A tale of 4 IFA's... (subtitle - why is it so hard?)

dunstonh

To say that its widely accepted that market timing is not a sensible course of action, is to my mind, a cop out.

You may think that but most others do not. Timing the market usually ends up being less successful. Sometimes you may get it right but you are more likely to get it wrong.

He did have a fee option, just brushed over it saying 'but no one ever chooses that'.

To be fair, he was right for the time. I have been agreed remuneration for years for my primary business but there was a subset that were always commission and no matter how you tried to present fees, they would always prefer commission.

GhIFA

fairleads wrote: »

Because, in my experience, trying to time the market (and only even partially succeeding) has proved to be a better option than being long only.
I'm not talking trading, just allocating more to cash as I see fit.
As per IFA 4.
To say that its widely accepted that market timing is not a sensible course of action, is to my mind, a cop out.

To a degree, yes. But the flipside of that is that you potentially do more long term damage by making the wrong call. Maybe it comes down to expectations/misconceptions of what the IFA is providing - performance is one element of a client's plan, but what's more important (and what the FSA will look at) is that the advice is given according to the client's actual risk profile, experience, objectives and capacity for loss, then reviewed and amended where appropriate. We are not stock pickers, and advice should never be given on the basis of promised, or inferred, outperformance of the market. If the strategy is appropriate then long term that should help the client meet their objectives. As mentioned, research has shown that getting the call wrong, even by just a matter of days, on when to be in and when to be out of certain markets, can do damage that can take years to put right. It means you may not reach the peaks, but will hopefully mean you also don't hit the base of the troughs.

What is amusing though is, given all the discussion about the value of IFA's on this board over the past few days, the one you are suggesting is doing the right thing (IFA 4) is the one whose actions are being questioned by the IFA's here! You say that every IFA should be "bound" to try and time the markets, yet the IFA in question has sat on cash since the back end of last year, and therefore missed out on the market gains since then, having given the client absolutely no written recommedation, or outline of what the investment strategy is. Again, I guess it comes down to expectations/misconceptions of the IFA role.

gadgetmind

fairleads wrote: »

I started investing in 1963 ................

Relevance?

However, although i have no truck with Hl..............
http://www.hl.co.uk/news/articles/features/six-simple-methods-to-choosing-shares

What a splendid collection of really bad advice. Nice to see it all in one place.

PennyForThem_2

When my husband was alive, and about 5 years ago, we went to IFA who was recommended via Which (the magazine - consumer advice). They charged commission but they sorted out the pensions and did all the paperwork plus gave us 'plain English' reports.

If for nothing else, the IFA found out what we had been paying 20£ a month for like 1980s and we had a nice lump sum.

Now from reading forums and financial advice in papers I would rather pay per hour and I have instructed my IFA to do this, and the IFA is happy with this arrangement.

This IFA is very highly qualified and I have been happy with the advice received, but I think that commission is long standing and as a woman with a life expentancy in 80+ I would rather pay upfront.

fairleads

What is amusing though is, given all the discussion about the value of IFA's on this board over the past few days, the one you are suggesting is doing the right thing (IFA 4) is the one whose actions are being questioned by the IFA's here! You say that every IFA should be "bound" to try and time the markets, yet the IFA in question has sat on cash since the back end of last year, and therefore missed out on the market gains since then, having given the client absolutely no written recommedation, or outline of what the investment strategy is. Again, I guess it comes down to expectations/misconceptions of the IFA role.

1]For 3 out of 4 IFAs to make the wrong call about cash is about par for the course
2] dissing IFA 4's actions is akin to saying there will be no major buying opportunity in the forseeable future. A brave call
3] What i find amusing is when a post contains pro pension information that is based upon a false premise/ maths, not one IFA will correct the mistake.

jem16

fairleads wrote: »

2] dissing IFA 4's actions is akin to saying there will be no major buying opportunity in the forseeable future. A brave call

The buying opportunity was last October and the boat has been missed.

gadgetmind

fairleads wrote: »

1]
2] dissing IFA 4's actions is akin to saying there will be no major buying opportunity in the forseeable future. A brave call

No, it's not.

There may be a buying opportunity, or there may not be. What history tells us is that being in the market is better than not being in it.

OK, so maybe there might (just might) be an argument for tweaking you asset allocation based on your reading of macro economics, but 100%cash? Really?

GhIFA

fairleads wrote: »

1]For 3 out of 4 IFAs to make the wrong call about cash is about par for the course
2] dissing IFA 4's actions is akin to saying there will be no major buying opportunity in the forseeable future. A brave call
3] What i find amusing is when a post contains pro pension information that is based upon a false premise/ maths, not one IFA will correct the mistake.

Eh?? What a pointless statement, it is akin to no such thing. As you are so successful at timing the markets, you'd have been happy sitting in cash since October would you? "Dissing" IFA 4's actions is based on the following: a recommendation given with no suitability report issued, no indication of a recommended investment strategy, and no attempt to provide these regulatory requirements in the almost six months since, leaving the client invested in cash, but still paying product fees.

However, as you are so keen to educate us then please do explain the "false premise/maths" that we are all missing.

gadgetmind

Timing the markets is simply a case of predicting the future direction of the market with enough accuracy to be able to steer you into the assets that will do best in the future.

Here is how the first part of this is done by the experts.

http://www.businessinsider.com/dow-jones-idiot-maker-rally-2013-3?op=1

fairleads

GhIFA wrote: »

Eh?? What a pointless statement, it is akin to no such thing. As you are so successful at timing the markets, you'd have been happy sitting in cash since October would you? yes "Dissing" IFA 4's actions is based on the following: a recommendation given with no suitability report issued, no indication of a recommended investment strategy, and no attempt to provide these regulatory requirements in the almost six months since, leaving the client invested in cash, but still paying product fees.

However, as you are so keen to educate us then please do explain the "false premise/maths" that we are all missing. Too many to explain plus the phrase "None so blind "etc comes to mind

What really puzzles me is that in the OP, IFA 4 is the only one who has made a plan for the client and provided an explanation. The other 3 ignored the client yet one and all are dissing the only IFA who made a plan. If, as is the case the client disagrees with IFA 4's actions then surely they should revisit the IFA? Or even better, go it alone.