Fidelity Multi Manager Growth / Income funds

kedj

dunstonh wrote:

So, an adviser that may end up with around £15pm may view that it isnt worth their while spending 10 or so hours on the work required to make a full and proper recommendation with sector allocation etc.

To some extent, I can see their point now. I didnt realise the value to the individual IFA would be as low as that. The performance of the MM funds is probably going to be satisfactory for a lot of investors anyway. I suppose its a question of how many extra investors they could retain long-term by offering a better service.

dunstonh

I didnt realise the value to the individual IFA would be as low as that.

It can be as low as that but it can be higher.

An owner/partner IFA is going to get all of the commission in most cases. So, they are more likely to see value in transactions of a reduced value.

Employed IFAs or IFAs attached to other firms dont usually get a big bite of the cherry (many IFAs are self employed but are attached to a firm for compliance, lead generation and convenience. They are employed effectively but are self employed from a tax point of view). Two larger firms in Norfolk have the following business models:
1 - Large regional Accountant. IFAs there have to write £100k of income to be paid £30k salary. So, they earn effectively 30% of what the commission says on the illustrations.
2 - Large IFA firm (with multi-tied arm). IFAs own generated business, IFA keeps 70% and firm gets 30%. Shop generated business (i.e. someone walks in or phones up), IFA gets 30% and shop gets 70%. IFAs also pay £200pm for compliance costs.

The advisers under those two models arent going to be interested in the small stuff.

A self employed IFA (or partner IFA) getting 100% of the commission is more likely.

A NMA IFA will see it as a slow starter but one with big potential as that model is based on managing the investment portfolio, with reporting and rebalancing etc and the focus isnt on that £60pm (as it would be £20 with NMA terms) but the 0.5% of the natural trail commission.

The performance of the MM funds is probably going to be satisfactory for a lot of investors anyway.

Better to be in an MM fund than a duff balanced managed or a bit of random fund picking from citywire top 10 list.

kedj

dunstonh wrote:

Better to be in an MM fund than a duff balanced managed or a bit of random fund picking from citywire top 10 list.

Yes I agree. Its actually a bit scary that you could go to a qualified IFA, think you were getting sound financial advice and get a random pick from citywire top 10!

EdInvestor

Yes I agree. Its actually a bit scary that you could go to a qualified IFA, think you were getting sound financial advice and get a random pick from citywire top 10!

The only advantage is that you could do him for misselling later if you made a loss.Assuming he hasn't gone out of business, of course.

Better you DYOR in the first place so you make money rather than lose it and the problem doesn't arise.:)

Chrismaths

Ah, the compensation culture put...

dunstonh

The only advantage is that you could do him for misselling later if you made a loss.Assuming he hasn't gone out of business, of course.

Advice is covered under the FSCS as well so thats not a problem.

Better you DYOR in the first place so you make money rather than lose it and the problem doesn't arise.:)

Better service your own car in case the mechanic makes a mistake. Better do your own brain surgery in case the surgeon makes a mistake.

I get a lot of business from DIY investors who have made a pigs ear of it and need sorting out. Most common error is investing above their risk profile and not understanding the contract they have entered in to. Many also think they are doing well until the risk/volality is pointed out and their fund (more often than not they are single fund investors) isnt very good.

Its just as easy for DIY'ers to lose money.

kedj

It can be quite complicated if you are starting without much investment experience, to get the right risk level, asset allocation and geographical split. Although fundsnetwork has some useful tools to assist you with this.

Doing your own research and picking a couple of MM funds yourself is an option. Then as you get more experience, you can start adding in individual funds that you research. Persevering with the IFA route and doing your own research to validate the advice is another. If you havent much investment experience, I wouldnt recommend trying to pick an entire portfolio of individual funds.

EdInvestor

Its just as easy for DIY'ers to lose money.

This is the trouble.If you go to an IFA you ought to be confident that you will make money, not lose it.But in fact the odds are much the same as doing it yourself.

So why bother to pay expensive fees for such a hit and miss service? :huh:

dunstonh

This is the trouble.If you go to an IFA you ought to be confident that you will make money, not lose it.But in fact the odds are much the same as doing it yourself.

Ok, anyone that has invested only in a FTSE100 or FTSE All share tracker only has received below sector returns in each and every year for the last 13 years. Its fair to say that not many of those would have ended up in FTSE trackers with the IFA. Even with stock picking you would have no doubt had Fid Spec Sits up until recently or Inv Perp Income. A sector allocated portfolio would have been far better as well.

So why bother to pay expensive fees for such a hit and miss service? :huh:

Most people do not even see an IFA. They see a tied agent. Of course, most of those seeing tied agents dont realise they are tied agents but think they are independent. Tied agents cannot give investment portfolio advice and the fund choice is documented as client choice and not recommended (although it doesnt occur like that in reality).

The majority that do see IFAs will get a very good service and good advice. Some will be better than others, like any occupation. IFA is a term that covers a wide range of advisers from low skilled to highly skilled. Just as a doctor can be a GP but you wouldnt want them peforming heart surgery. Go to an IFA that does mostly mortgages and their investment knowledge is going to be weak (and vice versa).

Ed, your way to tell people how to invest is not good enough. Yet you still do it on the forums. So, they can take your "advice" for free if they want or they can pay for a proper IFA or investments manager to do it for them.

The forums tend to focus on the negatives as most satisfied people will not post. However, those with problems do. So, you see a slant towards the negative here.

nrsql

>> Ok, anyone that has invested only in a FTSE100 or FTSE All share tracker only has received below sector returns in each and every year for the last 13 years.

But they haven't done as badly as a lot of other funds.
Must admit I have some money in trackers just in case the "better" managed funds don't do as well as expected.
I've reduced the amount a lot recently in favour of more cautious UK funds but that's just my view of the market.