Financial Advisor - recommendations

Rollinghome

Sceptic001 wrote: »

This advice is almost as bad as the alternative suggested by Panorama, which was to put one third of your cash into savings and gamble the rest on "risky" shares.

That is true of bank salespeople (I made the identical point here), but not IFAs, especially if you are paying a fee.

Where do you think IFAs come from? What do you think 99% did for a living before becoming an IFA?

To quote an earlier remark to someone who wanted to be an IFA from one of the IFAs in this thread: "If you are not sales minded you will not succeed".

dunstonh

if they sell advice why do they get commission on products they sell. is that not the sign of being a salesman?

does the commission they get not make them biased?

If the remuneration is agreed in advance then the product has nothing to do with it. The remuneration is the same whether xzy product or abc product is put in place.

Sceptic001

Rollinghome wrote: »

Where do you think IFAs come from? What do you think 99% did for a living before becoming an IFA?

I assume the correct answer is that they were bank salespeople, but what is your point? What they used to do is irrelevant.

When they worked for the bank their remit was to make profits for the bank. When they work for a client their remit is to do their best for their client. I accept that if commission-based there is room for a conflict of interest, but if fee-based there is no such conflict.

Rollinghome

Sceptic001 wrote: »

I assume the correct answer is that they were bank salespeople, but what is your point? What they used to do is irrelevant.

When they worked for the bank their remit was to make profits for the bank. When they work for a client their remit is to do their best for their client. I accept that if commission-based there is room for a conflict of interest, but if fee-based there is no such conflict.

Then I suggest you look at one of the many 'Situations Vacant' sites for IFAs.

There you'll find that some firms will employ IFAs on a commission-only self employed basis, others will employ on a salary plus the rest in commission. The terms will vary but invariably will involve at least part on commission. In other words, much as most other direct-sales staff are employed.

This ad is fairly typical: "Employed IFA, Derby: IFA vacancy - Derby - c£25k basic (c£70kpa OTE) + uncapped Bonus + Benefits." (OTE being if they hit their sales targets of course.) Other firms will only take on IFAs on a self-employed commission only basis such as: http://jobs.ftadviser.com/job-detail.aspx?id=84481&joblistingparams=searchparams%3DRecruiterID%253d395%26order%3Ddateposted%26pagesize%3D10

The amount of commission they earn will depend on the amount they sell, not on the quality of their advice. Being "fee-based" can mean many things. Where they call themselves "fee-based" but charge a percentage of the amount invested rather than an hourly fee or per transaction they'll be paid bonuses on the amount they can persuade the "prospect" to invest. I assume you were aware of that.

Surprisingly perhaps, banks are less likely to pay their salesmen commission than IFA firms. That's not to say I would suggest using a bank for advice, certainly not for large sums, but it does suggest that to say that bank advisers are just salesmen but IFAs never are is nonsense. If you read the forums for IFAs you'll see many who are proud to call themselves salesmen. The difference being that they are better, more persuasive salesmen than the ones who stay working for the banks. Thus they tend to earn more.

So those who need advice from advisers should do so by all means but they need to be more realistic and just a little less naive. Naivete is endearing but liable to harm your wealth. It's a rough old world.

darkpool

Lokolo wrote: »

Read a book? It's taken me a good couple of years researching, asking questions, to fully understand financial information. Someone with a full time job will not have the time nor interest to do so.

If we all had time to do everything ourselves, we wouldn't take our car to a garage for a service. We wouldn't call a plumber if our water stopped. We wouldn't hire gardeners etc.

Asking a workmate or friend? I think out of my big group of friends, there are 2 of us who know anything financial. One is an accountant and doesn't know a lot about investments, and the other is me. Now I doubt I could even begin to explain how to invest to my friends because for starters, they don't even know the benefits of a S&S ISA and what CGT is!

Every anti IFA person on this board expects everyone to have free time to learn all this stuff, it's like they are living in their own fantasy world where time is infinite.

you really think it takes a couple of years to get your head round the concept of ISAs and SIPPS? How about trackers? How many years study before you got to know the pros and cons?

How much do you pay a plumber each year? If you have a 100k of active funds it will cost you over two grand a year in fees 500k would mean 10 grand a year in fees in all honesty how hard is it to run a portfolio? I would use a plumber as it's not worth my time to learn plumbing. But it is worth my time to learn about investment to save me paying a financial salesman to "invest" my money.

darkpool

Sceptic001 wrote: »

This advice is almost as bad as the alternative suggested by Panorama, which was to put one third of your cash into savings and gamble the rest on "risky" shares.

ehhhhmmmm you really think it is a bad idea to read a book about investment? why do you think it bad advice to ask friends for advice on investments?

when you buy a car or house would you not read up on the subject or ask friends their opinion?

Lokolo

darkpool wrote: »

you really think it takes a couple of years to get your head round the concept of ISAs and SIPPS? How about trackers? How many years study before you got to know the pros and cons?

How much do you pay a plumber each year? If you have a 100k of active funds it will cost you over two grand a year in fees 500k would mean 10 grand a year in fees in all honesty how hard is it to run a portfolio? I would use a plumber as it's not worth my time to learn plumbing. But it is worth my time to learn about investment to save me paying a financial salesman to "invest" my money.

ISAs, SIPPs, Funds, Investment Trusts, ETFs, Risk Classes, Taxation etc. from start to finish, doing a few hours a week, yes, a couple of years, there's very few people who have the time to do it any faster.

And the second bit in bold is about YOU. You don't want to learn plumbing but you will quite happily learn about finances. Not everyone is YOU. I don't take an interest in cars, I take it to a garage. However my best mate is the complete opposite, couldn't give a figs about finances but can fix a car in no time. As I've said before, it's not all about time, you have to have an interest in it, otherwise you don't learn anything and get bored, make mistakes.

However I did laugh at your comment of "Oh how hard is it to run a portfolio?". So £500k - how would you invest all of that? I want a detailed report, risk analysis, fund analysis all done. Of course I want it done for free as well, don't want to pay you to do all this work.

darkpool

dunstonh wrote: »

If the remuneration is agreed in advance then the product has nothing to do with it. The remuneration is the same whether xzy product or abc product is put in place.

ohhhh i'm terrible sorry. i was under the impression that active funds paid "trail commission" to the IFA that flogged the fund to the punter.

i'm sure we can all agree that commission is a sign of being a salesman, and there's nothing wrong with that. but when salesmen label themselves "independent" and "advisors" it is a bit misleading.

it's a bit like a double glazing salesman calling himself a "independent wall visibilty advisor"

opinions4u

darkpool wrote: »

it's a bit like a double glazing salesman calling himself a "independent wall visibilty advisor"

Even if he only sells Everest glazing?

What a pointless example.

darkpool

Lokolo wrote: »

ISAs, SIPPs, Funds, Investment Trusts, ETFs, Risk Classes, Taxation etc. from start to finish, doing a few hours a week, yes, a couple of years, there's very few people who have the time to do it any faster.

And the second bit in bold is about YOU. You don't want to learn plumbing but you will quite happily learn about finances. Not everyone is YOU. I don't take an interest in cars, I take it to a garage. However my best mate is the complete opposite, couldn't give a figs about finances but can fix a car in no time. As I've said before, it's not all about time, you have to have an interest in it, otherwise you don't learn anything and get bored, make mistakes.

However I did laugh at your comment of "Oh how hard is it to run a portfolio?". So £500k - how would you invest all of that? I want a detailed report, risk analysis, fund analysis all done. Of course I want it done for free as well, don't want to pay you to do all this work.

years and years of study? i'd think a reasonable intelligent person could understand an ISA in well under an hour of study.

if i was paying a plumber 10k a year for a couple of hours work i'd learn plumbing

500k portfolio. me personally,FTSE350 direct shareholdings plus some derivative writing all through a limited company. save some money up and buy commercial property then buy an estate