Independent Financial Advisers fees vs Novice Investor!

Linton

gl196 wrote: »

3% fee a year plus fund manager fees would easily wipe out most, if not all, of your expected return

Rubbish. The FTSE100 5 years ago, pre credit crunch, was 15% higher than it is now. Since then the midpoint fund on Trustnet covering all sectors has increased by 5.6%.

But choosing sectors that clearly have a long term growth future, eg Far East, Emerging Markets Technology you would be looking at typical returns of 30%-40%: 6% annually.

Plus, unlike savings, for most investors investment returns are tax free.

Froggitt

Linton wrote: »

Rubbish. The FTSE100 5 years ago, pre credit crunch, was 15% higher than it is now. Since then the midpoint fund on Trustnet covering all sectors has increased by 5.6%.

So half for him, half for me. Is that fair or right?

darkpool

Ark_Welder wrote: »

A magazine from which you have quoted earlier in this thread and elsewhere.

The figures are available in the long-form of the annual reports - the place that I do go for reliable information.

i've also found other sources of info that says typical annual fees for a UT are nearer 3%. can you find any more evidence to back your 2% claim?

so before you buy a UT you study the reports etc? so why not just study the reports of plc companies and invest direct?

darkpool

Totton wrote: »

I'd just like to add that all of my big gains in % terms have come from so called expensive funds such as Jupiter Financial Opps, M&G Global Basics, Neptune Global Equity & Troy Trojan etc. It seems to me that when 'average' fund costs are quoted the point is missed that some of those OEICS are simply excellent ways to grow your capital or earn a decent income. If you leave your hard earned money in a poor fund then that's a different problem, at the moment I feel much safer in my sole OEIC and other IT's than I would in any of the trackers out there.

but that's just a variation of the "perp high income has done well" argument. no one disputes that some UTs do well, but I also think some UTs are complete dogs.

you have to look at average UT performance to measure the value they add. using your reasoning the national lottery is a good investment because some people win it - yet most people lose.

Linton

Froggitt wrote: »

So half for him, half for me. Is that fair or right?

The HSBC FTSE Allshare tracker would have returned 1.4%, the midpoint fund 5.6%. Which would you rather have bought?

But of course one wouldnt chose a fund at random, one would look for funds in sectors that are likely to do better than the FTSE. There returns of 30%+ over 5 years were easily attainable.

But of course if your objective is to minimise fees rather than maximise your own return then you are right. But that isnt my objective.

darkpool

Linton wrote: »

Rubbish. The FTSE100 5 years ago, pre credit crunch, was 15% higher than it is now. Since then the midpoint fund on Trustnet covering all sectors has increased by 5.6%.

But choosing sectors that clearly have a long term growth future, eg Far East, Emerging Markets Technology you would be looking at typical returns of 30%-40%: 6% annually.

Plus, unlike savings, for most investors investment returns are tax free.

that 6% annual return, is that before fees or after fees?

darkpool

Linton wrote: »

But of course one wouldnt chose a fund at random, one would look for funds in sectors that are likely to do better than the FTSE. There returns of 30%+ over 5 years were easily attainable.

so what is your academic experience to guess which sectors are likely to do well? maybe you're a professor of economics? or maybe you have a crystal ball?

millions of analysts watch the market to look for future growth areas, what ability do you have that the rest lack? premonition? second site?

Linton

darkpool wrote: »

that 6% annual return, is that before fees or after fees?

After fees.

For example, trustnet claims a total return of 88.4% over 5 years for First Asia Pacific. From my own data, having held that fund for the whole of the past 5 years I made a total return of 82%, nearly 13% annually. The difference between 82% and 88% can be accounted for by the precise dates being used, Far East shares having dropped a lot in the past month.

dunstonh

Linton wrote: »

After fees.

For example, trustnet claims a total return of 88.4% over 5 years for First Asia Pacific. From my own data, having held that fund for the whole of the past 5 years I made a total return of 82%, nearly 13% annually. The difference between 82% and 88% can be accounted for by the precise dates being used, Far East shares having dropped a lot in the past month.

Linton you should dump it as you are paying charges.

Far better for you to get 5% after little or no charges rather than 13% after 2% charges. :cool:

Banderman

Janeybo wrote: »

Hello
I've sought advice from an Independent Financial Adviser re. Stocks & Shares ISA's. Last year we invested the full allowance for myself and my husband. We paid 3% commission to the IFA (plus annual renewal fee), plus the Fund Managers fees. This came direct from the amount we invested i.e. we weren't invoiced for the IFA's time.

I've just met again after a year and of course they have lost some money due to the current climate. I've asked about investing our ISA allowance this year and found out that it's another 3% commission, but all the funds are the same ones a before.

I understood the initial commission last year as there was time spent getting to know us and selecting the 13 companies to invest in. £700 this year seems a lot as our risk level is the same and all the funds have remained the same.

My first question is: Is this the norm? Is it reasonable to pay the same commission?

I have asked if we can pay an hourly rate, and will wait to see what comes of this.

The second part is that I had my own cash ISA, which I'd paid into over the years, approx. 3% interest. So I asked about transferring this into a Stocks and Shares ISA. Again the quote came back with all the same 13 companies and a 3% initial commission fee = £460, the quote took 5 mins. to produce.

The total of just the IFA's fees will be £1,102.14 this year if I invested the full ISA amount, plus transfer my cash ISA over.

My second question is: Is it worth transferring my cash ISA into a S&S ISA? I know people are convinced that there will be a recovery, but I'm not sure if it's safer just leaving in a Cash ISA earning 3% (less than inflation!).

I'm a novice so maybe the answer is that you pay an IFA for the knowledge & safety reasons, but it still seems quite a lot. I've had a brief look at the Discount brokers, and although I could invest based on the IFA's recommendations, I'm not sure I'd know what to do after that.

Any help or advise would be much appreciated.
bw
Janey

Stop this madness. You are being right royally ripped-off. You are paying a massive amount of money to these shysters for the benefit of them losing you money. Do it yourself, you seriously couldn't do much worse than these charlatans. The government needs to act and stop people being ripped off by these so-called financial advisors, they're the only people making any money out of it.