Anyone been to an IFA and not been advised to buy Unit Trusts?

qpop

Rollinghome wrote: »

What complete nonsense. Of course the internal trading costs are additional costs to the fund and not included in the TER calculation.

It's shocking that there are characters out there, calling themselves 'Independent Financial Advisers', who are not only clueless about any investment that doesn't pay them commission but are almost as clueless about the products they do sell.

There needs to be a major shakeout of those now offering to give financial advice.

D'oh, it's already happening.

But thanks for your concern about an industry you actually know very little about.

saveonarola

Linton wrote: »

For many people short to medium term volatility and risk to capital are equally or possibly greater concerns.

I suggest that Fund-of-Funds are aimed at that market and so are conservative investors and use their freedom to try to even out volatility as much as maximising potential return. In that environment fees are a larger factor than in the higher risk higher return sectors.

I guess this is true of 'cautious' or 'balanced'-type funds, although 'growth' funds ought to take a few more risks. I suppose, as always, there are two issues here: there's asset allocation, and then there's choosing the best funds in a particular sector. I would suggest that real risk is trying to time moves in and out of different assets, but that seems to be the preserve of hedge funds. For these funds, it seems that more 'risk' just means a higher proportion of equities (which may or may not be risky at different times).

As for performance, on reflection, it's hard to see what to compare Funds-of-Funds to. It would be fascinating to compare their performance to active portfolios picked by IFAs or DIY investors, but that's not going to be possible.

Meeper

Rollinghome wrote: »

What complete nonsense. Of course the internal trading costs are additional costs to the fund and not included in the TER calculation.

It's shocking that there are characters out there, calling themselves 'Independent Financial Advisers', who are not only clueless about any investment that doesn't pay them commission but are almost as clueless about the products they do sell.

There needs to be a major shakeout of those now offering to give financial advice.

This is interesting - please can you provide some evidence that MY figures of 1.8 - 2.2% are incorrect and my previous statements are wrong.

You have no idea where I work or the companies that I am involved in, nor the agreements that I may have made with investment houses, platform providers and discretionary managers. If I say to you that the costs involved in my investments are 1.8 - 2.2% per annum, you have no basis with which to dispute that, other than "you cannot be telling the truth". Unfortuantely, the "liar liar pants on fire" theory is hardly compelling.

Do you have anything substantive to say that I am wrong, other than your unqualified opinion?

gadgetmind

Meeper wrote: »

MY figures of 1.8 - 2.2% are incorrect

I happy to accept those figures, not because I'm convinced that they include every cost, but because they are eye-wateringly high enough for passive investors to think you've perhaps messed up a decimal.

Meeper

gadgetmind wrote: »

I happy to accept those figures, not because I'm convinced that they include every cost, but because they are eye-wateringly high enough for passive investors to think you've perhaps messed up a decimal.

So you think that 1.8% per annum is too high a cost, when it includes the adviser ongoing remuneration, dfm costs, platform charges and fund costs?

gadgetmind

Meeper wrote: »

So you think that 1.8% per annum is too high a cost, when it includes the adviser ongoing remuneration, dfm costs, platform charges and fund costs?

Personally, yes, which is why I've been actively moving all my investments to lower fee environments (0.5% TER overall) over recent years. I wish I'd done it much sooner, but you live and learn.

Rollinghome

Meeper wrote: »

This is interesting - please can you provide some evidence that MY figures of 1.8 - 2.2% are incorrect and my previous statements are wrong.

You have no idea where I work or the companies that I am involved in, nor the agreements that I may have made with investment houses, platform providers and discretionary managers. If I say to you that the costs involved in my investments are 1.8 - 2.2% per annum, you have no basis with which to dispute that, other than "you cannot be telling the truth". Unfortuantely, the "liar liar pants on fire" theory is hardly compelling.

Do you have anything substantive to say that I am wrong, other than your unqualified opinion?

I have no idea what your investments are or the costs. What I do know is if you are saying that the TER normally given for unit trusts will include trading costs of the fund, as you appear to be saying, then you are either totally incompetent or deliberately misleading and probably both.

It's probably as well that no-one knows the company you work for and you cannot be identified by your clients.

IIRC, you are also the character who offered to choose some shares for someone with £1000 to invest for a fee of £250 +VAT thus giving him costs of £300 to invest £700.

fairleads

Meeper wrote: »

Fairleads - there is no point responding to you, as anything that we write will be labelled as "a red herring designed to put the blame onto the consumer". Ridiculous point of view.

If its that ridiculous it should be easy enough for even the most inexperienced IFA to refute.

Rollinghome

qpop wrote: »

D'oh, it's already happening.

But thanks for your concern about an industry you actually know very little about.

You misunderstand. I don't have any concern for the industry, only for the gullible investors it so often preys upon.

If you think that RDR and banning of commission is going to shake out all the salesmen, spivs, and incompetents then you are likely to be disappointed. Raising the requirements for being an IFA from Level 3 (the same level as a classroom assistant) to the very slightly higher QCF Level 4 in 2013 is welcome but hardly radical. The vast majority of IFAs will still be former salesmen of various kinds just as they are now.

If you are one of them then you will know more about them than me but I have had enough dealings with them over many years to know rather more about them than most of their clients.

Meeper

Rollinghome wrote: »

I have no idea what your investments are or the costs. What I do know is if you are saying that the TER normally given for unit trusts will include trading costs of the fund, as you appear to be saying, then you are either totally incompetent or deliberately misleading and probably both.

I think I stated that the total cost of investments that I did was 1.8 - 2.2% recently, I don't remember saying anything about the "TER normally given for unit trusts". I may be wrong of course, but I certainly remember being quite specific, whereas you're attacking my comment with generics, and calling me incompetent or dishonest to boot! Interesting.

It's probably as well that no-one knows the company you work for and you cannot be identified by your clients.

Because they may see their adviser willing to fight to refute the claims of people who have no knowledge and try to disparage the work of IFA's? I wish they did know and could read this very thread to illustrate the sheer idiocy of some members of the public who refuse to see the facts, preferring rumour, speculation and just plain nonsense.

IIRC, you are also the character who offered to choose some shares for someone with £1000 to invest for a fee of £250 +VAT thus giving him costs of £300 to invest £700.

Quote correct, I did. I provided a quotation for exactly what you and your contemporaries want - transparency and fee-based figures. The quotation of £250 + VAT was, IIRC, based on an assessment of the requirements of the individual and the time it would take to carry out the required research and present the results in an understandable format. You don't mention that the amount of work is the same regardless of the monetary value involved. The work to be done would cost £250 + VAT. If it is £1000 to invest, that would be the fee (which is a massive percentage of the investment). You neglect to mention however that the fee would be the same if it was an investment of £10,000 or £100,000 (perhaps with a small addition due to the exposure on the advice, but not significant). So, if someone is charged £250 + VAT for a specific piece of work, that is what the industry, the FSA and the public should rejoice in. Ok, it's £300 from £1000 making it 30%, but I didn't quote a fee of 30%, I quoted £250 + VAT. I would quote £250 + VAT for £10,000 also, which reduces the % from 30% to 3%. For £100,000 I would probably charge something in the region of £350 + VAT for the same report, which is 0.42%. Is that better for you? The value is the same and is commensurate with the amount of time and work involved. This should be a familiar concept, as it is one of the fundamental principles on which the RDR is based.