Why do the British public have a jaundice view of financial planners?

lisyloo

The lifetime guarantee (if it exists) only covers mis-selling.
It does not give any guarantee of good advice.

For example if the IFA had recommended investments in 2010 which returned 7% when the FTSE did 12% and generally did a poor job, then you would not be able to complain.

It's great to have liability cover, but it doesn't ensure a good job or provide any cover if they are poor, only if mis-sell.

I have no axe to grind either way.
I use IFAs for some things (pensions and investments).

One of the problems I've found, is that they are limited on what they can advise on.
So last year for example I put money into NSI savings certificates at RPI+1%.
This has turned out well, but clearly there is no interest in an IFA recommending such a product as they don't get paid.
I know for a fact that a good IFA will talk about savings and high st bank products, but they can't officially recommend them as it doesn't ear them any money.
There seems to me to be a conflict of interest here as some people might be better off using savings/high st products.
My in-laws for example are 83 and don't want to tie any money up (for obvious reasons).

dunstonh

For example if the IFA had recommended investments in 2010 which returned 7% when the FTSE did 12% and generally did a poor job, then you would not be able to complain.

That is not an example of doing a poor job.

If you take a risk scale of 10 covering the unit trust universe with cash savings benchmarked at 1 (meaning the highest risk UT funds were 10 - to put the scale in context), then The FTSE is around risk 7/8. Someone with a risk profile of 2 or 3 shouldnt expect to get returns comparable to the FTSE as they are not taking the same level of risk.

However, investment returns themselves are not something you can complain about. Use of the wrong tax wrapper or investments outside of the risk profile are examples of mis-sale potential.

It should also be noted that employed advisers have no personal liability for the advice they give. Self employed/partnerships do carry personal financial liability for life for the advice they give. Directors, whilst not personally having liability, will see their earnings hit if the firm has to pay redress (so small local limited companies can be viewed in the same way as self employed/partnerships to some extent). It will not surprise you how much extra care you are likely to take if you are carrying the financial liability instead of an employer. Indeed, its often said that new trainee advisers are best starting out at a bank as they get to make all the newbie mistakes on bank customers without having to worry about taking the responsibility for them.

So last year for example I put money into NSI savings certificates at RPI+1%.
This has turned out well, but clearly there is no interest in an IFA recommending such a product as they don't get paid.

IFAs are the biggest introducers of NS&I products out there. NS&I even have an IFA site and they keep IFA details on file for communication purposes. So, whilst some may not consider non commission products, its clear that many do.

I know for a fact that a good IFA will talk about savings and high st bank products, but they can't officially recommend them as it doesn't ear them any money.

IFAs can recommend products that dont pay (and indeed from the end of 2012 that will technically be all products apart from insurance) or that they dont have direct access to themselves.

lordhaldon

Rather than tick the box, I will publicly say "Thank you dunstonh."

mikey72

dunstonh wrote: »

That is not an example of doing a poor job

dunstonh wrote: »

If you take a risk scale of 10 covering the unit trust universe with cash savings benchmarked at 1 (meaning the highest risk UT funds were 10 - to put the scale in context), then The FTSE is around risk 7/8. Someone with a risk profile of 2 or 3 shouldnt expect to get returns comparable to the FTSE as they are not taking the same level of risk.

However, investment returns themselves are not something you can complain about. Use of the wrong tax wrapper or investments outside of the risk profile are examples of mis-sale potential.

It should also be noted that employed advisers have no personal liability for the advice they give. Self employed/partnerships do carry personal financial liability for life for the advice they give. Directors, whilst not personally having liability, will see their earnings hit if the firm has to pay redress (so small local limited companies can be viewed in the same way as self employed/partnerships to some extent). It will not surprise you how much extra care you are likely to take if you are carrying the financial liability instead of an employer. Indeed, its often said that new trainee advisers are best starting out at a bank as they get to make all the newbie mistakes on bank customers without having to worry about taking the responsibility for them.



IFAs are the biggest introducers of NS&I products out there. NS&I even have an IFA site and they keep IFA details on file for communication purposes. So, whilst some may not consider non commission products, its clear that many do.



IFAs can recommend products that dont pay (and indeed from the end of 2012 that will technically be all products apart from insurance) or that they dont have direct access to themselves.

It may not be a poor job.
It may be unfortunate timing that an investment product that has done well, suddenly fails to perform after the IFA has recommended it.
Whether the customer could have done better or not becomes a moot point then.

It doesn’t help to know that even though it may be the fault of the recession, that the customer has to carry on working for a few more years, to cover the shortfall, while as posters like lordhaldon are keen to point out, they can still expect to be paid £200 a meeting, and can still retire as 47. Especially if it’s pointed out on a moneysaving website.
So, whether it’s good or bad advice, it’s certainly a feeling of injustice to some, and we only read about the bad ones in the Daily Mail.
As to the lifetime liability, that's ok unless your IFA is 45 years older then you, then his lifetime guarantee won't really help your pension if it falls apart when you come retire.
That makes an institutional guarantee much more attractive.

lordhaldon

foggytown wrote: »

Like Lady MacBeth, methinks you protest too much. You have an agenda. This alone undermines your credibility.

Thank you. Just to confirm yet again, I do not have an agenda to drive. I am not an adviser of any kind. I do not earn money from anything on this site. After 42 years of taking the money out of the industry, if it is so bad, why?

lordhaldon

mikey72 wrote: »

........ while as posters likelordhaldon are keen to point out, they can still expect to be paid £200 a meeting, and can still retire as 47. Especially if it’s pointed out on a moneysaving website.

As to the lifetime liability, that's ok unless your IFA is 45 years older then you, then his lifetime guarentee won't really help your pension if it falls apart when you come retire.

I retired at 47 through ill health - not because I had amassed a fortune. I was never an IFA or advised anyone. As for the lifetime guarantee, it's for YOUR lifetime or the lifetime of the product. So, your IFA can be a 100 years older than you, it doesn't matter.
PS. It was £200 per hour not per meeting.... and you still have not told us what you do.

mikey72

lordhaldon wrote: »

I retired at 47 through ill health - not because I had amassed a fortune. I was never an IFA or advised anyone. As for the lifetime guarantee, it's for YOUR lifetime or the lifetime of the product. So, your IFA can be a 100 years older than you, it doesn't matter.
PS. It was £200 per hour not per meeting.... and you still have not told us what you do.

£200 per hour, my apologies in that case.

How could my job affect your view, or others, of IFA's, which is the thread you started?
I may use them, I may not.

lordhaldon

dunstonh wrote: »

And you met the 30,000 or so IFAs and god knows how many tied agents?

Same brush and tar come to mind

lisyloo

That is not an example of doing a poor job.

Ok, I accept it was not a good example.
I don't work in the industry so I'm sure you coudl pick holes in any example I gave.
However my point was that the liability is for mis-selling and not poor performance by the IFA.
I think lordhaldon is trying to tell everyone they are safe and that's not the case. The insurance is rather more specific.

IFAs can recommend products that dont pay

I know that some do (and said so).
But I do not believe that many business people who are successful at what they do, spend a lot of their time engaged in activities that don't make them any money.
It just isn't practical for them to drive that side of the business.

I'm not complaining, it's a observation.
If I went to a car showroom, I would not expect them to spend they valuable time, extolling the virtues of the bicycle.

mikey72

lordhaldon wrote: »

Same brush and tar come to mind

I know a good garage for MOT's if it helps.
I've even been in a good Kwik Fit.
I know a good plumber too.

What's that got to do with what you admit is a "jaundice view of financial planners"?
Do you plan to give any help as why the view is wrong, or just reinforce the view for us?


edit - you missed my response to dunstonh quote, I'll copy it for you, and to repeat my view.

"But good FSA's are worth it, bad ones aren't. "