Drop in well paid using IFA's

jem16

Rollinghome wrote: »

Yes let's. Can we assume that whatever his posts and PMs were, they were brought to the attention of the board-owner by the complaints of another user?

Whiteflag's PPR came about after his posts and subsequent pms in this thread.

http://forums.moneysavingexpert.com/showpost.php?p=28672695&postcount=178

Could one of those complainants have been you?

You couldn't be further from the truth if you tried.

I did receive one of those pms talked about by tartantera but mine wasn't abusive. It actually surprised me as whiteflag and I had had a few interesting debates. That last pm from whiteflag wished me all the best for the future and thanked me for being one of the few posters on the forum at the time who had a clue what they were on about and that he had enjoyed our debates. Whether you believe this or not i couldn't care less.

We also talked about you in his new guise as feesarefare but you wouldn't want to know what he said then.

One thing I admire whiteflag for is for never denying who he actually posted as previously unlike someone else on here.

I take it that you also agree that all the other IFAs here and their devoted groupies, including you, constantly denied any problems with commission based "advice" or the even the existence of commission bias and certainly did not support the proposals of the RDR as was claimed in that earlier post?

If you've at last changed your mind that's good.

Do you now agree that the banning of commission and higher training requirements for IFAs is a positive step despite the still non-stop wailing of many IFAs? (some even claiming that their human rights are being abused as a result of RDR. )

I have always maintained that some of RDR is going to be good for clients. However I have also said that some is going to be bad as it will see increased costs for the smaller investor. We are already seeing that now with HL's charge for trackers.

Rollinghome wrote: »

There's a difference between "flawed research" as you claim and limited research.

Consumer Focus' "research" used 31 clients out of 2 IFA networks. With 30,000 IFAs that's representative of 0.1% of cases. Do you really feel that it useful?

As a consumer I am looking for information that is meaningful and representative of the business. If only 0.1% was sampled what did the other 99.9% think?

I've had dealings with half a dozen IFAs recently (and various other brokers, advisers, and financial salesmen over 30+ years prior to that) and all have been rogues, all ex-salesmen, and all with extremely limited financial knowledge except of the retail products that paid them sales commission.

That it was only a sample of half a dozen doesn't prove my findings were flawed even though the sample was limited.

Of course it's flawed. Your 6 out of 30,000 IFAs represents 0.02% of all possible cases. What did the other 99.98% think?

I haven't read the actual report referred to and so can't directly comment and there's every chance that neither havel you.

Actually I have read the report and very interesting it was too. I would welcome any report by Consumer Focus - after all the very name suggests that it should be looking after me. However statistically it shows very little in the way of factual evidence that it actually backs up with meaningful figures. Most of it is very wooly with "we estimate this to be".

It then goes on to decry the RDR changes that you like in reference to pension transfers;

Changes from the RDR – such as the increased training requirements on IFAs – are unlikely to remedy this problem. Already IFAs that are allowed to advise on pension switching have to have training requirements beyond those mandated by the RDR. The switch from commission-based to fee-based charging does not address the transaction bias we have described.

Looking at the case studies of those 31 proved very interesting. Case 25 saw one client who wanted to transfer out of the NHS scheme as she had fallen out with her employer. The IFA advised against this but the client insisted.

Case study 11 saw the client being advised on a pension which saw lower charges than his previous pension and which would make him much better off in retirement. Yes Consumer Focus saw fit to mention the cost of the advice without comparing it to the amount that may have been saved or the amount by which the client would be better off in retirement.

Case 27 states that the client received investment advice that closely matched his needs yet seems to slate that the current system works well for the well-off without explaining why. In this case what has the IFA done wrong?

Case 3 wants to move his occupational scheme to a PP so he can get the largest lump sum possible so that he can buy a new car. The IFA strobgly advises against this course of action as it will make him considerably less well off. Again what has the IFA done wrong here?

Nor would I rely on the predictable response of the IFA journal you refer to which will always say what its readership wishes to hear.

Neither do I which is why I followed the link to the actual report. Do read it - it makes interesting reading.

Rollinghome

For aegis, Snowman makes the same point:

SnowMan wrote: »

Anyone who dares give a genuine experience of IFAs on this forum is accused of trolling, IFA bashing or having an axe to grind. What particularly amazed me was how little support there was for the RDR from IFAs when it was announced.

SnowMan

I remember the first mention of the FSA proposals to abolish commission through the RDR came in this thread in June 2009 started by the late great EdInvestor.

I will let people read and make their own judgements on what the initial reactions on this site were. Aegis's view seems to be set out in post 3 on that thread.

Aegis

Rollinghome wrote: »

"Lying as usual" That's quite a serious accusation. Is it really necessary to be abusive in that way? Why do we always get this from the IFAs on this board? Lying is a deliberate misrepresentation of the truth and I don't do that.

Yes, you do. I corrected you on what I think on RDR in August. You ignored it and accused me again of holding views that I don't actually hold. The very definition of lying is, as you say, deliberate misrepresentation of the trust, and that's exactly what you've done here with my views and those of others. On several occasions.

Don't want the label any more? Stop inventing my views and start being honest.

Oh, and stop acting like you're the innocent party in all this. The whole "oh, look what the IFAs are doing with no provocation" act is pathetic. If you go out to pick a fight, don't try to take the high ground when someone rises to it.

As I understand you, you seem to be saying that you weren't fully opposed to RDR. From my recollection you repeatedly argued that commission wasn't a problem and yet the ending of commission is central to the RDR.

Instead of just being abusive could you clarify your position to avoid future misunderstanding?

You used to work for a bank until a year or so ago and then you decided after joining this board to become an IFA. Is that right.

Your position now is that you agree with RDR? In its entirity or only in parts? Do you now agree that commission bias was a problem and that it is right that commission will be banned and that higher qualifications will be required from 2013.

You suggested the levels of poor advice could somehow be assessed by the frequency of complaints.

Without any more abuse could you answer my question, already asked twice I think, and say what action my friend should take to ensure that the IFA he saw can't rip-off others as he attempted to do with him? Who should he complain to and how? Or do you think that the behaviour described is fully up to the standard to be expected from an IFA and no complaint justified?

Could I also ask you something else? You have recently become an IFA but when and how often have you used one, or perhaps an advisory stockbroker, to get a client's-eye view of what happens?

Do you know how some in your trade behave? It might be that you and the company you work for are entirely different from those I've encountered. The IFA my friend used was recommended to him, which is worrying in itself, and possibly indicates that many clients don't realise when they're getting poor advice.

Another friend thought he'd saved money by using his brother-in-law who was an IFA but hadn't realised that his brother-in-law had in fact been paid a large chunk of commission. According to the BBC programme Moneybox, a high proportion of people are completely unaware that they are paying trail commission. Paul Lewis was subjected to a sustained attack from IFAs which can be seen on the IFA websites for airing the programme.

On the other hand, if you prefer to just be abusive, forget it, and I'll understand.

You won't get any more of a response from me until you agree to act like a decent person.

Aegis

SnowMan wrote: »

I remember the first mention of the FSA proposals to abolish commission through the RDR came in this thread in June 2009 started by the late great EdInvestor.

I will let people read and make their own judgements on what the initial reactions on this site were.

Please do, my comments are there unedited. My initial thoughts were that it was very short sighted to ban the option for commission altogether. I still feel that removing the commission option is going to cause prices to rise for the lowest net worth investors out there, and I think it's going to cause all sorts of problems if steps aren't taken with certain products, such as annuities.

Since then there have been several clarifications on the commission ban, including what happens with legacy products. In addition, there's no longer a blanket ban on taking charges from products, which was going to be a major sticking points with clients, especially for things like pensions (where tax relief can be available on the fees) and offshore bonds (where some of the fees can be exempted from VAT).

Still lacking, however, is information on what is going to happen with platforms next year, which is a symptom of implementing a policy without thinking through all the consequences in advance.

I still think that RDR is going to make financial advice less accessible to lower net worth individuals rather than more so, so I feel it will fail on that particular objective.

However, I have always fully supported the increased qualification criteria and the overall goals of RDR, so the claim (made repeatedly) that I have been vehemently opposed to RDR since day 1 is simply absurd.

arnoldy

I think the issue is about fees in general.
The vast majority of investment returns comes from dividend re-investment according to several studies. Now the FTSE 100 yields about 4%. If your various charges are 1.5% a year you are losing nearly 40% of your annual gains. Compound that over twenty years. Get your calculator out and do 0.6 to the power of 20. Then you will see the devastating impact of commission/charges. Far better (if you can) to hold the underlying investments yourself.

Aegis

arnoldy wrote: »

I think the issue is about fees in general.
The vast majority of investment returns comes from dividend re-investment according to several studies. Now the FTSE 100 yields about 4%. If your various charges are 1.5% a year you are losing nearly 40% of your annual gains. Compound that over twenty years. Get your calculator out and do 0.6 to the power of 20. Then you will see the devastating impact of commission/charges. Far better (if you can) to hold the underlying investments yourself.

Absolutely right, if you would invest in the exact same underlying investments in either case then there's no point in paying more. However, when you pay extra fees you are paying for someone to come up with a portfolio that you wouldn't otherwise have selected for yourself.

On a like for like basis, a directly held portfolio will outperform a managed portfolio, but it's almost never like for like.

gadgetmind

Aegis wrote: »

However, when you pay extra fees you are paying for someone to come up with a portfolio that you wouldn't otherwise have selected for yourself.

I'm sure that's true, but what evidence do we have that such a portfolio will outperform a well-diversified and rebalanced directly-held portfolio?

Aegis

gadgetmind wrote: »

I'm sure that's true, but what evidence do we have that such a portfolio will outperform a well-diversified and rebalanced directly-held portfolio?

As you know, this is a very contentious issue with advocates and evidence on either side. I use both active and passive in my own portfolio because I like to sit on the fence in some markets.

Edit: Just realised I crossed wires here, you were talking about direct holdings vs indirect holdings. My apologies for the misconception

psychic_teabag

gadgetmind wrote: »

I'm sure that's true, but what evidence do we have that such a portfolio will outperform a well-diversified and rebalanced directly-held portfolio?

I'm not sure anyone is claiming such a thing. But not everyone is able to construct such a portfolio themselves.