A good word at last...for IFAs

fiesta04

I have had 3 meetings with an IFA about my pension.

The first to decide on my risk etc.

The second he came back with alternatives to consider after advice on each.

The third to discuss my decision.

I have decided to keep it where it is.

All this and no charge.

F4

CannySaver_2

So how does the IFA get paid?

Would he have been paid if you had moved it?

Was his recommendation to move it which you decided against?

fiesta04

CannySaver wrote: »

So how does the IFA get paid?

On this he does not

Would he have been paid if you had moved it?

Yes



Was his recommendation to move it which you decided against?

No, he suggested as if moved would have to outperform current pension by a way to compensate for low charges in existing Fund.

I can change to different funds within the Pension.

So it seems as though, to me, he was actually thinking of what was best for me at this time.

F4

Daniel_Elkington

Being an IFA I do this with my clients, I don't charge until the client is happy with the recommendation. From a business point of view it is probably better to not get paid for some advice than have a potential complaint down the line as complaints are generally very expensive. I've never had one so don't know for sure.

I tend to ask clients whether they want more performance or pay less to a pensions company.

If they want more performance then they need to pay for it, like with cars, a porsche costs more than a fiesta for good reason.

If you want to save money then there are many contracts that will allow you to keep a tracker strategy (ie cheap) and possibly save some AMC. I know a few that charge 0.4% AMC and have lifestyling and all the rest thrown in.

I also advise on active management strategies that cost roughly 1.5% Total Expense Ratio and my clients on the active strategy tend to get about 4%+ extra performance a year, which is well worth the extra charges. This also includes a review from myself as an active strategy needs reviewing.

I'm surprised he did three meetings though. I usually have two in person and keep in touch via the old email and phone throughout the research process so when I go back to a client they know what they are getting and it is really a case of the legal disclosures and signing some forms!

Pension Transfers are very hard work as there are a lot of considerations involved.

If he asked you how you want to invest as well as what kind of risk you wanted to take and brought a service and payment agreement (detailing his ongoing services) then he is very probably well above board.

If he is citing outperformance is necessary then ask him about his research methodology and why he feels that his portfolio is going to beat the existing one.

I recognise that you can switch internally, however if your existing plan is not a platform then it is likely that those external fund mirrors will be vastly more expensive than a portfolio on platform.

hope this helps,

fiesta04

Thankyou for replying...BUT PLEASE EDIT YOUR POST AS NO TOUTING FOR BUSINESS IS ALLOWED ON THIS FORUM.

F4

chris1

fiesta04 wrote: »

So it seems as though, to me, he was actually thinking of what was best for me at this time.

So who was this then?

fiesta04

chris1 wrote: »

So who was this then?

It was an IFA I used from unbiased.com

F4

Aegis

Daniel_Elkington wrote: »

I also advise on active management strategies that cost roughly 1.5% Total Expense Ratio and my clients on the active strategy tend to get about 4%+ extra performance a year, which is well worth the extra charges. This also includes a review from myself as an active strategy needs reviewing.

Your entry on the FSA register indicates that you've been an authorised adviser since April last year, with no previous history of controlled functions or Appointed rep status. As such, I find it very hard to believe that you have sufficient data to say that your clients get about 4%+ extra performance each year, as you surely only have one year's worth of investments that you've recommended to look at?

It's also very unclear as to whether you mean a 4% increase in performance, e.g. 5% increasing to 5.2%, or 4% additional percentage points of growth, e.g. 5% increasing to 9%. If the former, it's not that much to brag about, especially over a short timeframe, if the latter then it indicates an unsustainable amount of additional growth if you act within the correct attitude to risk.

Would you perhaps care to elaborate as to what you meant by this 4% figure and how long you have been advising clients for?

gadgetmind

Daniel_Elkington wrote: »

I also advise on active management strategies that cost roughly 1.5% Total Expense Ratio and my clients on the active strategy tend to get about 4%+ extra performance a year, which is well worth the extra charges.

On what historical data is this based and over what time frame?

While high fees undoubtedly benefit those receiving them, evidence strongly suggests that they are to the detriment of investors.