part of the annual fund fees refunded with some discount brokers. This means it will probably (though not always) be cheaper to do it yourself.

If you are going via an IFA you are doing so because you need advice and are willing to pay for it. If not do it yourself.

bristolian

The MSE article (and the wikipedia page on Independent Financial Advisors) don't mention any of the 3 qualifications by the Personal Finance Society listed on unbiased.co.uk's page (although they both link to it), namely APFS (Associate, Personal Finance Society), Dip PFS (Personal Finance Society Diploma), FPFS Fellow, Personal Finance Society

Why? Are they new? How do they compare to the qualifications which are listed?

Thanks

dunstonh

bristolian wrote: »

The MSE article (and the wikipedia page on Independent Financial Advisors) don't mention any of the 3 qualifications by the Personal Finance Society listed on unbiased.co.uk's page (although they both link to it), namely APFS (Associate, Personal Finance Society), Dip PFS (Personal Finance Society Diploma), FPFS Fellow, Personal Finance Society

Why? Are they new? How do they compare to the qualifications which are listed?

Thanks

There are so many different qualification bodies now and different exam versions that its getting hard to keep track.

However, your best place to ask is the examining body.