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

darkpool

dunstonh wrote: »

For many people, especially those using IFAs (rather than tied agents), its not about being stupid or under-informed. Its about having better things to do with their time.

You can DIY on anything if you want to. Some will do a perfectly good job, some will scrape by and others will make a complete pigs ear of it.

I will pay to get tradesmen in to do a job because they can do it better than me and it will cost me less than doing it myself. Financial advice is just the same.

But there is little or no evidence that using financial professionals means you get a better job done. So punters are forking out 2.5% a year for Unit Trusts, while trackers have been shown to have superior returns....

Someone with 100k in Unit Trusts will pay 2.5 grand a year in fees. To run a 100k share portfolio might take a couple of hours a month. I'd rather do the work myself and save myself the 2.5 grand - i don't value my leisure time at over 100 pound an hour.

To run a 200k, 500k or 1M portfolio doesn't take much longer to run than a 100k portfolio.....

gadgetmind

darkpool wrote: »

To run a 200k, 500k or 1M portfolio doesn't take much longer to run than a 100k portfolio.....

It does, because you need at least three walks around the house and a large G&T before pressing the "trade" button when the sums get bigger!

dunstonh

But there is little or no evidence that using financial professionals means you get a better job done.

That is because it is not measurable or no-one has ever tried.

So punters are forking out 2.5% a year for Unit Trusts, while trackers have been shown to have superior returns....

No they havent as you are not comparing like for like.

Someone with 100k in Unit Trusts will pay 2.5 grand a year in fees.

Someone with £100k in unit trusts paying 2.5% is not using an adviser (or at least not a servicing one. A transactional one maybe but with £100k that would be daft).

darkpool

dunstonh wrote: »

Someone with £100k in unit trusts paying 2.5% is not using an adviser (or at least not a servicing one. A transactional one maybe but with £100k that would be daft).

so what does someone that uses an IFA to invest 100k into Unit Trusts pay in fees? Typically Total Expense Ratios are 1.7%, and typically there will be another 1% on top of the TER for share dealing.

bigfreddiel

dunstonh wrote: »

What has that got to do with this thread?



Typically one that does not want to do their own investments or will not pay for an IFA to do it. So, they pay for it in fund chargse where the fund manager will do it.



What risk?



You have just accused the majority of the population as being stupid.
:T Probably correct:T

fantastic little discussion above - cheers

fj

bigfreddiel

I'm bored with this thread now - the outcome is most peope are too stupid to do their own research,so use an ifa and pay for it with no guarantees, just illustrations usually showing you wahts happened in the past with the get out clause that previous perfomance is no indicator for future performance

thanks for all the responses lets move on now

cheers

fj

dunstonh

so what does someone that uses an IFA to invest 100k into Unit Trusts pay in fees? Typically Total Expense Ratios are 1.7%, and typically there will be another 1% on top of the TER for share dealing.

Typically between 0.7% and 2% depending on investments and taking the typical 0.5% adviser remuneration.

gadgetmind

dunstonh wrote: »

Typically between 0.7% and 2% depending on investments and taking the typical 0.5% adviser remuneration.

What about the 4% to 5% up-front costs? How does that get split between UT manager and IFA? And yes, I have been quoted 4% up-front by an IFA within just the last few weeks.

Don't get me wrong, financial advice is a good thing, particularly when the advice is good, but we've been comparing IFAs to trades and Doctors, and the qualifications for an IFA don't strike me as being any harder than those for (say) an electrician, yet my electrician doesn't demand a percentage of my electricity bill.

(Actually, I also do all my own wiring, and yes, I can do cable derating calculations, disconnect timings, and discrimination assessments. These calculations dwarf what is commonly found in financial planning.)

fairleads

gadgetmind wrote: »

(Actually, I also do all my own wiring, and yes, I can do cable derating calculations, disconnect timings, and discrimination assessments. These calculations dwarf what is commonly found in financial planning.)

Which begs the question why use an IFA?

dunstonh

What about the 4% to 5% up-front costs?

I dont know anything about 4-5% up fronts. I typically dont see them exceeding 1% equivalent nowadays apart from small transactional amounts.

How does that get split between UT manager and IFA?

Most UT/OEICS are clean priced (or as much as they can be on UTs) nowadays.

qualifications for an IFA don't strike me as being any harder than those for (say) an electrician, yet my electrician doesn't demand a percentage of my electricity bill.

Your electrician does a job and moves on. A servicing IFA does not.