Drop in well paid using IFA's

dunstonh

Mr Massow said: "These findings fly in the face of claims that consumers have full knowledge of the charges they pay.

Massow paid for research to suit his business that offers to refund only some of the commission. The information was highly flawed and inaccurate (just use their website to see some of the ridiculous amounts being mentioned). I do think that most consumers dont know. It is not important to them and whilst it is shown on their paperwork they probably cant remember it within hours or days of the advice, let alone years later.

'Expert' IFA invested half of 97yo's cash in Keydata.

Who says he is an "expert" IFA. Personally, I find that recommendation disgraceful. However, I dont see why the actions of one should tarnish nearly 30,000 others. IIRC, keydata paid 3% commission. Not 5%.

darkpool

qpop wrote: »

No, I don't think that's likely at all.

In fact, I think your returns have probably been mediocre over the medium-to-long term, a thought which becomes more certain every time you avoid posting any evidence whatsoever of your supposed success.

----

To look at the other side of a coin, let's take an example of an expensive OEIC, with an AMC of 1.75% and TER of 1.9%, which invests in emerging markets (expensive due to market inefficiency/corruption), with currency risk etc. to further pollute returns.

What do you think the annualised return is likely to be, NET OF ALL CHARGES?

439% over the last ten years?

BUT HOW? It's an expensive fund! What kind of voodoo magic has been undertaken? How did those "charlatans" do it?

http://www.trustnet.com/Tools/Charting.aspx?typeCode=FAFEMA,XU:GLO

Your arguments are both one-dimensional and inaccurate.

tbh i would prefer mediocre returns than pay 3% fees and get rubbish returns.

ahhhh an IFA that uses the "well perp high income has done well" argument. so you propose people invest in UTs because one UT has done well?

qpop

darkpool wrote: »

tbh i would prefer mediocre returns than pay 3% fees and get rubbish returns.

ahhhh an IFA that uses the "well perp high income has done well" argument. so you propose people invest in UTs because one UT has done well?

The fund in question wasn't Invesco Perp High Income, as well you know.

In fact, over three years High Income is one of the least successful UK Equity Income funds, in terms of total return, having *only* returned 36% over three years. 81st out of 95 funds, with that awful return (NET OF ALL FEES). WHAT CHARLATANS!

How about the other 80 UK equity income funds who have returned in excess of 36% in three years?

Oh wait, they're all champagne guzzling city-boys, right? Their charges are so onerous that they could never manage to exceed 10% annualized returns?

....


Although I'm sure in the last three years your directly invested portfolio in UK shares has outperformed a fourth quartile OEIC...I'd hope so, otherwise you'd be rather foolish spouting all the rubbish on these forums.

Oh wait, we have no demonstration of your ability to invest, whatsoever.

( source: http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=PPHI&univ=U )

darkpool

qpop wrote: »

How about the other 80 UK equity income funds who have returned in excess of 36% in three years?

so how many Unit Trusts are there.......

gadgetmind

qpop wrote: »

...let's just hope you didn't add Tesco to it at the turn of the year:

Why? As long as it was no more than 5% of the portfolio, and retailers less than 10% overall, then the drop in Tesco would be noise and I can't see their dividends suffering over the medium to long term

Yes, the fund managers will have held Tesco, BP, et al. As a small holding amongst many others.

Or not so small.
http://www.investmentweek.co.uk/investment-week/news/2145444/woodford-sells-tesco-buffett-buys

A private investor with £20k to invest *could* hold 20 individual companies; the trading charges would be troublesome

I think 20 companies is about right, though some argue for as low as 15. Trading charges aren't troublesome if you don't keep churning the portfolio.

and what about the time value of monitoring those 20 companies; ensuring the balance sheets are up to scratch, watching for RNS releases, keeping abreast of the industry they operate within.

And what about the time value of monitoring active investments to do the same? For every fund you can show that's beaten the index over recent years, many others that looked every bit as promising have under-performed.

I probably count as well-paid (depends on who you ask) and I've certainly had quite enough of high-fee funds and will only be using IFAs in the future for very specific advice that almost certainly won't pertain to the assets in which I choose to invest.

I know many others who now feel the same way but I fully accept that my sample size is small and that such anecdotes do not constitute research.

qpop

darkpool wrote: »

so how many Unit Trusts are there.......

Way to ignore the rest of my post darkpool, quite a skill you have there.

In the UK equity income universe, there are 95 funds that have at least 3 years worth of data, are based onshore, and submit their data to trustnet.

Of these 95 funds, Invesco Perpetual High Income's total return over three years is the 81st best.

The rest have exceeded this return (36% over three years)

Do you need me to explain it again? Or any more slowly?

As these funds are probably most comparable with a private investor holding in blue chip FTSE100 shares, which is what you profess to invest in.

I wait with baited breath for your evidence that you've outperformed a fourth quartile OEIC in the last three years.

Rollinghome

Aegis wrote: »

Some people trying to manage their own finances make extremely poor decisions on a par with trying to extract their own teeth. I saw a case recently where someone was on the verge of losing about £30,000 over the next 20 years by failing to draw one of their pensions in time to retain their guaranteed annuity rate, simply because they didn't understand the policy enough to realise that it was a spot guarantee.

I don't follow your argument. So some people can do even worse by doing it themselves than by paying someone else to do it.

How does that excuse dodgy IFAs who charge for their service but still give worse results than if the client had done it themselves? I calculate that my friend would have been worse off to the tune of £50-70,000 over a period of 5 years had he taken the advice from the IFA and moved his funds.

Incidentally, £115,000 of funds going into one of the investment bonds they wanted to sell him seems to have been intended for a tracker fund. The main difference from a normal unit trust tracker was the huge fees including 4.5% initial commission plus tasty ongoing trail commission.

Also two of the funds recommended for the ISAs were HSBC trackers but instead of 0% initial and 0.25% ongoing fees, the commission payable to them alone was 3% initial plus 0.9% ongoing plus a platform fee.

Again, I'd ask you: you say that the level of complaints proves there isn't a problem but where would a complaint against rip-offs and poor advice of that kind be dealt with or even recorded? As I understand it action can only be taken after the event and then only if clear misselling can be proved.

Or are you saying that advice of that kind from IFAs when clearly against the interests of the client is entirely acceptable?

qpop

gadgetmind wrote: »

Why? As long as it was no more than 5% of the portfolio, and retailers less than 10% overall, then the drop in Tesco would be noise and I can't see their dividends suffering over the medium to long term

Or not so small.
http://www.investmentweek.co.uk/investment-week/news/2145444/woodford-sells-tesco-buffett-buys

The truth is that most private investor portfolios are far more concentrated than that - People don't educate themselves properly on the risks before diving in with (inappropriate) investments. This is demonstrated regularly on this forum, as I'm sure you've seen.

I think 20 companies is about right, though some argue for as low as 15. Trading charges aren't troublesome if you don't keep churning the portfolio.

20 companies is the point at which the reduction in volatility tails off. It is a sensible amount to hold.

And what about the time value of monitoring active investments to do the same? For every fund you can show that's beaten the index over recent years, many others that looked every bit as promising have under-performed.

The potential losses as a result of am error is lower with collectives. An annual "review" of an OEIC holding tends to suffice due to the diversification effect (and the fact that you're essentially delegating the day-to-day monitoring of the individual investments to the fund manager for a fee)

I probably count as well-paid (depends on who you ask) and I've certainly had quite enough of high-fee funds and will only be using IFAs in the future for very specific advice that almost certainly won't pertain to the assets in which I choose to invest.

I know many others who now feel the same way but I fully accept that my sample size is small and that such anecdotes do not constitute research.

I'm glad that you acknowledge n=1 (anecdotal) doesn't count as research; it makes a change.

High-fee funds aren't always right, for sure. There are some corners of the world where low-fee funds just won't work. (emerging markets, for example). Likewise there are areas (such as the USA) where there are very few fund management groups that can boast demonstrable track records.

The issue that I take with darkpool et al is that all of these issues are taken as black and white, and flippant comments are made with no reasoning or source (and a newspaper article doesn't count as a source, nor does a blog post).

IronWolf

Private DIY investor here, moreover one of the ones holding Tesco before the decline with a massive 15% of my portfolio in it. I guess I'm one of the people Qpop was talking about

I think there are fair points on both sides, DIY isn't for everyone, I've dedicated a considerable amount of effort to investing and still have much to learn. If I calculated my 'earnings per hour' from investing it would probably be poor, but in the long term if it pays off and the portfolio grows I will get better money for my time, and also the years of experience investing. Also if I wasn't reading annual reports I'd just be browsing forums wasting my time anyway lol.

I don't get phased by the wild swings in the market and do a pretty good job of keeping the emotions in check. Good job as my 2 biggest holdings have been down around 15% in the past year. The Tesco profit warning still hurt though but I got over it and increased my stake further to a lofty 20%. Fortune favours the brave eh.

I don't regret going DIY, I measure my performance against the FTSE all share, as I'd probably invest in a tracker if I didn't invest in shares. So far this year Im beating it, even with Tesco's stinking performance. Cheating slightly though as I'm including an emerging markets fund for a small part, but haven't been bothered to get the calculator out to work out returns excluding it.

qpop

IronWolf wrote: »

Private DIY investor here, moreover one of the ones holding Tesco before the decline with a massive 15% of my portfolio in it. I guess I'm one of the people Qpop was talking about

I think there are fair points on both sides, DIY isn't for everyone, I've dedicated a considerable amount of effort to investing and still have much to learn. If I calculated my 'earnings per hour' from investing it would probably be poor, but in the long term if it pays off and the portfolio grows I will get better money for my time, and also the years of experience investing. Also if I wasn't reading annual reports I'd just be browsing forums wasting my time anyway lol.

I don't get phased by the wild swings in the market and do a pretty good job of keeping the emotions in check. Good job as my 2 biggest holdings have been down around 15% in the past year. The Tesco profit warning still hurt though but I got over it and increased my stake further to a lofty 20%. Fortune favours the brave eh.

I don't regret going DIY, I measure my performance against the FTSE all share, as I'd probably invest in a tracker if I didn't invest in shares. So far this year Im beating it, even with Tesco's stinking performance. Cheating slightly though as I'm including an emerging markets fund for a small part, but haven't been bothered to get the calculator out to work out returns excluding it.

I wasn't deriding those holding Tesco, by the way. Looks like you did the sensible thing, if you had conviction in them as an investment; bought more.

Private investment is profitable, if you are prepared to to take the time and effort required to make it so. The majority of people don't, and therefore do one of two things:

Try anyway, and either get lucky or don't
Pay somebody else to do it.

It is a given that there are IFAs trading who don't do much other than sell bonds and expensive individual UTs, but I don't accept that they're the majority.

It's horses for courses, and the OEIC/IFA industry simply wouldn't exist if everybody could be bothered to learn about private investment thoroughly.

Likewise the practice accountancy industry wouldn't exist if company owners and individuals learnt how to balance their books properly; solicitors wouldn't exist if people learnt how to represent themselves legally; perhaps GP surgeries wouldn't exist if we all studied medicine.