Should an IFA be a fund tracker too?

jimjames

If the IFA is recommending cashing out and starting a new investment I would be very wary and want to know exactly why.

What has changed between his previous recommendation and now? I can understand why rebalancing would make sense but selling everything and then buying another set of investments would appear to make no sense other than potentially generating more fees for them.

dunstonh

jimjames wrote: »

If the IFA is recommending cashing out and starting a new investment I would be very wary and want to know exactly why.

What has changed between his previous recommendation and now? I can understand why rebalancing would make sense but selling everything and then buying another set of investments would appear to make no sense other than potentially generating more fees for them.

With RDR and new higher FCA requirements (And thematic reviews), a lot of the research companies, compliance and actuaries have come out with new risk profiling and data on funds which has seen a number of portfolios require updating. Plus, a number of RDR contracts are better value than pre-RDR contracts (not a hard and fast rule as there are plenty the other way around). Things change and move on. Things you did 5 years ago can appear dated by today's options, let alone 10 or 15 years ago.

So, whilst you are right that you need to be aware why, there are plenty of reasons why you would change a portfolio now.

Thanks guys. It was Trustnet that really alerted me to the problems. The investment is behind even the cautious benchmark by (from memory) 10-12%.

Be wary of that. Most IFAs have risk 10 or thereabouts risk profiles. Cautious benchmark is not actually cautious and balanced is not actually balanced. Balanced is more adventurous nowadays and cautious is more balanced. You would expect a "real" cautious portfolio to underperform the cautious benchmark during periods of growth. The main sectors were recently changed to remove balanced, cautious and adventurous as it was realised they were anything but what they described.