How to choose an IFA

Bluebell1000

Hi,

My Dad has recently retired and has some spare money after downsizing his house. I've helped him find a good cash savings account and set him up with a tracker share ISA. His cash ISAs were at a pretty low rate so he called into the building society. After a long meeting with their advisor he was told he would get a better rate by changing them to shares as well. While i'm not entirely convinced that was a good thing - after all, return is far from guaranteed - I'm no expert. Dad has never had enough money before to really think about investments etc so he just does what he's told!

So I was thinking an IFA would be sensible (hopefully better than a building society) but I have no idea how to select one. I don't know anyone who could recommend one, so what should i be looking for?

jem16

Bluebell1000 wrote: »

So I was thinking an IFA would be sensible (hopefully better than a building society)

Almost certainly but how much is involved?

but I have no idea how to select one.

Use https://www.unbiased.co.uk and select 2 or 3 in your area. You could then contact them and see how it goes.

I don't know anyone who could recommend one, so what should i be looking for?

An IFA who specialises in investments rather than a jack-of-all trades would be best.

Bluebell1000

jem16 wrote: »

Almost certainly but how much is involved?

.

Around £120k in total. I think about £25k of that is now shares, rest cash.

Thanks.

jem16

Bluebell1000 wrote: »

Around £120k in total. I think about £25k of that is now shares, rest cash.

Thanks.

Definitely in IFA territory then. Steer well clear of a bank/building society for investments.

Make sure you discuss paying by fee as opposed to commission.

Bluebell1000

Looks like there are a few options on the website you suggested thanks again, will pass their details on.

bigfreddiel

can i just add that you must be absolutely clear how the ifa will be paid - if you're in anyway unclear qbout this keep asking for clarification, with examplesif that makes it clearer and make sure you get the final payment structure in writing.

some ifas charge a fee and some may expect an ongoing percentage of the fund they're managing. some people say a fee is the best route, but its whatever you're happy with

just be absolutely clear that what sounds like a small fee percentage wise, can have devasting affect on your fund over time - although 2%/annum sounds low on £100k it's actually £2,000 (plus vat i expect)

just to reiterate make sure you know how much you're paying, how you're being charged and what you're going to get.

good luck

fj

jem16

bigfreddiel wrote: »

some ifas charge a fee and some may expect an ongoing percentage of the fund they're managing. some people say a fee is the best route, but its whatever you're happy with

Just also be clear that there will be a fee for the initial advice and a fee for ongoing advice should that be required.

On an investment of £100k, paying a fee for the initial advice will almost certainly be better than paying commission. That fee can be taken from the product or paid by cheque.

Ongoing advice would most likely be 0.5% or a fixed amount.

just be absolutely clear that what sounds like a small fee percentage wise, can have devasting affect on your fund over time - although 2%/annum sounds low on £100k it's actually £2,000 (plus vat i expect)

Again do be clear that you don't mix up the fees for the actual fund with the fees for the IFA working on a servicing basis.

Money_Saving_Dude

It won't harm your defence to do some reading. There's lots of advice on the web so read far and wide. One site I like (though it seems to be slipping a bit recently, but the boards are still excellent value) is The Motley Fool. You could try with the advice here: Investment terms explained. The more you read the more you'll understand.

Just remember, keep those fees down. Although you'll probably struggle to get it below 1% if you use an IFA I would personally be aiming for 0.5% maximum. And the best way to pay for an IFA is directly, so you see the money and it hurts to pay it. If you just agree to paying via a percentage you'll lose more than you think.

Plus if it hurts you you'll make them work harder for their money. :rotfl:

Jegersmart

Personally I would only use a fee-based IFA, and only at times when I need to consider tax and other implications such as transferring private company shares into SIPP and other more complicated themes. To pay an IFA to choose funds for investment I would personally view as a waste of money - but everyone is different of course.

Just to stress though, if you want to use an IFA I would use a fee-based one, not someone that gets commission - because it is clear case of conflict of interest - the IFA would get paid more for more expensive investment vehicles.....

J

Rollinghome

Lots of good advice by Justin Modray on when, and when not, to use an IFA and how to choose should you decide you need one:
http://www.candidmoney.com/intro/financialadvice.aspx
and http://candidmoney.com/questions/question584.aspx

dunstonh

wales100, what is it you like about adviserindex? I agree it is visually attractive but it seems to have a tiny number of adviser firms signed up to it. There are under half a dozen in the whole of East Anglia according to them but there are half a dozen within just 5 miles of me using the unbiased website.