Looking for an IFA - I will pay 5% maybe 10%!

bigfreddiel

dunstonh wrote: »

It may be an extreme example but ......

i love it in one breath dunstonh said don't use extreme examples

Originally Posted by dunstonh
However, calling people stupid for using an adviser (as darkpool did) or using extreme examples as the norm is not on. There needs to be some balance.


and then uses one himself heheheheh!

now now guys - i've already said this thread is getting boring lets all move on now - please - no more!

fj

fairleads

Meeper wrote: »

Because the proponents of "do it yourself" are so entrenched in their thought process that they refuse to believe that there is a viable alternative to their opinions, thus they decry every contrary point of view as nonsense or unfounded.

Here's a decent example along the same lines as dunstonh mentioned previously:

I have a client for whom I have provided advice on pensions, investments, mortgages, savings and protection. Said client is not an idiot, uninformed or anything else. Said client is a fund manager, an investment banker working for one of the biggest investment banks in the world. Said client has experience in active management, passive tracker fund management, ETF's and a whole range of other areas to long to go in to. Said client has neither the time nor the inclination to research the most appropriate structures for tax-efficiency, find out which platforms offer the most flexibility, who is the most secure and reliable provider, where to find the best mortgage rates, which critical illness providers have the most illness definitions, and so on. Said client works over 70 hours a week and has a basic salary in excess of £150,000 per annum, IMA and CFA qualifications and a doctorate in financial analysis. Said client has referred over a dozen of his colleagues to me as the service I provide gives him the peace of mind he deserves for his finances so that he does not need to worry about the management of his money whilst he is busy managing the billions of other people's. I advise on the structures and underlying strategic asset allocations required to achieve his goals, and we jointly decide on the funds which will fit into the strategic modelling and make tactical asset allocation decisions from time to time on a joint basis in order to take advantage of certain situations or reduce the effect of others.

The adviser gives advice on strucutres and products which will achieve the aims and goals. The adviser does not generally (although some do) get involved in the physical investment management of the funds, leaving this either to the fund managers themselves or using a discretionary fund manager to work on behalf of this specific's clients objectives. It is the advice on said structures and products and their continued suitability for the aims and objectives of the individual client that justifies the adviser remuneration. It's that simple. Saying that an adviser should be liable to pay money back to the investor when markets fall is ludicrous and just plain nonsensical - referring to the original post.

Meeper

Not impressed one bit and does nothing for your credibility.

fairleads

Meeper wrote: »

Please provide said academic evidence. Please also find me unit trusts which have 3% annual charges. Provide.....something of substance to back up your arguments, otherwise you have nothing but black marks on a white screen.

The problem is that its difficult to prove when fund managers and those that have a symbiotic relationship with them, vis a vis Ifas, Fas and platfom providers et al, deliberately hide or continually deny those extra costs incurred by dealing and other mysterious costs such as 'incentives' to the vested interests.

Ilya_Ilyich

I absolutely understand the importance of advisors but it's always going to something of an awkward interaction if the interests of the client and advisor are opposed -- i.e. the client's aim is to maximise their wealth while the advisor's aim is to maximise the amount of wealth they take from the client!

Meeper

Not impressed one bit and does nothing for your credibility.

I don't remember setting out to impress you, and if giving a real-life scenario doesn't add to my credibility, then you're not my target audience regardless. Have a nice day!

The problem is that its difficult to prove when fund managers and those that have a symbiotic relationship with them, vis a vis Ifas, Fas and platfom providers et al, deliberately hide or continually deny those extra costs incurred by dealing and other mysterious costs such as 'incentives' to the vested interests.

I seeee. So, what you're saying is that it was Professor Plum in the Library with the Revolver. It's all just a big conspiracy!

the client's aim is to maximise their wealth while the advisor's aim is to maximise the amount of wealth they take from the client!

There's that big wide broadstroking brush again. Doing all you can to take money away from clients is not good business. Why would clients stay with you and make recommendations for you to their friends if all we're concerned about is screwing them over? Your logic is flawed. Of course, there are some bad apples. I might even be pushed to say "a lot", but certainly not all. Not any more - the profession is changing and is not what it was in the last 20 years. People blindly stating "you're only out to make as much money as you can, all of you advisers!" really need to understand what is going on in the industry. If you can't be bothered to educate yourself on the CURRENT state of it rather than being stuck in your 1990's prejudices, don't bother posting.

Ark_Welder

Ilya_Ilyich wrote: »

I absolutely understand the importance of advisors but it's always going to something of an awkward interaction if the interests of the client and advisor are opposed -- i.e. the client's aim is to maximise their wealth while the advisor's aim is to maximise the amount of wealth they take from the client!

Therefore, it ought to be in the interest of the IFA to maximise the wealth of the client so that any ongoing annual percentage fee increases accordingly.

Ark_Welder

bigfreddiel wrote: »

now now guys - i've already said this thread is getting boring lets all move on now - please - no more!

Boring? More like a source of amusement! It does get interefered with by serious posts at times, though.

fairleads

Meeper wrote: »

I don't remember setting out to impress you, and if giving a real-life scenario doesn't add to my credibility, then you're not my target audience regardless. Have a nice day!
I seeee. So, what you're saying is that it was Professor Plum in the Library with the Revolver. It's all just a big conspiracy!
There's that big wide broadstroking brush again. Doing all you can to take money away from clients is not good business. Why would clients stay with you and make recommendations for you to their friends if all we're concerned about is screwing them over? Your logic is flawed. Of course, there are some bad apples. I might even be pushed to say "a lot", but certainly not all. Not any more - the profession is changing and is not what it was in the last 20 years. People blindly stating "you're only out to make as much money as you can, all of you advisers!" really need to understand what is going on in the industry. If you can't be bothered to educate yourself on the CURRENT state of it rather than being stuck in your 1990's prejudices, don't bother posting.

Profession! - pull the other one.

Ilya_Ilyich

Meeper wrote: »

There's that big wide broadstroking brush again. Doing all you can to take money away from clients is not good business. Why would clients stay with you and make recommendations for you to their friends if all we're concerned about is screwing them over? Your logic is flawed. Of course, there are some bad apples. I might even be pushed to say "a lot", but certainly not all. Not any more - the profession is changing and is not what it was in the last 20 years. People blindly stating "you're only out to make as much money as you can, all of you advisers!" really need to understand what is going on in the industry. If you can't be bothered to educate yourself on the CURRENT state of it rather than being stuck in your 1990's prejudices, don't bother posting.

I don't mean in the simple sense of 'you must take as much money as possible from each client', I mean that the financial incentive for the adviser isn't particularly aligned with that of the client, as is the case for virtually any provider of goods/services -- widget sellers are incentivised to charge the highest possible price for their widget that doesn't discourage customers; advisers are incentivised to take as big a commission as they can from their clients' investments without discouraging future clients. I'm by no means certain but I believe it's a possibility customers who go to a financial advisor are doing so because they don't have the time/inclination to research/deal with financial matters themselves. If so how come they have the time to research financial advisers to compare on the basis of cost? Or am I completely off base?

Ark_Welder wrote: »

Therefore, it ought to be in the interest of the IFA to maximise the wealth of the client so that any ongoing annual percentage fee increases accordingly.

Completely depending on the charging/commisson structure. Compare say a 0.5% FMC + 0.5% trail fund with avg 7% growth to one with 0.75% FMC + 0.25% with avg 6.5% growth -- from a client's point of view these are essentially equivalent in terms of but an adviser has an incentive to recommend the lower growth fund paying him twice the commission!

Meeper

Or, alternatively, we might do none of those, charge the client fees for our services with zero commissions, and offer the product and structures that were most appropriate for their circumstances.

God forbid.