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

crittertog

colinscott wrote: »

Jem16 says, "over the years the risk profile would soon get out of sync."

If you have chosen an OEIC that suits me, I would not be expecting you to change it any time soon. I do not see how this can justify an annual management charge, which was my point.

My understanding is that certain areas & markets can change in their risk profile, sometimes by indirect influences. E.g. banks were once considered safe, now they're relatively high risk. European stocks might have been considered safe, but thanks to the Greek problem, the area is a bit volatile at the moment. I've also heard it said that the FTSE was considered a 5, and it's now sat at a 7 on the risk-o-meter.

Of course, whether you feel that you need on-going servicing is up to you - you could always say that you feel confident that you could perform the same task by watching the news every morning (whether that's the case is something I can't comment on ). Entirely up to you.

darkpool

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.

perhaps YOU could provide some proof that the dealing charges incurred by the fund manager are included in the 1.8 - 2.2%? there seems to be a few people here that have presented evidence that dealing costs are not included in the TER....

dunstonh

My understanding is that certain areas & markets can change in their risk profile, sometimes by indirect influences. E.g. banks were once considered safe, now they're relatively high risk. European stocks might have been considered safe, but thanks to the Greek problem, the area is a bit volatile at the moment. I've also heard it said that the FTSE was considered a 5, and it's now sat at a 7 on the risk-o-meter.

There is no one-size-fits-all scale. Each interprets risk in their own way and has their own scale to benchmark on. The research company I use have increased UK equity in risk in general over the last year. Financial Express also notified that they increased the risk in their last update on their new risk scale (which benchmarks the FTSE100 with a risk score of 100 and everything else works around that and the starting point).

. I do not expect the adviser to come back to me every year to check what he gave me still suits my needs or even to move me to another vehicle, when he thought a new one might serve me better. My initial remit was to find something that would set me up for at least five years. Why would I want him coming back to check that my needs profile is still in sync. with his recommendation, and take an annual review charge for the pleasure? I would have no confidence in any adviser who set me up with a medium to long term product, and then came back as a matter of course for an annual review, and charged for it. Even worse, if he advised on a change before the short term was up.

On that basis, you should be offered a transactional service only and investments selected on the basis that you do not want reviews or rebalancing at advice level. That would rule out most investments and leave you with self balancing portfolio funds. Nothing wrong with those. However, they are typically as much as double the cost. However, an IFA would have little choice in using those as self select funds need rebalancing and reviews.

The economic situation is not constant. It is a cycle that changes. The sector allocations get updated (my research provider updates them quarterly). So, you would expect change. To think of that as a failing is just wrong. For example, back in 2007, the sector allocation towards property reduced. Then in late 2008 it increased again. They managed to miss most of the decline in property. If you didnt have those reviews and were in self select funds (rather than self balancing portfolio funds) then you would have followed the market down.

Also, the way you are thinking of investments as a "product" is obsolete thinking. That harks back to the old days where you placed money with a provider who may only have had a couple of investment options or even just one option. Now, "products" have as many as 17,000 investment options. They are much more advanced than before. Yes you can still buy basic "products" but you typically find they are not as good.

gadgetmind

jem16 wrote: »

Bed&ISA/pension as appropriate.

I used to get my accountant and an IFA to handle this for me, but -
1) Neither knew (or mentioned) that approved share options could be moved directly into an ISA, which wasted a fair bit of my capital gains allowance for 2-3 years.
2) Neither knew (or mentioned) about Pension Input Periods, which nearly caused me big problems.
3) Some capital gains advice from my IFA didn't take into account section 104 holdings, which rendered it worse than useless.

Fortunately, I was slowly (and reluctantly!) learning all this stuff myself, so nothing got into too much of a mess.

Yes, use professionals when you need to (whether it's for plumbing, fixing a car gearbox, or filing a tax return) but make sure you have an understanding of the basics so you can make sure it's done right.

Lokolo

Rollinghome wrote: »

That's right. No one has to accept a loan from a loan-shark either. It doesn't make it morally correct or good financial advice.

Meeper has thanked you for your post. He seems to agree with you that if anyone is mug enough to use him then he need feel no guilt in taking their money. 'Catch as catch can' seems to be his motto. And yours apparently.

Anyone seeking an IFA for advice should be aware that there are characters like him around. This board is nothing if not educational.

But no-one does have to use him? He's not the only IFA out there. I don't understand what point you are making, IFAs aren't there to give everyone advice. Plumbers charge extortionate fees, and so do chimney sweeps! Massive amounts. Where's your ranting about these professionals?

Meeper

And no admission that my fee of 0.42% for a £100,000 investment represents good value either. Always attacking the negatives and finding the most outrageous message to give, but never looking at the other side of the story.

If you want to show a balanced point of view and look at things from a different perspective, that's all good. Until then, I'll leave you to your rantings and concentrate on people who actually need help.

Maverick_Money

I remember reading an article suggesting that many IFA's failed to recommend investment trusts because "they didn't understand them".

While this approach might adhere to that of Warren Buffett (which was something along the lines of keeping clear of investments you don't understand), it doesn't say much about the depth of knowledge of those "commission-driven salespeople"!

jem16

Maverick_Money wrote: »

I remember reading an article suggesting that many IFA's failed to recommend investment trusts because "they didn't understand them".

While this approach might adhere to that of Warren Buffett (which was something along the lines of keeping clear of investments you don't understand), it doesn't say much about the depth of knowledge of those "commission-driven salespeople"!

Then again there are many IFAs who understand that the risk of an IT is generally above that of an equivalent OEIC and see no need to use them for the average investor that would consult an IFA.

Don't expect that to change much when commission is removed from the equation.

dunstonh

I remember reading an article suggesting that many IFA's failed to recommend investment trusts because "they didn't understand them".

Nothing to do with the fact that currently most are not authorised to recommend them within their scope of permissions then?

How about them generally being a notch up the risk scale and more suited to experienced investors. The typical advice client is generally viewed as cautious and inexperienced.

bigfreddiel

jem16 wrote: »

If a product is required the majority of IFAs can, at the moment, only provide access to packaged products as that is all they are authorised to do so.

So they are not that INDEPENDENT then!

fj