IFA Advice - Commission based?

qpop

I think a Total Expense Ratio (TER) of 5% would make even the most foolhardy investor walk away?

For a platform based investment, with a 1% trail, you might expect ~2.5-3% TER (depending on the terms).

Re Buffett - he doesn't want everyone doing as he does, otherwise it wouldn't work!

darkpool

qpop wrote: »

I think a Total Expense Ratio (TER) of 5% would make even the most foolhardy investor walk away?

For a platform based investment, with a 1% trail, you might expect ~2.5-3% TER (depending on the terms).

i doubt many Unit Trusts would have a TER of 5%, but a fair few Unit Trusts will have expenses of 5% when dealing charges are included.

tbh, i would have thought most investors would have been shocked by giving away 5% of their portfolio each year. but a lot of them seem happy enough.

Ark_Welder

darkpool wrote: »

i doubt many Unit Trusts would have a TER of 5%, but a fair few Unit Trusts will have expenses of 5% when dealing charges are included.

tbh, i would have thought most investors would have been shocked by giving away 5% of their portfolio each year. but a lot of them seem happy enough.

Reasons why prospective investors should read the relevant prospectus and long-form of the annual reports so that they can determine the true level of charges for themselves. And that goes for investment trusts too, which will also have transaction charges within the fund.

jonny2510

Thanks for the replies and recommendations everyone.

I think we're going to have to think about this for a while, without rushing into anything (the easy option). Perhaps we'll need to see someone else, and see how they compare too.

darkpool

In all honesty i reckon the best option for most people is to have a portfolio of about 20 blue chip shares in an online account. a fair degree of diversification and not too cumbersome.

jonny2510

darkpool wrote: »

In all honesty i reckon the best option for most people is to have a portfolio of about 20 blue chip shares in an online account. a fair degree of diversification and not too cumbersome.

It's just the time involved in learning what to pick.

I have a small portfolio of low cost index trackers (started this January). I spent a lot of time researching etc, and whilst I'm happy taking a risk with my money, I wouldn't be overly happy making recommendations with someone elses!

Aegis

jonny2510 wrote: »

It's just the time involved in learning what to pick.

I have a small portfolio of low cost index trackers (started this January). I spent a lot of time researching etc, and whilst I'm happy taking a risk with my money, I wouldn't be overly happy making recommendations with someone elses!

Also blue chip stocks wouldn't necessarily make for a particularly well-diversified portfolio. In fact, you'd only have large cap stock, and most people would probably end up picking companies from their own markets, i.e. from the FTSE 100. Ultimately you'd end up with a portfolio less diversified than a simple FTSE tracker, which is fine if you've picked those stocks for a good reason and are willing to stand by the decision in the hope of outperforming that tracker according to certain metrics (total return, yield, reduced volatility, etc), but it's not diversified in terms of geographic spread (assuming they invest in those large caps from their own market), sector (the FTSE in particular is dominated by a small number of sectors), company size (if they're all large cap this one is obvious) or even asset class (what about bonds, property and commodities?).

All in all, it's a cheap way to invest, but for someone not really sure what they're doing it's unlikely to be a good way to invest.

darkpool

FTSE 100 stocks do give world wide market exposure. Diageo, makes johnny walker whisky - i've seen that in every pub/ hotel i've ever been to. Unilever also sells on the world market. anyone here think the miners like BHP/ RTZ aren't exposed to the world economy? How about Shell? BP?

Linton

darkpool wrote: »

FTSE 100 stocks do give world wide market exposure. Diageo, makes johnny walker whisky - i've seen that in every pub/ hotel i've ever been to. Unilever also sells on the world market. anyone here think the miners like BHP/ RTZ aren't exposed to the world economy? How about Shell? BP?

Yes but the exposure is very limited in scope. Little investment in manufacturing, technology. Your financial company investment is limited to the UK. Nothing in the Far East. USA is out as well. High growth small companies etc etc.

If you are a novice investor and you wanted to invest in 20 companies in the FTSE100 it would be much simpler to go for a FTSE100 tracker.

Before you say "but you lose 0.5% from charges": if good returns was your objective you wouldnt be purely investing in the FTSE100.

Aegis

There's a degree of global exposure in there, but it's still highly concentrated into the resources, financial and pharmaceutical sectors, with a lot of the companies mainly focused on the UK. You're still missing a large number of asset classes, sectors and geographies, which was my point. It's not effective diversification if you just pile everything into equities, especially if they're all from the same index, which I said was fine IF you have a good reason for doing so, but not if you're constructing a portfolio as a fairly new investor who doesn't want to spend ages researching how to select appropriate stocks.