Drop in well paid using IFA's

Meeper

I'm quite prepared to concede that point Gadget, as it's a good point. But you must also be prepared to concede that some people don't want to do that. Some people don't have the time. Some don't have the mental acuity to be able to do it even if they wanted to. And some simply can't be bothered.

I have a client who is a fund manager for an investment bank. He knows significantly more about investing than I do. However, he works about 70 hours a week and doesn't have any time to do anything with his own money because he's too busy looking after other people's! He has mortgage issues, protection issues, IHT issues, CGT issues, and lots of other issues. He doesn't even have the time to look for a mortgage on a comparison site, let alone find a complex mortgage structure that is appropriate for his current needs. He has the ability, but not the time.

The biggest problem I have with the arguments of some of the anti-IFA protestors on here is that they think that everyone has the time, skills, acumen and desire to do things themselves. IFA's do a great number of things. One of the things I think we do primarily is provide a service to people who may, for whatever reason, not be able to do it themselves.

Please, as a sensible individual, at least give us that much.

oldvicar

Meeper wrote: »

If you can do all of those things, all power to you. Don't pay the fee and don't engage the adviser.

The vast vast majority of people cannot do all of these things, and pay for the expertise and time of someone who can.

I could learn how to strip down my car engine and rebuild it better. But I have neither the time nor the inclination to do so. So, I pay someone else who already has that knowledge and experience to do it for me.

I would question whether it needs doing at all.

I don't think I would ever pay anyone to strip my car engine and re-build it, nor would I do it myself.

Unless the car is very rare/special/different, and also probably very valuable, its just not worth the cost of such specialist attention. For me, and the majority of other car owners, buying a new car would be better value. Like IFA, its a service I can happily do without.

Meeper

Gosh. You had to do it, didn't you.

Obviously I know you're joking due to the little wink at the end. Others aren't so subtle. Let me try something different then.

I could learn dentistry to be able to do my own teeth when it was necessary, but I don't. I could learn how to build a PC and install new hardware, but I don't. I could learn how to build a website, but I don't want to. I could get up a ladder and clean my windows, but I have a guy who comes and does that because I know he will come and do a good job and I don't have the time or the inclination. I could do a perfectly good marketing campaign for my house, but I let an estate agent handle it because I don't want the hassle. I could manage my own tenants perfectly well, but I prefer to have a rental agent take care of it for me and just pay me the rent once a month without hassle. I could learn how to be an accountant and how to use Sage, but I don't want to.

All everyday things that I either a) don't have the expertise to do; b) can't be bothered to do; or c) don't have the time to do, so I pay someone else to do them all for me.

Same goes for an IFA.

Am I getting anywhere with this?

oldvicar

Actually Meeper, there was a serious element to my point. And that is that IFA, with all the bells and whistles and the thoroughness which regulation requires., simply cannot be economically delivered for many ordinary folk. Some of the IFAs posting here express concern about independent advice not being accessible to people who will be put off by being charged fees. IMHO, they are more concerned about there being enough work to keep 30000 professionals employed.

JamesU

darkpool wrote: »

It is interesting that the vast bulk of the pro IFA comments come from ........IFAs. There seem to be few customers of IFAs here singing their praises.

Your sentiment is not correct. At least in my case, the only reason I have not posted is because I do not have the time to argue the toss. Although I feel comfortable being in control of my own financial affairs at present, I would not hesitate to embark on using an IFA should the need arise. At the first meeting that IFA would either convince me there would be added value to justify the costs, or alternatively would fail and not get my business.

JamesU

property.advert

Aegis wrote: »

... 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.

Charge for help in that particular instance was under £400, all offset by the annuity commission which would otherwise have gone to the product provider, before you make any assumptions about the cost.

And was this pension set up by an advisor ?

If so, then was not a duty of care owed to the client so that he fully understood what had been sold ?

property.advert

Meeper wrote: »

I'm quite prepared to concede that point Gadget, as it's a good point. But you must also be prepared to concede that some people don't want to do that. Some people don't have the time. Some don't have the mental acuity to be able to do it even if they wanted to. And some simply can't be bothered.

I have a client who is a fund manager for an investment bank. He knows significantly more about investing than I do. However, he works about 70 hours a week and doesn't have any time to do anything with his own money because he's too busy looking after other people's! He has mortgage issues, protection issues, IHT issues, CGT issues, and lots of other issues. He doesn't even have the time to look for a mortgage on a comparison site, let alone find a complex mortgage structure that is appropriate for his current needs. He has the ability, but not the time.

The biggest problem I have with the arguments of some of the anti-IFA protestors on here is that they think that everyone has the time, skills, acumen and desire to do things themselves. IFA's do a great number of things. One of the things I think we do primarily is provide a service to people who may, for whatever reason, not be able to do it themselves.

Please, as a sensible individual, at least give us that much.

I don't believe that argument for one minute simply because I was in that very situation. I was working huge hours and yet could easily manage all the aspects of finance which you allude he cannot find the time to manage.

What he doesn't have is the inclination. He has the financial ability to pay for advice and has chosen that route, not because he doesn't have time, rather because he cannot be bothered.

However, it does draw a dangerous parallel for an investment advisor. This client is well paid on a performance basis yet the IFA is assuredly well paid on a non performance basis. Should the client's investments falter then the IFA can shrug their shoulders whereas if the client's customers' investments fail he may well find himself not in need of an IFA but a recruitment agent.

Yet for the average Joe, is there really anything in the product line up which would justify a £200 an hour fee or are IFAs only going to be useful to the relatively wealthy because the charges to the poor would be the same as having huge management fees or upfront loaded commissions ?

I just don't see a viable business model for regular folk with small contributions with fees at high levels.

Aegis

property.advert wrote: »

And was this pension set up by an advisor ?

If so, then was not a duty of care owed to the client so that he fully understood what had been sold ?

Yes. In 1981. Hence why this had been forgotten.

Meeper

oldvicar wrote: »

Actually Meeper, there was a serious element to my point. And that is that IFA, with all the bells and whistles and the thoroughness which regulation requires., simply cannot be economically delivered for many ordinary folk.

Ding ding ding ding ding! We have a winner.

Please tell that to the FSA.

2010

Aegis wrote: »

I will happily guarantee success with my charges. Largely because I specifically DON'T state that I will outperform all the benchmarks all the time.

Success is defined as achieving the stated goals. In this case, the usual goals are:

• assessing the current financial situation and helping the client to identify their main goals
• identifying any areas of weakness, inefficiency or shortfall in their affairs
• proposing and explaining new tax structures and investment/savings strategies
• finding out any ethical or academic preferences for their investments (actively managed asset allocation, passive investment vehicle is more than possible if the client wants that)
• checking the level of financial protection in place
• ensuring that any available allowances are being fully utilised if this fits in line with the client's goals
• taking account of long term and short term cash flows
• introducing the client to third party providers of investment management, pension provision, legal advice, annual accounting advice, etc

At no point do I EVER guarantee or promise that the investments are going to be "better"* than what they can manage for themselves. What I do is find the best way for a client to invest into a range of tax wrappers in line with their investment preferences and attitudes to risk.

A lot of work goes into what I do, so yes, I have the "brass neck" to charge a fee for what I do.

You can`t EVER guarantee anything because you don`t know yourself how they`ll perform, and as I keep pointing out, only how they did in the past.

A lot of work goes into what I do, hmmmmmmmmmm 1 hour, 5 hours, 10 hours or any number of hours you care to charge.

You say you have the "brass neck" to charge a fee, which of course you must, but you don`t mention it being the exorbitant £160 an hour, which was talked about earlier.

If this thread gets read by anyone thinking of going to an IFA, with all the charges and dubious goings on in the financial industry, at least they have been forewarned that they could be ripped-off and suffer serious financial loss.