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How best to put £255k in savings
Comments
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What of the people who cannot afford to pay fees in this manner for whom "commissions" (the remuneration being taken from the contract at no additional cost to the client) or the new "commissions-lite" which will come in the form of "Client agreed remuneration" is the only way they can get advice?gadgetmind wrote: »I'd also insist on paying a fee so that there wasn't the slightest risk that commissions would ever cloud your judgment.
How do people who can't pay up-front fees in the manner that you are suggesting get advice on their financial issues without a "commission-based" structure?
NOTE: I have tried to say many times that commissions do NOT necessarily mean that the product is more expensive or that there is ANY detriment to the client over and above a fee model. Please try to bear this in mind.I am an Independent Financial AdviserYou should note that this site doesn't check my status as an Independent Financial Adviser, so you need to take my word for it. This signature is here as I follow MSE's Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I appreciate that.Have enjoyed the debate (so far). Thank you Meeper. Just to reiterate it is not personal.
Agreed.And not all IFAs on here are tarred ... for example I have a great respect for the words of dunstonh, and I do respect the knowledge some IFAs have.
This is where your argument falls away slightly (but not massively). The financial advice community DOES recognise the failings of the current system. At least, the good ones do. There are still some around who are dishonest and fleece their clients out of every penny. Can't deny it. They will be gone in 2013 when the new rules are in force. To say that the people on the inside don't see the weaknesses thoguh is unfair, because we do. The problem is that there is a limited amount that we as individual companies can do about systemic issues. All we can do is conduct our own business in a satisfactory manner and try to be another voice of quality in the profession. As an industry we're trying to improve. I appreciate that the actions of "advisers" of the past has made our lives difficult to try to turn around these perceptions of us, but we're trying.Its frustrating though that those on the inside (the IFA's) don't see the systemic weaknesses in their industry as readily as those on the outside. As gadgetmind has been saying its not that IFAs are untrustworthy people, but that they are incentivised by the system to recommend commissioned products.
I am an Independent Financial AdviserYou should note that this site doesn't check my status as an Independent Financial Adviser, so you need to take my word for it. This signature is here as I follow MSE's Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
How do people who can't pay up-front fees in the manner that you are suggesting get advice on their financial issues without a "commission-based" structure?
I guess we're going to find out as I'm not the only one suggesting this, far from it, and the writing is on the wall.commissions do NOT necessarily mean that the product is more expensive or that there is ANY detriment to the client over and above a fee model. Please try to bear this in mind.
I agree it won't always be the case the commission products are inferior, but even some of the time is too often IMO.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
The problem is that theres no guarantee that an IFA will turn 5% into 6.5%.
My question to you is, would you take an incentivised commission e.g. nothing upto the 5%, and say a fifth of any growth over 5% in year one? Or smooth it over five years if you want?But the chances are increased.
Of course not. How could anyone run a business on that basis?
And as oldvicar says, your risks of losing more are also increased. Any fool can punt higher risk products to clients, but its not that fool who's taking the risk with his money....its the client.
Performance based charging......"how can anyone run a business when I only get paid for doing well".......hmmmmmm.
Why cant an IFA put his knob on the block and refund all commission if the investment does not meet pre-determined and pre-agreed criteria.illegitimi non carborundum0 -
How do people who can't pay up-front fees in the manner that you are suggesting get advice on their financial issues without a "commission-based" structure?
IMO on the whole (big generalisation) these relatively poor people (another big generalisation) probably should not be seeking an IFA's advice at all.
If they have just a little money to invest then simple deposit accounts etc will be sufficient (until they have saved a bit more - enough to make paying the fees worthwhile) and they shouldn't be seeking advice from a person dependent on them buying commissioned products.
Every generalisation needs exceptions:
1. Pension funds needing review: someone with a big pension assets but no other funds to afford fees etc. An IFA with specialist pensions expertise may be needed.
2. Buying a specialist product e.g. an annuity to cover care home fees - but here again best to seek out an adviser specialising in the field.
Are there any other exceptions worth mentioning?
The thrust of my point is that those needing an adviser but who can only afford them on a commission basis should be a small minority, the smaller the better.
Like gadget, I await to see the impact of the 2013 changes.
If I was an IFA I would be worried about my livelihood post 2013, unless I knew I was one of the good guys like Meeper, dunstonh, and various others on here.0 -
Why cant an IFA put his knob on the block and refund all commission if the investment does not meet pre-determined and pre-agreed criteria.
Oh no I would not be in favour of this approach. An IFA would be incentivised to take huge risks with clients money on the basis of 'heads' we both win and 'tails' you lose but I don't.
A fairly respectable fund manager has recently launched funds with this sort of approach built into the charges. On the surface its appealing, but client and provider interests are not truly aligned.0 -
Performance based charging......"how can anyone run a business when I only get paid for doing well".......hmmmmmm.
The whole investment industry is geared around a select few making money come rain or shine. This is why I favour ITs where the managers have a lot of "skin" in the trust.
http://www.investmentweek.co.uk/investment-week/news/1947189/managers-skin-game
I also favour companies where the directors are buying, but historically it seems that said directors are no better a judge of price direction and yield than outsiders!I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I find it incredible that this thread is about investing for 2 years only, or taking out a 5 year bond but cashing early without penalty etc, and there is all this talk of stockmarkets and balanced portfolios. On a 2 year timescale with low risk this is good advice in the present climate?0
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On a 2 year timescale with low risk this is good advice in the present climate?
Yes, we did rather drift off topic.
I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »An IFA who didn't recommend spreading investments across both sectors and territories would be doing a *very* bad job IMO. They *should* also be rebalancing this spread on a regular basis.
My (outgoing!) IFA managed to get at least this right, but did use funds for everything rather than low cost trackers/ETFs/ITs for those areas of my portfolio where they could have been used.
Agreed, there should most often be some content of equity (even I have some) -- my quibble is over what proportion. And I agree that it should not necessarily all be in managed funds.
Regarding the re-balancing regularly, this is a very valid point. I do wonder though whether, unless the client is mega wealthy and therefore a really big deal to his advisor, is the advisor ever going to 'nurse' the portfolio as frequently and objectively as the owner of the funds will ?No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0
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