Financial Advisors-are they worth using?

Mo_L

Hey All,

For the past few months I've been drowning in a sea of information when it comes to investing. Anytime I begin to start looking into one area I end up looking at another area and then come out more confused then I initially was. The long term aim I've always said is to get into property however I want to expand my horizons. Commodities has been an area that I've read about here and there (not in too much detail). So now I'm thinking to refer to a financial adviser for..well advice. However I am skeptical. Just wondering if anyone here has used a financial adviser? What to look out for aside from FSA regulated, CFA & IMC..

Totton

Good advice is priceless so in the right circumstances the right advisor should be a good idea. I'm happy to DIY investing so do not use one now but in the early days we used a stockbroker and financial advisors. I would still use an advisor to help me with maters such as inheritance planning, retirement planning etc but for investing I see little benefit once someone has gotten to grips with the basics.

dunstonh

FAs should be avoided. IFAs are the one to use if you need advice.

What to look out for aside from FSA regulated, CFA & IMC..

FSA regulated is fine.

bigfreddiel

dunstonh wrote: »

FAs should be avoided. IFAs are the one to use if you need advice.

if you can find a true post rdr ifa that is:

Eight out of the 10 biggest advice firms are using the restricted model post-Retail Distribution Review, marking a substantial swing from a pre-RDR independence ratio of 4:1 following the advent of the new advice definitions under the rules

just be careful to check you do find an ifa - not an rfa

see ya

fj

atush

IFAs are worth using if you are clueless, have a large sum to invest, are too short on time or interest to learn to DIY.

They are good, even if just to evaluate your personal attitude to risk. Many say they are risk averse, but then say they want single shares, commodities like you, or put all their money into BTL houses. Which are all High risk. Others say they are low risk and want only cash investments, which these days will not give you a real return after inflation much less tax. Which means higher risk of shortfall.

look for one on unbiased.co.uk

dunstonh

bigfreddiel wrote: »

if you can find a true post rdr ifa that is:

Eight out of the 10 biggest advice firms are using the restricted model post-Retail Distribution Review, marking a substantial swing from a pre-RDR independence ratio of 4:1 following the advent of the new advice definitions under the rules

just be careful to check you do find an ifa - not an rfa

see ya

fj

You do realise that restricted means they are not an IFA?

nothing to do with a "true" IFA. Restricted means restricted. It doesnt mean IFA. However, the sentiment is correct.

Glen_Clark

A bit like asking if car mechanics are worth using.
If you know what you are doing, you are better off doing it yourself. If you don't, then you are likely to be better off paying someone else to do it. Even though some might rip you off.

jimjames

You haven't given a lot to go on but if you have no other investments it would probably be unlikely that an adviser (FA or IFA) would be able to help too much with property or commodity investments so you may be disappointed.

However they should be able to construct a far more balanced portfolio than just concentrating on one or two areas of the market.

dunstonh

jimjames wrote: »

You haven't given a lot to go on but if you have no other investments it would probably be unlikely that an adviser (FA or IFA) would be able to help too much with property or commodity investments so you may be disappointed.

However they should be able to construct a far more balanced portfolio than just concentrating on one or two areas of the market.

There is a greater focus nowadays on structured portfolios or portfolio funds or portfolio solutions (where funds are blended). The FSA is apparently going to be focusing more on due diligence and audit trails leading to the recommendation. The picking of funds to focus ONLY on a limited area (such as property or commodities) would be difficult for an IFA to justify. In the past, the adviser could do so if the client gave them such instructions but nowadays, the ombudsman and regulator would frown on such recommendations as they would say the client doesnt know enough to make that decision and the adviser shouldnt allow that sort of restriction to be placed on them. The adviser can get round it by recommending what should be done but then saying the client has rejected the advice and wants to proceed on a different basis. However, by doing that, you effectively lose the benefit of consumer protection and you may as well DIY.

bigadaj

dunstonh wrote: »

There is a greater focus nowadays on structured portfolios or portfolio funds or portfolio solutions (where funds are blended). The FSA is apparently going to be focusing more on due diligence and audit trails leading to the recommendation. The picking of funds to focus ONLY on a limited area (such as property or commodities) would be difficult for an IFA to justify. In the past, the adviser could do so if the client gave them such instructions but nowadays, the ombudsman and regulator would frown on such recommendations as they would say the client doesnt know enough to make that decision and the adviser shouldnt allow that sort of restriction to be placed on them. The adviser can get round it by recommending what should be done but then saying the client has rejected the advice and wants to proceed on a different basis. However, by doing that, you effectively lose the benefit of consumer protection and you may as well DIY.

But surely this should be possible if the client is made aware and makes an independent reasoned decision. There should be a huge onus put on the IFAs records, quite rightly but if The options are explained and someone chooses against advice then that is up to them.

As you say there is then a serious question why anyone would want to pay £150 an hour plus for this service, but some might view it as an insurance policy type payment.

Is the fact that the IFA can't recommend on such things as currencies, commodities, property etc not a serious handicap in providing well rounded advice for people about their whole financial situation.

jimjames

bigadaj wrote: »

Is the fact that the IFA can't recommend on such things as currencies, commodities, property etc not a serious handicap in providing well rounded advice for people about their whole financial situation.

My post was based on the OP's statement about being confused about investing and considering property & commodities. They made no mention of having an equity portfolio or any other investments. Maybe an IFA could recommend a property or commodity/currency fund but to recommend that in isolation with no other investments to balance it wouldn't seem to be sensible advice.