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

dunstonh

I was just wondering if anyone had been to an IFA and NOT been advised to buy Unit Trusts or similar managed investments?

Life funds
pension funds
UT/OEIC/SICAV
ETFs
packaged ITs

And others that fall under their CURRENT authorisations. Of course, advisers should not breach their permissions and recommend products/investments that they are not CURRENTLY authorised to give advice on.

If I was advising a friend/ relative etc about investment I would suggest a portfolio of blue chip shares to start with, and if they had millions I would suggest commercial property. I wouldn't suggest a UT etc as I believe the fees are simply not worth it.

You wouldnt last 2 minutes as that would breach FSA rules. It would also be high risk (fine if person has that risk profile but the FOS generally treat consumers as cautious unless proven otherwise)

With regard to this wholly sensationalist remark which can only have been designed to highlight an inadequacy in IFA-based work, I ask this question - how much experience do you have with this?

He is probably talking about himself. As you will know meeper, IFAs introduce millions to NS&I. NS&I even have an IFA website and provide mailings. I have done quite a few hundred thousand in NS&I this year and do most years. As well as some cash ISAs (tend to look if fixed interest securities with higher yields are better placed in ISA than cash ISAs but where not, then cash ISAs are used).


Back on to Darkpools clearly provocative thread topic, IFAs are not stockbrokers. However, that is changing with RDR. From 2013, IFAs will be required and authorised to give advice on every investment option available.

However, dont expect it to make much of a difference. ITs tend to carry higher risk than the equivalent OEIC so for the average consumer, you would likely eliminate. ETFs should be eliminated if they are synthetic (in most cases). So, that leaves you ETFs that are more expensive than can be achieved with OEICs. A portfolio of shares is possible but seeing as IFAs will not be stockbrokers and these will require heavy maintenance going forward, it is likely that they will remain on a discretionary management basis and would be deemed poor advice for a non-discretionary service.

Rollinghome

darkpool wrote: »

I was just wondering if anyone had been to an IFA and NOT been advised to buy Unit Trusts or similar managed investments?

The feedback I've been getting recently is that a lot are trying to flog investment bonds again, even when totally inappropriate (as arguably they are for the majority of people) and frequently falsely misrepresented as being "tax-free".

Presumably thats due to the attraction of 7% commission upfront in preference to trail commission which will be banned on new business in 13 month's time.

For anyone sold a bond and wondering how appropriate it was there's a useful article here: http://www.candidmoney.com/investment/lifeinvest.aspx

darkpool

opinions4u wrote: »

By the way, your single share suggestion is right up there in high risk and for most investors would be an idiotic approach.

not a single share, a portfolio of shares.

you really think direct share investment is more idiotic than paying 3% of your portfolio in fees each year? or as idiotic as having cash that is losing value at circa 4% a year?

dunstonh

you really think direct share investment is more idiotic than paying 3% of your portfolio in fees each year? or as idiotic as having cash that is losing value at circa 4% a year?

Yes. Because recommending such a thing to an average consumer will typically mean that you have to put them in a discretionary service that will result in an annual charge that is typically on par or higher than investment funds.

Although again, your fascination with 3% a year charges is way off the mark.

Rollinghome

dunstonh wrote: »

Yes. Because recommending such a thing to an average consumer will typically mean that you have to put them in a discretionary service that will result in an annual charge that is typically on par or higher than investment funds.

Although again, your fascination with 3% a year charges is way off the mark.

Discretionary stockbrokers? You're obviously missing a trick.

Meeper offered to give someone wanting to invest £1000 the benefit of his enormous expertise in selecting equities after relieving them of 250 quid and sending them on their way.

Meeper wrote: »

...If the mission was as intended, just to come up with some share recommendations for self-trading, I'd expect that to take a decent amount of my time, so I'd be charging something in the region of £250 +VAT in that case.

Whether blowing a quarter of his investment in that way would make any sense whatsoever to anyone other than the most gullible or be any better than a fiver spent on Investors Chronicle seems rather doublful.

Who needs stockbrokers when you've got a lucky pin? Perhaps he'd lend you his?

DiggerUK

dunstonh wrote: »

.......... From 2013, IFAs will be required and authorised to give advice on every investment option available........

Have to ask....what will you tell prospective clients who ask about gold post 2013.
As portfolios can have exposure to gold in many ways, lets see the advice they can expect to hear.
..._

Ark_Welder

DiggerUK wrote: »

Have to ask....what will you tell prospective clients who ask about gold post 2013.
As portfolios can have exposure to gold in many ways, lets see the advice they can expect to hear.
..._

They'll have moved the gold-posts again by then...:p

darkpool

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 cannot provide shares or property - you would need to see someone different for that.

yeah, that's how i understand it. IFAs are really only good if you want to buy a UT/ investment bond etc. perhaps we should rename IFAs as UT salemen? There advice can't really be "independent" if they can only sell certain products?

darkpool

Meeper wrote: »

In response to the OP, I'm afraid you are showing, once again, your total lack of understanding of the financial advice process. One wonders why you continue this anti-IFA crusade you are on when you are exposed time and again as your points have no foundation or basis in truth and accuracy.

excuse my ignorance, but what points did I make that have no foundation or basis in truth and accuracy?

darkpool

dunstonh wrote: »

Although again, your fascination with 3% a year charges is way off the mark.

Ohhh, so a typical TER is circa 1.7% and that excludes audit fees and dealings costs for shares held by the UT. I believe audit costs are about 0.1% a year and dealing costs another 1%. A total not too far from 3%.

So what are the total fees paid directly and indirectly by an investor in a UT?