Questions to ask an IFA?

1echidna

The whole thing needs cleaning up. Even doctors are expected to get results.

dunstonh

yes, i obviously agree that IFAs can only advise on what they are regulated to advise upon. But it does seem debatable if they can call their advice independent if they can only sell certain products.

It is only debatable if you want advisers to start advising in areas that are not applicable. The FSA recently changed the stockbroker/adviser classification to merge those and this will allow advisers to utilise further options. However, the issue still remains that the advice has to be within the understanding and ability of the individual and suggesting property to the majority would be foolish and as property has no protection under the FSCS and it not an activity covered by the FSA, then no access to FOS is granted.

The whole thing needs cleaning up. Even doctors are expected to get results.

what do you mean by that. There is consumer protection that ensures you get the right advice or protected if not.

1echidna

dunstonh wrote: »

what do you mean by that. There is consumer protection that ensures you get the right advice or protected if not.

It seems that you may be protected against 'correct' methodology not being followed. There is no linkage, monitoring, reporting of actual performance.

dunstonh

1echidna wrote: »

It seems that you may be protected against 'correct' methodology not being followed. There is no linkage, monitoring, reporting of actual performance.

Why should there be any linkage? That isnt what an IFA is for or what they do.

1echidna

dunstonh wrote: »

Why should there be any linkage? That isnt what an IFA is for or what they do.

?????????????

doubleJackD

dunstonh wrote: »

It is only debatable if you want advisers to start advising in areas that are not applicable. The FSA recently changed the stockbroker/adviser classification to merge those and this will allow advisers to utilise further options. However, the issue still remains that the advice has to be within the understanding and ability of the individual and suggesting property to the majority would be foolish and as property has no protection under the FSCS and it not an activity covered by the FSA, then no access to FOS is granted.

yes i agree 100% with what you are saying, but you must admit that property *may* be a suitable investment for someone going to an IFA.

for an IFA to call himself "independent" is misleading as, by your own admission, he will not advise on certain investments. If these other investments were not mainstream investments I could understand the situation, but to suggest property and direct shareholdings are not suitable for every "average" investor is slightly silly.

Lokolo

doubleJackD wrote: »

yes i agree 100% with what you are saying, but you must admit that property *may* be a suitable investment for someone going to an IFA.

for an IFA to call himself "independent" is misleading as, by your own admission, he will not advise on certain investments. If these other investments were not mainstream investments I could understand the situation, but to suggest property and direct shareholdings are not suitable for every "average" investor is slightly silly.

Yes but the word independant isn't used for that context, its used for the context of being tied to an investment provider. IFAs are not tied to an investment provider, so they are independant.

I see what you are saying but we can't start calling them Limited Independant Financial Advisors if they can't recommend property or shares but can recommend funds across the board. We would just end up adding more and more terms (such as Global or Local) and end up with IFAs being renamed something like Global/Local Unbound/Limited Independant/Tied Financial Advisor.... and it starts getting rediculous doesn't it?

If people want advise to invest in property and shares they can do, but they have to see a Wealth Management advisor.

dunstonh

yes i agree 100% with what you are saying, but you must admit that property *may* be a suitable investment for someone going to an IFA.

Its certainly possible. However, you just don't see it that often.

for an IFA to call himself "independent" is misleading as, by your own admission, he will not advise on certain investments.

Under 2013 rules, that will not be the case.

If these other investments were not mainstream investments I could understand the situation, but to suggest property and direct shareholdings are not suitable for every "average" investor is slightly silly.

You may think that but the regulator and the ombudsman disagree. They consider the average consumer to be cautious and in general low knowledge unless shown otherwise. So, with single company shares (in isolation) being higher risk and mortgaged buy to lets being higher risk, they are not that suitable. Shares in a portfolio could easily be suitable but with due diligence required on any recommendation, it would be inappropriate for an most advisers to recommend them for most people. You have to remember that liability issues. Look at it from the adviser point of view. You have a incompetent regulator who changes minds on things at a drop of a hat and doesnt really understand consumer issues or adviser issues (for example, the FSA doesnt understand what a platform is or does) and you have a regulator that thinks most people are low risk and have little or no knowledge. If you had to put your own money behind the advice you give, would you go recommending options that require knowledge and understanding of a higher level and are higher risk than the average person?

doubleJackD

Lokolo wrote: »

Yes but the word independant isn't used for that context, its used for the context of being tied to an investment provider. IFAs are not tied to an investment provider, so they are independant.

I see what you are saying but we can't start calling them Limited Independant Financial Advisors if they can't recommend property or shares but can recommend funds across the board. We would just end up adding more and more terms (such as Global or Local) and end up with IFAs being renamed something like Global/Local Unbound/Limited Independant/Tied Financial Advisor.... and it starts getting rediculous doesn't it?

If people want advise to invest in property and shares they can do, but they have to see a Wealth Management advisor.

i can see your viewpoint as well, it just bothers me to see the Queen's English abused in this way. The advise offered by an IFA does not seem to be particularly independent....

dunstonh

The advise offered by an IFA does not seem to be particularly independent....

To say it is not independent then that suggests bias. What is that bias you perceive to be? If you want a recommendation to invest in property then fine have it. It will come with no consumer protection, no help from the adviser in deciding what property to pick, no due diligence on the suitability of the property but you will be charged £500 for that advice. Do you think there would be a market for such advice?