Seen IFA, But also seen neg comments on here...

bossymoo

Thoughts on the products I've been recommended, please!

I have had a couple of consultations with IFA, about investing £80k. Although I am 'adventurous' on the risk scale, I don't really consider this money my own, therefore wish to be more cautious with it. (It is intended for my children, I have recently been widowed).

I am looking to invest for 15yrs, by which time my eldest will be 18.

I want to invest for growth, but I do like the idea of these lock ins. There is apparently a new 'issue' out shortly where all the growth can be locked in on the anniversary (apparently is used to be just a 10% lock in limit). I was looking at the 'mid' option which I believe is 40% in fixed.

He also suggested a S&S ISA with Sterling for part of the amount, leaving £70k for the Metlife.

I guess my question is, I've seen a number of threads where posters aren't keen on these. Is it the provider? Product? Charges? Commission?

Alarm bells are ringing so I want to be fully informed before I decide.

Many thanks for any opinons shared.

Edited to add, he rec's the metlife guaranteed bond for the bulk

atush

These products usually carry a fairly hefty commission for the advisor. How are you paying him? By fee, or commission? We usually advise fee basis.

how did you find the IFA? And are they independant or are they tied to a bank?

There ar a few people here who hate advisors and rensent paying them for anything. I am not one, but I do feel you need to go in with eyes wide open.

bossymoo

Thanks
He's not billing me a fee. I asked up front and he said they can either fee or commission, but the fee is payable whether i invest or not. The commission would only be if I proceed. He said they work out comparable in the end. Although I haven't seen a full quote.

I was given his number by my solicitor. She was preparing my new will and helping me with a couple of bits and bobs of my late husbands, and I mentioned investing for the children. She said they have had lots of dealings with the firm over the years. They are both local, established firms.

tescobabe69

Dont do anything until you understand the costs involved, as I understand it an IFA can take 5% of your investment as commission, and continue to benefit by way of commission for as long as you hold the investment.
There are brokers who will act for you for the second part of the commission (known as trail) and will repay/invest for you the 5% (£3500).
There are also IFAs who will cut various deals depending on the amount of work you require them to do.
I'm not an IFA, but I do sleep at night.

dunstonh

He also suggested a S&S ISA with Sterling for part of the amount, leaving £70k for the Metlife.

I am sure that there must be someone out there who these would be sensible for. However, when you find one let me know as I havent seen one yet.

Sterling is expensive and low quality as a platform. Wasnt always like that but is looking dated compared to others. I can think of no reason why best advice would go to Sterling now. I can think of a few reasons if you are not on fee basis though. Met Life is popular with some advisers and has passed our own due diligence. However, personally, I rather dislike it as it is expensive, has a short history and in that period has underperformed comparable alternatives which available in the Unit Trust investment universe (and can also be put in an ISA).

£80k should be done on fee basis. It is daft to go commission on that amount. Fee basis would be cheaper. The fee can still be collected via the commission system but it means that it is the same irrespective of product and it should be cheaper than commission.

bossymoo

Hmm. Thanks all for the comments. I think I need to scratch my head somewhat now.

What would be the best option? A second opinion via another IFA?

I could be doing this forever, never really knowing if I'm being shown what's best for me...

dunstonh

What would be the best option? A second opinion via another IFA?

Yes. Try another IFA. Also ask for their fee option. Suggest you look for an IFA that is DipPFS qualified and not CertPFS.

I could be doing this forever, never really knowing if I'm being shown what's best for me...

Statistically, IFAs have a tiny number of complaints against the volume of business they do. They have under 1.5% of complaints at the FOS. So, the odds of a bad one are low. What you have been recommended is not bad. It is just includes a provider that puts you on guard. It would suggest more that it is a greedy adviser taking a lot of commission rather than actually bad advice.

bossymoo

Much appreciated. I'll look into finding another IFA.

Oddly, he seems a straight forward type, I'm normally fairly financially savvy and usually a good judge of character, but given my circumstances, I'm also aware I'm quite vulnerable just now. He's happy to answer my questions, and hasn't been pushy at all.

Anyway. Onwards and upwards...

Ifts

Saw this article over on The Motley Fool website that may be of interest to you - Awkward questions to help build your wealth:

http://www.fool.co.uk/news/investing/2012/02/10/3-awkward-questions-to-help-build-your-wealth.aspx

dunstonh

Oddly, he seems a straight forward type, I'm normally fairly financially savvy and usually a good judge of character, but given my circumstances, I'm also aware I'm quite vulnerable just now. He's happy to answer my questions, and hasn't been pushy at all.

The best IFAs are often the ones that dwell on things that may bore you.
Perhaps trying to teach you a bit on the way. Things like clearly talking about charges, how you understand risk. Telling you up front that fee basis would be better than commission on £80k.

Investing is about opinion. So, you wouldnt expect the same opinions to exist. Sterling obviously exist and get business do there is something that people like about them. Same with Metlife. If you do feel you want to give this other one a chance to explain (he may have valid reasons we dont know about given we dont know anything about you), then ask why Sterling and not Cofunds or Fidelity (generally cheaper options for small investors - although with 80k on platform, I would personally prefer another but if its just ISA then the other two are fine). I would also ask why metlife and not one of the unit trust based protected assets funds from the likes of Investec or Skandia (just two examples - not recommendations but both have been running longer - only just in the case of Skandia but both have better records plus are available in a more tax efficient wrapper unless you are a higher rate tax payer).

You could even consider if you want protected asset funds. Guarantees/protections cost money and the assets used are often placed to reduce liability. So, you can end up with a bit of a fudge by having a fund that doesnt do that well and costs you more. If you really dont have the stomach to invest and lose a certain amount then perhaps invest less and that amount dont invest in protected assets but cheaper conventional investments.

bossymoo

Thanks. All this is making sense. I've had a closer look at the illustration, and to be honest, I'm disappointed. Their assumed value after 15yrs at a growth of 4% is less than I could earn fixing it for just 5 years with the Halifax even after tax is taken off.

I realise 4% might be considered conservative, but really, when I think about the growth that would be required to pay for the fees and offer the same return, my mind boggles. In short, for an investment of £70k at 4% I'd get back £81,500 after 15 years. When, really a clean (without charges) 4% growth yoy would be £126,000. Thats nearly £45k in charges? They'd be making four times as much as I am. Am I missing something here (maybe a few marbles?). And, assuming a higher growth level, they'd be taking a higher charge.

I think I'll go back to my spreadsheets...