I.F.A's are they worth consulting?

frumpyknickers

:eek: Great Grandmother has left 5 Great Gandchildren £127k split between them, each child to have money in trust until they reach 21. Kids ages are 14, 12, 10, 9 and 7. Trustees are the 2 fathers (grandsons) who are going to speak to an Independent Financial Advisor. I'm sceptical as I'm never sure how 'independent' these people are - comments please. Also, if anyone has advice as to what to do with the money please let me know!

deemy2004

There is an inherent conflict of interest

I.e. the IFA's would obviously push products where they get a commission and the higher the commission the greater the push.

So it is upto the individual to better educate themselves as there is no such thing as a free lunch !

Tim_L

IFA's are worthwhile in my opinion. They are required by law to give best advice, and it is possible to see a few if you are going for the fee free option and compare notes. Of course you can also pay for their time which removes the conflict of interests problem, and this is worth considering for a large capital sum.

Moving away from the specific question to a more general comment, it is worth saying that IFA's are not a one way ticket to wealth. Fundamentally the advice they offer is to use tax efficient cash savings (i.e. ISAs), to use the best available interest rate for other cash savings, to consider life and critical illness insurance, to look at pension provision if appropriate (or additional pension provision), and to consider long term equity based investments for a proportion of any excess. They haven't got a crystal ball, and the bits that can actually make the money (equities of some sort) can't be guaranteed, and ultimately you have to make your own mind up. So, I agree with Deemy: there's no substitute for becoming financially savvy yourself, but FSA's provide a useful second opinion.

blinko

i would say for your position its definately worth going to see them as that sounds like a lot of technical stuff that would have to go on there. But dont take anything or comit yourself yet if you want run the advice through here first and we can tell you what we think and for free

savings account no risk - low returns
stocks and shares medium to high risk - possible higher returns but possible to lose money aswell !

dunstonh

Argh, i typed a few paragraphs the got a 404 and lost it all.

In short, if you know what you are doing, then do it yourself. If you do not know, then you need to seek advice. A trustee needs to do what is best for the beneficiary and if you do it yourself and get it right, there is no problem. If you don't get it right, you could be held responsible and face a court case and possible financial penalties and indeed imprisonment. A defence of "I did not seek advice" wouldn't get you very far.

This area requires knowledge on investment wrappers, trusts and taxation. So thats your research area if you do decide to go it alone.

Investment is an area where the commissions are similar same across the board. However, if you are concerned about commission, then pay by fees instead.

All IFAs are independent. That cannot be doubted. However, its the quality of the research that is important and you do have rights to see any research that is obtained in making the recommendation. The quality of that research could be quite poor to being first rate. In the same way that any profession has poor and good people. This is why it is important to view the research.

lipidicman

dunstonh wrote:

Argh, i typed a few paragraphs the got a 404 and lost it all.

Never happened to me here, but I've had it on other forums - what I do is:

Always hit ctrl-a ctrl-c before you post - then it is all on your clipboard if you get a 404!

dunstonh

Thanks lipidicman. My ADSL dropped hence the 404. However, your copy and paste is a good idea with long posts.

frumpyknickers

:T Thanks for your replies, it has helped put things into perspective. Will definitely post the ifa's ideas to see what you think, and will recommend the idea of seeing more than one ifa.