IFA Advice

debbie42

I've read enough now to realise that some extra professional advice might be in order for my investments. What should I look for if and when contacting an IFA?

dunstonh

1 - Make sure that they are really an IFA. Tied agents and multi-tied individuals are notorious for giving the impression they are independent (reseach last year showed that over two thirds of people seeing tied agents thought the adviser was independent)
2 - Avoid salesforces. Sales Targets, sales managers and league tables with incentives do more damage to quality advice than anything else. (The FOS has said that just 12 companies account for over half the complaint they receive). Plus they have a a high staff turnover.
3 - Try and get in with an owner/partner/director IFA. These will typically be there for the long term as it is their companies. Plus, owner/partner IFAs are the only one's that are personally financially liable for the advice they give for the rest of their life. If they have a complaint and redress is payable, it comes out of their pocket. Thats a good incentive to give best advice.
4 - Get an investment specialist IFA. The term IFA covers a multitude to skills. Some will spend most of their time with mortgages, others with estate planning and others with investments and pensions. Some will be general practioners who do a bit of everything. If you want investment advice, you dont really want to be seeing someone that spends most of their time dealing with mortgages (and vice versa to be fair on those that do mostly mortgages). You want someone that spends most of their time with investments.

You want someone you can understand, communicate well with and trust. They should have a clear investment strategy and be able to explain it to you. A good way to spot it is if they recommend a wide range of funds (single fund investing suggests laziness or poor knowledge).

Charges should be acceptable and not greedy. You should be looking at no more than 3% plus 0.5% p.a. However, the FSA figures show that the average taken is 1.8% plus 0.5% p.a. Aim for that or lower.

Dont be afraid to ask questions and ask to see research if you think something doesnt sound right. Every recommendation for product provider has to have recorded why that was chosen over alternatives. It can be quite a simple elimination at times (particulary with fund supermarkets where there is little difference between them all) or an area with over 100 products with detailed research and elimination/ranking.

debbie42

Thanks for that advice. I've got the name of a local firm from the "unbiased" web site, and the owner has the following certificates:
AFPC - Advanced Financial Planning Certificate (CII)
Dip PFS - Personal Finance Society Diploma (PFS)

I'm not sure what that means?

dunstonh

AFPC is good. It shows he has gone above and beyond the minimum. The other is one of the standard variety.

greenface

How long do you wait for a IFA after a initial meeting where we both lay our cards on the table discuss our risk levels and our needs. Before the IFA returns to us with their ideas.
Is there a thin line between "that was quick they havent spent much time on it "and "im losing (potential) money while im waiting for them to sort it out"


Reading Dunstonh 10.56 post which is good sound advice i am now questioning the choice i made.
We met IFA end March (7 weeks ago) I am aware busiest time only thing done is used up ISA,s before April 5th 2007 (14k both into the same ISA)
IFA from large enough established company and a nice person to meet but without any knowledge nor nothing in writing to check against. My money is in a single account earning not top interest (thought it would be working for me by now) been 15% of 2007 waiting .

dunstonh

How long do you wait for a IFA after a initial meeting where we both lay our cards on the table discuss our risk levels and our needs. Before the IFA returns to us with their ideas.

Depends. If they are writing to the existing providers/insurance companies etc to get info then this can take quite a few weeks or even months.

If its just cash to invest then it should be fairly quickly.