Independent Financial Advisers fees vs Novice Investor!

Ark_Welder

darkpool wrote: »

so you believe the cost of buying and selling 60m (ie 120m in total) is 328k.

£55m is not the value of the trades. If you check the facts available in the annual report of the fund that you selected as an example - rather than simply making assumptions - then you will be able to see the value of the trades made.

darkpool

Ark_Welder wrote: »

£55m is not the value of the trades. If you check the facts available in the annual report of the fund that you selected as an example - rather than simply making assumptions - then you will be able to see the value of the trades made.

yeah ok. as i said before you should stick with your UTs.

darkpool

for everyone else apart from AW.

Page 54. shows disclosed fees being equal to undislclosed fees, TERs are about 1.6% in the UK so undisclosed fees are likely to be similar. ok hard document to understand and a bit old, but not bad evidence.

http://www.fsa.gov.uk/pubs/occpapers/op06.pdf

fairleads

jem16 wrote: »

Not the performance figures I look at.

From Trustnet,

http://www.trustnet.com/Investments/Perf.aspx?univ=U

Bid to bid is still flawed because investors purchase at the offer price and sell at the bid price.

Linton

fairleads wrote: »

Bid to bid is still flawed because investors purchase at the offer price and sell at the bid price.

Most funds are OEICS for which the bid price is the same as the offer price.

Ark_Welder

darkpool wrote: »

for everyone else apart from AW.

Page 54. shows disclosed fees being equal to undislclosed fees, TERs are about 1.6% in the UK so undisclosed fees are likely to be similar. ok hard document to understand and a bit old, but not bad evidence.

http://www.fsa.gov.uk/pubs/occpapers/op06.pdf

Do you have anything that is up-to-date? This 12-year old document is using an initial charge of 5% in its calculations. You appear to be confusing that with ongoing annual charges.

Linton

darkpool wrote: »

Wow 13% a year! If I thought there was any way you could get these types of returns I would sell my portfolio and house and invest with you.

But the thing is you plucked 13% out of thin air of course if you have any evidence that you can deliver 13% a year I will persuade my family to invest with you. just think, you'd get 20k per year for each million we have..... go on just provide the evidence....

Try looking here

In case maths isnt your forte, an increase of 88% over 5 years is just over 13% per year.

property.advert

I think the advisers here are trying to say that their job is to interpret the risk profile of their client and then advise on an investment strategy which matches that risk profile. They are then remunerated either on a fee basis or on commission.

I accept that on the one hand but it doesn't stop there does it. Go to see a lawyer and once you've paid your bill that is it. He doesn't get a backhander from someone every year whether his advice proved good or not. On the other hand, go ask a financial services company how many thousands, yes, that is right, thousands of commissions which could be payable for years after the event.

My feeling is that all trail commissions should be outlawed just as all fees, commissions and charges should be totally transparent.

As some have said, if an index or subset of investments increases by 5% per annum, an advisor collecting 3% means that the investor needs 8% to match the index average and that would be at the n'th percentile (no time to work it out just now). The risk associated with attempting to reach that 8% would be much higher than the average and could that not preclude that investment ever matching the client's risk profile ?

In IFA language, there is far too much reference to what others charge or an industry average and little attempt to justify the charges per se. I don't like that very much. I would much rather have them remunerated by performance, meaning that if they were duffers, they would not benefit from duff advice.

fairleads

property.advert wrote: »

I think the advisers here are trying to say that their job is to interpret the risk profile of their client and then advise on an investment strategy which matches that risk profile. They are then remunerated either on a fee basis or on commission.

And the main purpose of risk profiling the client is to place the responsibility/consequences of investment choices onto their shoulders.

dunstonh

s some have said, if an index or subset of investments increases by 5% per annum, an advisor collecting 3% means that the investor needs 8% to match the index average

The problem with that is that no adviser gets 3%. The industry typical amount is 0.5%. There is a move towards 1% on smaller amounts but 0.5% is the more common norm.