Financial Advisor

Rollinghome

jamesd wrote: »

Please provide a link to two posts in say the last year where an IFA has provided a list of ten or more named funds and said buy them. It's "usually" done so that should be a pretty quick task to find a couple of examples, right?

How many IFAs have you had dealings with? In my experience, that's exactly the way that many chancers out there with minimal qualifications justify their bloated fees.

They have the client complete a form that's supposed to reveal his attitude to risk, which almost invariably comes out as "balanced", and they're all recommended the same stock list on that basis.

I posted details here of one of them near me for which I have all the documents: https://forums.moneysavingexpert.com/discussion/comment/50970679#Comment_50970679

In that case the motley list of 16 funds included 9 that the client already held. The client also had very substantial investments in shares and ITs but the IFA didn't even bother to ask what those were or, even less, consider how they might affect the balance and suitability of his recommendations.

I found out that like so many in the trade, the IFA was a former insurance salesman, so very good at selling but with only a basic understanding of investments such a unit trusts and insurance bonds and zero knowledge of other investments. And that too often is the reality of retail advice.

robmatic

w5moss wrote: »

Ok - Tell me if I'm being unreasonable. I have a Pension fund of 134K and portfolio of funds worth around 40K . My advisor is recommending to swap from Jupiter Merlin Growth Portfolio, to IFDS Omnis Threadneedle Advanced Acc, purely on the basis of Annual Management ~Charge. He says it is 2.57%, I checked with Jupiter, and they say it is 1.5%. He put me into Jupiter 3 years ago, so what has changed in such a short period that I should change. Also, he wants to charge me on either an hourly rate of £300 per hour (estimate of 6 hrs per year) or 1% of funds. I would be ok with this, if it werent that the bulk of my money is in the pension, so surely that means little work for him, yet he cops 1%. Is this normal?

I'm not sure what the point would be of being solely invested in a multi-manager fund (or single fund of funds) and paying an advisor for 6 hours of 'work' per year on top of that. What value is he adding every year? Isn't the point of those types of funds that the manager is making the asset allocation decisions etc.? What kind of shoddy investment recommendation is it that needs reviewing on an annual basis?

robmatic

jamesd wrote: »

The TERs are a bit high but they do their job for people who don't want to do asset allocation and rebalancing and who can't justify paying an IFA because of the amounts of money involved.

In this situation, we appear to be doing both.

robmatic

dunstonh wrote: »

HL keep all the trail commission on their SIPP and dont rebate any. Their SIPP isnt great value for DIY as you are effectively paying the same for no advice as the average IFA would take for servicing advice.

Not all investments pay trail commission...

doubleJackD

jamesd wrote: »

Please provide a link to two posts in say the last year where an IFA has provided a list of ten or more named funds and said buy them. It's "usually" done so that should be a pretty quick task to find a couple of examples, right?

The non-IFAs tend to be more specific in identifying named funds that they think are worth a look but even there it does tend to be "worth a look" or "I like the look of" rather than "go out and buy without more investigation".

Whenever someone posts on here with advice they have received from an IFA it is has invariable been to invest in UTs or investments bonds.

Like it or not there are other investments ie shares, agricultural land, forestry, industrial land or even flats....

gadgetmind

doubleJackD wrote: »

Whenever someone posts on here with advice they have received from an IFA it is has invariable been to invest in UTs or investments bonds.

No, I've twice (nor thrice!) mentioned the chap who wanted me to put my entire SIPP into providing mezzanine loans to property developers.

jamesd

robmatic wrote: »

In this situation, we appear to be doing both.

Agreed. I think it's a bad deal on both price and quality of advice for the amount involved.

Rollinghome wrote: »

How many IFAs have you had dealings with?

A few. The first I encountered via work and it was a question of what to report them to the FSA for than buying anything via them. The others have been good to excellent, particularly one I contacted independently of work. Capable people. Not necessarily pricing I'd agree with in all cases.

There definitely are some bad IFAs out there. Same for doctors and lawyers as well, but they do seem to be improving. It'll be interesting to see what the RDR changes bring about and whether they end up with a better reputation and more uniform high quality as a result.

The ones who post here tend to demonstrate that they know their business well. Dunstonh in particular has repeatedly demonstrated tailoring what is suggested to the specific circumstances of a poster and that's why I'm happy to suggest people contact dunstonh if they happen to need IFA service - after years of reading the posts I know dunstonh knows the subject. Others vary but only one I'd call bad and that was a relatively new one who was using out of date information about tax breaks and who I ended up correcting a few times.

The bad IFAs mentioned here tend to be the ones used by people asking for help. If you watch over time you'll see a fairly steady diet of IFAs and others here saying that a particular IFA doesn't seem to have done a good job, as in this discussion.

doubleJackD wrote: »

Whenever someone posts on here with advice they have received from an IFA it is has invariable been to invest in UTs or investments bonds.

Does that mean you accept that your original claim that 'the advice seen on this forum from IFAs is typically "here are a list of 10 unit trusts, invest in them"' was wrong, having failed to find even one example of an IFA doing that in the last year, let alone two or more?

Investment bonds are more often commented on here by IFAs as a bad idea than a good one, because their costs make them unsuitable a lot of the time - donstonh even wrote something of the sort in the last week.

Suggesting UTs makes sense because those are aimed at retail investors. IT's in general, aren't. But lots of posters here know about their potential advantages and may like them anyway.

doubleJackD wrote: »

Like it or not there are other investments ie shares, agricultural land, forestry, industrial land or even flats....

Sure, most of those aren't mainstream investments approved for sale to most consumers by IFAs though some of that is changing now IFA permissions are increasing to allow them to cover more of them.

I'd like to see more people here posting about ITs. I think they can be quite interesting options sometimes, provided it's not just claims that they are cheaper but forgetting the extra costs. I don't mind extra costs to get higher returns and some ITs deliver.

doubleJackD

gadgetmind wrote: »

No, I've twice (nor thrice!) mentioned the chap who wanted me to put my entire SIPP into providing mezzanine loans to property developers.

by any chance was the commission for the IFA very high..

doubleJackD

jamesd wrote: »

Does that mean you accept that your original claim that 'the advice seen on this forum from IFAs is typically "here are a list of 10 unit trusts, invest in them"' was wrong, having failed to find even one example of an IFA doing that in the last year, let alone two or more?

Sure, most of those aren't mainstream investments approved for sale to most consumers by IFAs though some of that is changing now IFA permissions are increasing to allow them to cover more of them.

ehhhmmmm ok, so if land and shares aren't suitable for IFA customers could you tell me what is? There really isn't a lot else apart from UTs....

There's a whole big world of investment out there, why limit yourself to UTs....

dunstonh

ehhhmmmm ok, so if land and shares aren't suitable for IFA customers could you tell me what is? There really isn't a lot else apart from UTs....

My goodness, I think he may be getting it.

There's a whole big world of investment out there, why limit yourself to UTs....

Because the advice has to be suitable for the amounts involved, the knowledge of the consumer along with other things. Has not the events of the credit crunch and recession not shown you the value the average consumer puts on consumer protection, like the FSCS. Plus, firms have been fined for recommending investments which do not carry FSCS protection.