Independent Financial Advisers fees vs Novice Investor!

Janeybo

Janeybo wrote: »

The exact example for one investment this year into S&S ISA:

Invested Amount = £10,680.00
Initial Commission (paid to IFA) = 3% = £320.38
Initial Charge (Fund Manager) = various %'s according to the fund = £80.21
Renewal Commission = £43.34

For this year it would be £10,680 x 2 investment
Plus transferring in an old cash ISA at £15K :-

Total fees described up front to me = £1,102.14

As I say there are 13 funds, all the same ones, with some re-balancing taking place. It's done through Cofunds, they area mix of OEIC's, UT's and European Collective Investments Vehicle's.

There's 13 funds, so there's 13 different AMC's, e.e. Aberdeen emerging markets - Standard charge 4.25%, AMC = 1.75%, TER = 1.89%. The IFA's fee of 3% comes out of this.

And I now realise that adding new money to an ISA is another IFA fee of 3% as legally it's seen as a new investment. And that was one of the points about my original post - that I expected to pay the first 3% last year and renewal commission, but not another 3%, now I know.

Generally the AMCs range from 1.75 to one at .5%

Yes I had been looking at DIY and seeing that there would not be a big saving doing it myself, plus it's obvious that I don't know what I'm doing!

Ark_Welder

Janeybo wrote: »

Yes I had been looking at DIY and seeing that there would not be a big saving doing it myself, plus it's obvious that I don't know what I'm doing!

On some of the other threads there have been suggestions made for worthwhile books on investments to read. You might do as well to find some of those because they could help you to DIY.

You'll probably find that those books are far more useful to you than much of what has been posted on this thread in its later stages...

darkpool

Meeper wrote: »

The guy is a waste of time to respond to, just leave him be to get on with living in his own little fantasy world.

i saw on the news last night that world GDP is forecast to grow 3 - 4 % this year. to me this indicates stockmarkets will grow by circa 5%.

so someone investing in a UT charging 3% will only get 2% of this stockmarket return? it seems a lot of return to lose for no real benefit.

as a matter of interest, have you ever recomended an investor invest directly into the stockmarket? or how about buying commercial property directly?

darkpool

Lokolo wrote: »

Yep but also looking at the evidence we can say that darkpool is financially illiterate and thinks he knows everything by Googling for what he wants to see.

ehhhmmm were you not the person who thought there was a 0.1% probability that you would get 8 heads if you tossed a coin 10 times?

so why is there no evidence that shows that UTs are worth the fees? surely if there was the fund management industry would be shouting about it from the roof tops?

darkpool

Totton wrote: »

Not so Darkpool, I don't play the lottery :-)

No I don't have to consider average fund performance when deciding whether to invest in a fund, what a silly idea. Perhaps the 'average' can be used if one wishes to argue the merits of active over passive but even then the argument is poor, the real research goes deeper than some average line in the sand that tells me little compared to performance.

Regards,
Mickey

ehhhhmmm ok, so what research do you carry out before you invest in a fund?

gadgetmind

darkpool wrote: »

ehhhhmmm ok, so what research do you carry out before you invest in a fund?

You look at how many heads it's tossed in a row and use this to predict what its heads/tails ratio will be in the future.

Linton

Ark_Welder wrote: »

...

You'll probably find that those books are far more useful to you than much of what has been posted on this thread in its later stages...

Yes - unfortunately there are too many people around who read some broad assertions on the internet that there is only one way to sensibly invest, convince themselves they must be true, and then repeat them ad nauseum without being able to discuss any evidence to the contrary.

One day it's everyone must invest in gold. Next it's silver is the only possible investment. The day afterwards it's anyone who invests in a managed fund is bound to lose.

Hopefully new investors who get this far will have realised that investing is a complex business with a vast number of options. There is no golden path to riches. The best thing you can do is to maximise your understanding, keep an open mind, and consistently follow a strategy that you are comfortable with.

Linton

darkpool wrote: »

ehhhhmmm ok, so what research do you carry out before you invest in a fund?

What research do you do? Look at its name, if it says tracker it must be good, if it doesnt keep clear?

gadgetmind

Linton wrote: »

evidence to the contrary.

Evidence is good; we like evidence. Obviously this needs to be well-researched and peer-reviewed evidence based on several decades of data, as opposed to cherry picked "evidence" based on just the last few years, but I guess you knew that already.

Lokolo

darkpool wrote: »

ehhhmmm were you not the person who thought there was a 0.1% probability that you would get 8 heads if you tossed a coin 10 times?

so why is there no evidence that shows that UTs are worth the fees? surely if there was the fund management industry would be shouting about it from the roof tops?

Typing the wrong thing into Excel late at night (to which I also said I made a mistake!) is entirely different to looking at US funds for a valid argument that trackers are always better than active managed.

gadgetmind wrote: »

Evidence is good; we like evidence. Obviously this needs to be well-researched and peer-reviewed evidence based on several decades of data, as opposed to cherry picked "evidence" based on just the last few years, but I guess you knew that already.

And unfortuantely, this is the problem we all have. There are advantages and disadvantages for both sides, to say one is always better than the other is entirely false.