MSE News: Banks not giving adequate investment advice, says FSA

dunstonh

seriously, while there is a real issue about RDR pricing smaller investors out of the market for proper financial advice (by removing cross-subsidies), the high street banks have never been giving proper financial advice.

I don't necessarily agree. Lets say an old investment pre RDR paid a 3% commission and a trail of 0.5% p.a. On a £10k investment, thats £300 initial. Lets say an adviser would do it for £500 initial post RDR. Thats £200 more but there is no need for trail on an investment that size. So, that is 0.50% a year cheaper. Within around 4-5 years the cost to the individual is the same and beyond that it is cheaper.

The bigger issue to the smaller investor is the platform review which is increasingly bringing in other products and not just platforms. The banning of backhanders or undisclosed commissions between fund house and platform means explicit charging needs to come in its place. Explicit charging tends to be better for larger investors and worse for smaller ones as there is less cross subsidy (still some but to a lesser extent) and companies are less inclined or even unable to price in loss leaders.

There perhaps also needs to be a recognition that if you can only afford tiny amounts to invest then really you shouldnt be investing as it would suggest you dont have enough cash savings to make it worthwhile. There will be exceptions to that but there are some people who do not hold enough cash back before they go into investing and when the first large loss comes, they pull out because they cant afford to lose any more. They are the ones that shouldnt be invested in the first place.

jimjames

Statistics can be shown any way you want. I think this is more shocking than the original title.

75% of High Street bank customers received good advice.

Is that really true? Although 75% isn't good enough I still think in most situations it would be considered a good achievement.

2sides2everystory

jimjames wrote: »

Statistics can be shown any way you want. I think this is more shocking than the original title.

75% of High Street bank customers received good advice.

Is that really true? Although 75% isn't good enough I still think in most situations it would be considered a good achievement.

Of course it isn't true. Whoever penned that doesn't know their a$$ from their elbow.

antrobus

2sides2everystory wrote: »

Of course it isn't true. Whoever penned that doesn't know their a$$ from their elbow.

To assess advice given to a customer with a lump sum to invest, the FSA hired a market research firm to send mystery shoppers into branches of high-street banks and building societies. It said banks gave good advice in about 75% of the 231 cases studied,

http://online.wsj.com/article/BT-CO-20130213-705080.html

But then again, simply reading the first line of the linked article in the OP - "One in four investors are not receiving good enough advice from their bank"- would have enabled many people to have worked out that three in four people were receiving 'good enough advice', and that three in four is about 75%.:)

2sides2everystory

Of course, mystery shoppers do not know a$$es from elbows, antrobus. Especially bank mystery shoppers. They are tick boxers, nothing more. The people they "assess" are also tick-boxers. The FSA thinks regulation can be done by ticking boxes. They have all been ticking each others boxes for years. It's a self-serving sham from the lot of them.

jimjames

antrobus wrote: »

To assess advice given to a customer with a lump sum to invest, the FSA hired a market research firm to send mystery shoppers into branches of high-street banks and building societies. It said banks gave good advice in about 75% of the 231 cases studied,

http://online.wsj.com/article/BT-CO-20130213-705080.html

But then again, simply reading the first line of the linked article in the OP - "One in four investors are not receiving good enough advice from their bank"- would have enabled many people to have worked out that three in four people were receiving 'good enough advice', and that three in four is about 75%.:)

We might know that I bet the average person doesn't see beyond the headline. If the headline was reversed it would be very much a non story. Read the details and I think the MSE story is equally misleading as the numbers do not support the statement that they are giving bad advice when in 90% of cases they are! (only 10% of cases were shown to be detrimental advice)

Banks not giving adequate investment advice, says FSA

Very easy to manipulate statistics to suit your needs! This is just one example

http://damn-lies-and-statistics.blogspot.co.uk/