IFA 'independance' question

Valcor

Hi noobie here:)

I have a number of debts and may wish to take the lump sum from my pension, and/or somehow deal with our mortgage and credit cards and are considering contacting an IFA. I have read on here that some IFAs are 'truely' independant and some are restricted to only certain products, I'm wondering is there an easy way of telling which is which. I have been mis-sold products before and am a little wary of financial advisors:(

Thanks for any advice.

Velcro_Hotdog

www.unbiased.co.uk can be used to search for a firm by post code and I think it gives you the option to filter the search results by selecting there status.

Failing that, ask them or read there terms of business which will tell you there status (sometimes found on there website)

HTH

dunstonh

I have read on here that some IFAs are 'truely' independant and some are restricted to only certain products

That is not correct. FAs are restricted. IFAs are independent. There are some IFAs that may work to more of a panel (typically the building societies and HSBC) and they are worth avoiding.

SallyG

After my divorce I checked out a few IFAs - looking for "unbiased" advice - but most of them seemed to be tied to an "IFA company" - one I remember was Sesame -
[another "Millfield" ?? went bust during the run up]
kind of IFA conglomerates?
Do these IFA groups have special relationships with particular funds/pension companies?
None of them seem to come up with the same "best buy" when I was looking for a resting place for my share of the pension.

Velcro_Hotdog

I think IFA firms can be a member of the Sesame network, in return they get help with compliance, training, regulatory updates etc etc. The firm would still be independant just part of, or a member of said oganisation.

dunstonh

After my divorce I checked out a few IFAs - looking for "unbiased" advice - but most of them seemed to be tied to an "IFA company" - one I remember was Sesame -

Sesame Bankhall are the biggest network/compliance company in the UK. The IFA companies that use Sesame Bankhall (or most other network/compliance companies) are not tied in any way. Indeed, the networks have little influence over the member firms other than compliance requirements.

Do these IFA groups have special relationships with particular funds/pension companies?

The idea behind networks is that pooling compliance requirements reduces costs. However, it also has allowed product providers and the networks to negotiate terms that a directly authorised IFA without buying compliance services would not get. So, there is some enhanced terms with some product providers but I wouldnt say there is any special relationship. Just your typical economies of scale that exist in most retail areas. (i.e. when Sesame Bankhall negotiate terms they have 8000 odd IFAs using them. When they look at a small local firm who doesnt use a compliance company then the scale of distribution is tiny in comparison).

None of them seem to come up with the same "best buy" when I was looking for a resting place for my share of the pension.

Seeing as there is no such thing as a "best buy" it would be hard to come up with the same thing. investing is about opinion. Service levels are based on experience. What is best for one person is not for another. A lot of things about investing are subjective.

Bigsmak

SallyG wrote: »

After my divorce I checked out a few IFAs - looking for "unbiased" advice - but most of them seemed to be tied to an "IFA company" - one I remember was Sesame -
[another "Millfield" ?? went bust during the run up]
kind of IFA conglomerates?
Do these IFA groups have special relationships with particular funds/pension companies?
None of them seem to come up with the same "best buy" when I was looking for a resting place for my share of the pension.

The Best buy today might not be the same as the Best buy tomorrow.

Some companies I will stay away from because their rep is a fool and you get poor service. However, some might not be the cheapest but will answer all my queries in minutes and I couldn't praise them higher. Sometimes that is worth recommending a company for the sake of a tiny bit of a percent.

If I were you, I would find an IFA that I can trust, and use over and over again. Perhaps ask your friends or colleagues if they have used anyone?

Valcor

dunstonh wrote: »

That is not correct. FAs are restricted. IFAs are independent. There are some IFAs that may work to more of a panel (typically the building societies and HSBC) and they are worth avoiding.

I suppose that's what I was thinking about:o

I will investigate further and as bigsmak suggested will ask around my friends and get some recommendations.

Thanks for all your comments:)

Loughton_Monkey

Firstly, you are using 'loose' terminology. Make no mistake, an IFA is one thing. A Financial Advisor (FA) is a different animal. Avoid the latter.

Whether or not an IFA is 'truly' Independent depends upon your definition of 'Independant'.

In one sense they are. But personally I look on large firms as a 'no go' area on the main principle that there is usually a rabid MD in charge of the large company who considers sales results as the be-all and end-all of performance. But when you get to 'small local' firms, then these can range from the excellent, intelligent and genuine good advisor, right down to the dilatory, lazy, and money-grabbing type who's only interest is to sell you as much as possible while staying within the 'rules and guidelines'.

At another level, I have my doubts as to whether they are 'truly' independant. I can only get across what I mean by way of a made up example. Looking at your post, you mention debts and you mention a pension. You also mention taking your tax free lump sum early to help pay for debts. Now my point is that possibly a "True Independent Advisor" [if exist] would run through all the reasons you are in debt. Your income, outgoings, spending lifestyle, etc. He could well come up with the 'optimum' solution which may be an extremely strict budgeting and spending system, paying off your debts, getting you back on course, and leaving your pension intact.

History would show, however, that 99% of IFA's would end up selling you some form of 'appropriate' pension drawdown arrangement that would give you your lump sum now.

After the full impact of RDR, however, where it's all about an up front quoted 'fee', and no commission, then in theory you could get impeccable advice that results in the sale of absolutely no financial product.

[To put my cynical hat on, though, I still have my doubts, because as far as I know, the RDR has not investigated the 'Independence' associated with lavish golf-days, lunches, and 'seminars' [in Bali preferably], offered to IFA's by Financial Product Providers, which may have some 'vague' link with the volume of business placed!]

dunstonh

History would show, however, that 99% of IFA's would end up selling you some form of 'appropriate' pension drawdown arrangement that would give you your lump sum now.

You are probably right. However, for an IFA to do the sort of advice you give would mean putting them on a retainer and paying them fees which the UK public in general has shown little appetite for. Some will do that but most wont.

So, IFAs coming in "after" the event has been created and then needing to sort it out and using a product to do that is often the outcome because its the only thing that can be done at that time.

Its a bit chicken and egg.

To put my cynical hat on, though, I still have my doubts, because as far as I know, the RDR has not investigated the 'Independence' associated with lavish golf-days, lunches, and 'seminars' [in Bali preferably], offered to IFA's by Financial Product Providers, which may have some 'vague' link with the volume of business placed!

That is very 1980s and very life companies. Its not very 2010s though in the era of platforms. Tied salesforces still give big incentives for sales but you are lucky if you get a desk calendar nowadays. A couple still give a bottle of wine here and there. There are a few providers that will do a 1 day event with a training and marketing session but they are few and far between. Most marketing or training related seminars throw in a carvery lunch at the hotel its being hosted at. Not exactly at the level where you can be bribed unless you are really sad. That said, I do believe that had Arch Cru not targeted Chartered financial planners and wined and dined them with those high up in the company to make them feel more important than they were, then probably no-one would have invested with them. So, there must be some out there who are gullible enough to be fooled and sad enough to be bribed!

The best bribes have come from clients! The cakes that are baked or the jam that you are given and the market gardeners who stock you up on fruit and veg or bedding plants do wonders.

Loughton_Monkey

dunstonh wrote: »

.... but you are lucky if you get a desk calendar nowadays. A couple still give a bottle of wine here and there. There are a few providers that will do a 1 day event with a training and marketing session but they are few and far between. Most marketing or training related seminars throw in a carvery lunch at the hotel its being hosted at. Not exactly at the level where you can be bribed unless you are really sad.

OK. I stand to be corrected. I am by nature a 'bit' cynical [Ha!] and if I've been told once, I've been told a million times not to exaggerate. So either I'm wrong, or you're too honest and don't splash such a huge amount of business in the same direction.

dunstonh wrote: »

The best bribes have come from clients! The cakes that are baked or the jam that you are given and the market gardeners who stock you up on fruit and veg or bedding plants do wonders.

Wonderful. A note of your specific tax district (and reference number) would be helpful here. A pound of apples has a value - a percentage of which should head towards our HMRC friends. If not, perhaps they will inform the local constabulary. I'm told that in Norfolk, they are particularly numerate, being able to count the seven deadly sins on one hand?

[PS If you are given 4 apples, presumably you could put all 4 into your pension and receive and extra once from HMRC. If 40% tax payer, you could claim another one back under self-assessment.]