MSE News: Do you really need to pay for financial advice?

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"Danny Cox, from financial advisers Hargreaves Lansdown, asks whether DIY investing is the future ..."

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  • bigbloke45
    bigbloke45 Posts: 2,342 Forumite
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    The problem is, why pay an adviser who was commission only one day and fee-charging the next? He/She won't know any more and will be inclined to suggest that you change things to justify the fee.

    How many people would be happy to pay hundreds of pounds or more to be told that everything is fine and you need do nothing? And yet, doing nothing is a big financial decision.
  • Pincher
    Pincher Posts: 6,552 Forumite
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    Backhanders take lots of forms. Fund managers will incentivise IFAs, one way or another. If I was a property developer, would I take an IFA to the Bahamas, to encourage him to invest client money my way? I build him a villa, so when the whole thing blows up, he has a bolt hole to go to.
  • dunstonh
    dunstonh Posts: 116,371 Forumite
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    Backhanders take lots of forms.

    Maybe including asking a DIY provider (that keeps most or all of the advice commissions for itself) to write an article promoting its own business model?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jimjames
    jimjames Posts: 17,619 Forumite
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    To quote "This begs the question: why pay for advice when you can find all the information you need online?"

    Just because all the information is available online doesn't mean that the info is in a form that is understandable or that explains exactly how that information applies in their specific circumstances. If you don't know about something then it is pretty difficult to find it. Reminds me of the "known unknowns" and "unknown unknowns"

    Yes there are reasons to do DIY but equally cases when advice will help the person reduce tax or consider options that they hadn't thought about or even known exists.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    With Hargreaves Lansdown you *are* paying for advice, but then not getting any, at least not any that's actually of value.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • Pincher
    Pincher Posts: 6,552 Forumite
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    They should have a Guild of Financial Advisers, with a guarantee fund, but I rather suspect no one will join, because they all think the others have a one way ticket to the Bahamas. :rotfl:
  • jamesd
    jamesd Posts: 26,103 Forumite
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    dunstonh wrote: »
    Maybe including asking a DIY provider (that keeps most or all of the advice commissions for itself) to write an article promoting its own business model?
    This can't really have been about HL's own execution only service. The introduction contains:

    "more DIY services are cropping up which don't give advice — they just process your investment request, for a lower fee."

    and the body says:

    "You save the cost of the advice but have no right to redress if the investment isn't right for you."

    We know that HL's SIPP service charges the full advice trail fee without charging for the advice, not the 0.5% or so lower one that would be expected if no advice was being paid for. Which means it's impossible for it to mean using HL's own SIPP service. It'd be more about the many other providers that don't charge for advice not being provided.

    Given Danny's role at HL it's more likely that this is the intended key message:

    "Good advice at the right time is well worth paying for. When considering advice, you should do as much research as you can beforehand". I expect that many IFAs would agree with that view.
  • dwsjarcmcd
    dwsjarcmcd Posts: 1,855 Forumite
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    To me this is really simple, if you understand something then DIY and take responsiblity, if you don't then pay for the expertise. When paying for expertise, shop around for price/value/experience etc.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    dwsjarcmcd wrote: »
    To me this is really simple, if you understand something then DIY and take responsiblity, if you don't then pay for the expertise.

    Options 3: if you don't yet understand how to DIY, then do some research. It's more than likely that you'll find the principles easy, and even if you don't, you'll better understand what you need from an adviser.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
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