Financial Industry think their clients are "muppets"?

Jegersmart

GeorgeHowell wrote: »

More pompous nonsense.

Point taken.

I am not an IFA, have never used one and probably never will - but I do agree that they *may* be facing a bleak future due to the easy access to investing tools and platforms these days. Time will tell.

I am out of this one, as I seem to have completely misunderstood the point of this thread. I thought discussion was wanted regarding financial institutions, banks and perhaps on the system that affects all of us - but I was so wrong. I don't have experience that would enable me join in to bash IFA's or comment on the amount of time they may or may not spend on here - but if they contribute I thank them for it - just as I am grateful to anyone else who is open to a discussion or sharing of views. There are of course others that are unable or unwilling to debate - and those are the ones I referred to in my post as "laughable". I do stand by that - whether it makes me pompous or not:)

Good luck

J

GeorgeHowell

Jegersmart wrote: »

Point taken.

I am not an IFA, have never used one and probably never will - but I do agree that they *may* be facing a bleak future due to the easy access to investing tools and platforms these days. Time will tell.

I am out of this one, as I seem to have completely misunderstood the point of this thread. I thought discussion was wanted regarding financial institutions, banks and perhaps on the system that affects all of us - but I was so wrong. I don't have experience that would enable me join in to bash IFA's or comment on the amount of time they may or may not spend on here - but if they contribute I thank them for it - just as I am grateful to anyone else who is open to a discussion or sharing of views. There are of course others that are unable or unwilling to debate - and those are the ones I referred to in my post as "laughable". I do stand by that - whether it makes me pompous or not:)

Good luck

J

Fair enough.

IFA-bashing, per se, may not always be constructive. But some of them do rather set themselves up for it by posting in that, "Look, here's how it is ... we know best." tone. I think it would be better if IFA's did not use this forum because for me it is supposed to be for ordinary punters to share info, and pick each others brains. But it's a free country, and IFAs are entitled to do so if they wish. Clearly I am not the only person around who will decline to buy into their "wisdom" just because they are an IFA. "Trust me, I'm a doctor." may still carry some weight in our society, "Trust me, I'm an IFA." most certainly does not !

darkpool

brasso wrote: »

The point I'm making is pretty simple. Some people have the inclination and the mindset and the drive to do it. Others excel at other things - say accountancy - and are happy to leave the car maintenance to the professional mechanics, who of course are equally content to visit the same accountant once a year and dump a carrier-load of paperwork on the desk rather than spend long weekends trying to do the year-end accounts.

This is a serious question: tell us about your portfolio. I know you're an index-tracker enthusiast, but tell us how your portfolio is broken down, and how you see things panning out over the next year. I'll happily reciprocate if we can just move away from this.

i get your point about some people preferring to get the professionals in regarding some things. but the vast bulk of evidence shows that active fund managment does not deliver any alpha. i would suggest fund management has more in common with the Feng Shui industry rather than mechanics....

if you go to a car mechanic you know if he has fixed your car, if you go to a feng shui expert/ fund manager he will give a lot of gobble gook and jargon, and it's not obvious what they have done for their very large fees.

I mostly invest in FTSE350 shares. I invest for the long term so prefer dull companies that should be here in 100 years time. I wouldn't invest in gilts/ bonds because I think we are likely to have inflation over the coming decades. If I had the money I'd be investing in retail and industrial property - tesco are selling a lot of convenience stores on 20 year leases that yield over 6%, they seem good value to me.

darkpool

GeorgeHowell wrote: »

Fair enough.

IFA-bashing, per se, may not always be constructive. But some of them do rather set themselves up for it by posting in that, "Look, here's how it is ... we know best." tone. I think it would be better if IFA's did not use this forum because for me it is supposed to be for ordinary punters to share info, and pick each others brains. But it's a free country, and IFAs are entitled to do so if they wish. Clearly I am not the only person around who will decline to buy into their "wisdom" just because they are an IFA. "Trust me, I'm a doctor." may still carry some weight in our society, "Trust me, I'm an IFA." most certainly does not !

tbh i think some "IFA bashing" is constructive, if it makes people think twice about going to an IFA and buying investments that have 2 or 3% charges it has to be good.

I agree that IFAs shouldn't be posting in such large numbers, in one thread there were 6 IFAs posting!!!!!

darkpool

dunstonh wrote: »

They know exactly what they are getting.

I don't understand something you said, earlier on you said people would save 500 pounds a year on a 100k portfolio if they DIY'ed.

But you said your customers paid up to 1.7% a year in charges. If these customers got trakers instead would they not be saving 1500 pounds a year on a 100k portfolio?

jem16

darkpool wrote: »

I mostly invest in FTSE350 shares. I invest for the long term so prefer dull companies that should be here in 100 years time. I wouldn't invest in gilts/ bonds because I think we are likely to have inflation over the coming decades. If I had the money I'd be investing in retail and industrial property - tesco are selling a lot of convenience stores on 20 year leases that yield over 6%, they seem good value to me.

Thank you.

This information is much more helpful to anyone contemplating a DIY approach. It's something constructive rather than simply destructive.

darkpool wrote: »

I don't understand something you said, earlier on you said people would save 500 pounds a year on a 100k portfolio if they DIY'ed.

But you said your customers paid up to 1.7% a year in charges. If these customers got trakers instead would they not be saving 1500 pounds a year on a 100k portfolio?

Oh dear, too good to last.

If you want a cheap portfolio of only trackers advised by an IFA then it will be around 0.7%. DIY and it will cost 0.2%. Difference of 0.5% which on a £100k portfolio is £500.

If you had exactly the same portfolio (probably a mix of trackers and active funds as appropriate) as Dunstonh talks about for 1.7% then that would cost you 1.2% if you went DIY. Again a difference of 0.5%.

It's not about comparing the DIY cost of trackers with the advised cost of active funds, so not all black vs white. There are many shades of grey in between.

If you want a long term, rarely to be looked at portfolio with minimal costs, then say so and that's exactly what you will get.

If you feel the IFA will offer extra value in that mix of active funds and tracker funds, then go with that.

Basically it's all down to communication with your IFA.

Please do not simply regurgitate the active vs tracker debate - as brasso says, "Move on"

darkpool

jem16 wrote: »

It's not about comparing the DIY cost of trackers with the advised cost of active funds, so not all black vs white. There are many shades of grey in between.

But do you admit that if someone has money with an IFA in actively managed UTs and he decided to invest the money himself in trackers he would save circa 1.5%?

If someone came on this site and said he spent thousands each year on feng shui or crystal healing experts he would get criticised. Yet some people seem to think it sensible to spend thousands each year on fund management - even though there is very little evidence that shows it is cost effective.

You seem to spend a lot of time defending the fund management industry here. Do you have much investment experience? It does seem to be the people with little experience and small portfolios that defend the IFAs/ fund managers.

brasso

darkpool wrote: »

i get your point about some people preferring to get the professionals in regarding some things. but the vast bulk of evidence shows that active fund managment does not deliver any alpha. i would suggest fund management has more in common with the Feng Shui industry rather than mechanics....

if you go to a car mechanic you know if he has fixed your car, if you go to a feng shui expert/ fund manager he will give a lot of gobble gook and jargon, and it's not obvious what they have done for their very large fees.

Sorry -- been away from my PC for a few days.

Well a quick point is that I DON'T always know if the garage has fixed my car. They say they've changed the oil and replaced this and that. I take their word for it. Maybe I'm too trusting, but I would prefer that than the opposite -- which is either to do the stuff myself, and do a worse job; or to use their services but be weighed down with anger on a hunch that they probably have not done what I paid them for.

But coming back to investment the problem with trying to work out what is best is that we don't know what non-experts would do if they didn't go to an IFA. It's all very well saying 'You don't have to be an expert, you just put your money in low-TER index trackers and forget all about them'. People have to have some knowledge to even know about index trackers. (This is quite apart from the debate about whether trackers are better than active management.)

In other words, it's impossible to weigh up whether an IFA who charges to give advice, and then may recommend fund investment that creates more charges, is REALLY disadvantaging the client because we can't compare it with what would have happened if the client did something else. Let's say the potential client read this discussion and cancelled the appointment with the IFA. Maybe they will read a few other discussions and listen to the neighbour and the chap in the pub. Result? A portfolio made up of Premium Bonds, a few shares in oil and gold, and the bulk of their cash in a 3% bank savings account. Which may work out to be the best advice if we knew the future. Or may not.

But anyway, the real point is in the first paragraph. It's a matter of trust. There are good and bad car mechanics and good and bad IFAs. If someone is certain that they don't want to learn about investment strategies or car mechanics, they have to ask around, do some research, look for bona fides etc and make a decision on who to use. In most cases, I'm sure they'll be content, just as I am content to pay the mechanic to service my car, regardless of the knowledge that I could have done it myself.

darkpool wrote: »

I mostly invest in FTSE350 shares. I invest for the long term so prefer dull companies that should be here in 100 years time. I wouldn't invest in gilts/ bonds because I think we are likely to have inflation over the coming decades. If I had the money I'd be investing in retail and industrial property - tesco are selling a lot of convenience stores on 20 year leases that yield over 6%, they seem good value to me.

Do you invest in them directly, or through trackers? If direct, what criteria do you use? Dividends? Price-earnings etc? Director behaviour? Real world events? If you invest for the long term does this mean you just buy and hold and never rebalance? If trackers, what vehicle - ETFs or funds?

I've recently moved more towards the index tracker method though I can't get anywhere near enough diversification with just the FTSE, so have come up with a much broader global plan - which may or may not work out.

jem16

darkpool wrote: »

But do you admit that if someone has money with an IFA in actively managed UTs and he decided to invest the money himself in trackers he would save circa 1.5%?

That would be assuming that the IFA receommended purely active funds which, as I have said, is not black vs white. Please do try to move on from the active vs tracker debate.

Someone could POTENTIALLY save 1.5% just the same as they could POTENTIALLY lose 1.5% or even a whole lot more by going DIY.

You seem to spend a lot of time defending the fund management industry here.

Never once defended the fund management industry. I have though defended the IFA industry through experience. Are you confusing the role of an IFA with the role of a fund manager again?

Do you have much investment experience? It does seem to be the people with little experience and small portfolios that defend the IFAs/ fund managers.

To date around 35 years and a total portfolio of £345k approx. Is that small?

darkpool

brasso wrote: »

In other words, it's impossible to weigh up whether an IFA who charges to give advice, and then may recommend fund investment that creates more charges, is REALLY disadvantaging the client because we can't compare it with what would have happened if the client did something else. Let's say the potential client read this discussion and cancelled the appointment with the IFA. Maybe they will read a few other discussions and listen to the neighbour and the chap in the pub. Result? A portfolio made up of Premium Bonds, a few shares in oil and gold, and the bulk of their cash in a 3% bank savings account. Which may work out to be the best advice if we knew the future. Or may not.


Do you invest in them directly, or through trackers? If direct, what criteria do you use? Dividends? Price-earnings etc? Director behaviour? Real world events? If you invest for the long term does this mean you just buy and hold and never rebalance? If trackers, what vehicle - ETFs or funds?

I've recently moved more towards the index tracker method though I can't get anywhere near enough diversification with just the FTSE, so have come up with a much broader global plan - which may or may not work out.

i'll agree that someone might go to an IFA and get outstanding investment advise, but the chances are they will get a long list of UTs to invest in. So they will basically have a high cost tracker. I would argue that someone intelligent enough to save a decent amount of money is intelligent enough to invest it for themselves.

I think with investment you have to think how you increase the chances of getting a good return. I think the main way to increase your chances of a favourable outcome is to reduce costs. If you accept that long term shares deliver 5% a year in real terms it makes little sense to give away 2% of your portfolio each year.....

I invest directly, I look for a low PE (under 10) and an ok dividend (over 5%). Last time i sold a share that wasn't being taken over was maybe 15 years ago.

to be fair there is a certain amount of global diversification in the ftse 100. i live in the middle east, we have shell filling stations, unilever products, diageo spirits, rolls royce powered planes etc. people in the UK get all down about the lack of UK industry, but when you look at the UK from abroad it still has a lot of global brands.