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

dunstonh

I have a jaundiced view of financial planners as I suspect a lot of them consider their own self interests before their customers.

Of course they do and I hope they all do. I hope everyone puts their family ahead of others. Anyone person that tells you that they do their job because they dont care more about their job than their family is selfish.

I know this might upset the applecart but I think they are really just salesmen.

It doesnt upset the applecart. It just confirms that you dont know the subject. Sales reps are salesmen. It would be daft to suggest otherwise. However, not all advisers are sales reps.

When you got to buy a car you know the car salesman will try and sell you a car that will maximise his commission. I think IFAs are just the same. They try and sell products that make them the most money.

IFAs are selling advice. Not products. People buy the advice. Sales reps are selling products. If you agree to pay the IFA £500 for advice then it doesnt matter if you buy one product or another or no product. The IFA gets the same. Sales reps though earn on the product sold.

darkpool

I agree that every person considers their own self interest (to a certain extent) in any activity they are involved in. But I would trust the word of most other advisers higher than an IFA.
Maybe with the new FSA regulations concerning commission IFAs might sell advice. But up to this point in time I think it fair to say that IFAs have sold products. Or is there another reason why IFAs "sell" more commission paying Unit Trusts as opposed to no commission Investment Trusts?
I think overall the entire investment industry misleads the customer. For instance why does a Total Expense Ratio not cover the total expenses of a managed fund? The TER doesn't cover dealing and other costs. What other industry would use a word like "Total" in such a misleading way?

dunstonh

Maybe with the new FSA regulations concerning commission IFAs might sell advice.

Most IFAs already do and have done for a while.

But up to this point in time I think it fair to say that IFAs have sold products.

Years ago the ratio would have been higher as that was the norm. Nowadays though far more work to agreed remuneration levels.

Or is there another reason why IFAs "sell" more commission paying Unit Trusts as opposed to no commission Investment Trusts?

Yes there is. Most IFAs do not hold the authorisations to recommend investments trusts as ITs are not packaged products. Until recently they fell under the remit of a stockbroker. Not an IFA.

I think overall the entire investment industry misleads the customer. For instance why does a Total Expense Ratio not cover the total expenses of a managed fund? The TER doesn't cover dealing and other costs. What other industry would use a word like "Total" in such a misleading way?

There is inconsistency there. However, pension funds have used TER as the AMC for many years. A lot of life funds do too. Its mainly the unit trust universe that its still optional. However, even there now you find many platforms use or disclose the TER now.