Worth talking to an IFA?

IvorBiggun

I want to invest around £80k for the medium to long term (want a steady income in 15 years time). Is it worth talking to an IFA? I realise from reading threads on this forum that £80k is considered a "small" investment for an IFA.
I was considering signing up with iii and using a mixture of their ready made portfolios and ready made funds.
I imagine the charges would be lower than an IFA and no up front fee to pay, which could more than outweigh the better returns I would expect (but obviously not guarantee)
When looking for an IFA what questions should I be asking?

Thanks in advance.

innovate

I would look at passive investing instead - you can do this without paying an IFA. Several books about it - e.g. Tim Hale's "Smarter Investing", or you can have a look at monevator

However, if you want to have your investment hand-picked and managed on an ongoing basis specifically for you, seeking the advice of an IFA might be a better option for you.

srcandas

IvorBiggun wrote: »

..................... which could more than outweigh the better returns ..........

As I understand it IFAs are not in the business of giving you better returns in the sense of investments that gain more than those chosen by yourself.

They seem to be in the business of giving you an option which reduces the risk of loses beyond your tolerance. But without guarantees.

What you require in 15 years time is not relevant in terms of income or growth. I guess if they thought you needed £800,000 in 15 years to balance your dreams they might find you an agressive portfolio but 15 years is a long time.

If on the other hand you have complex tax issues, or don't know how to utilise ISAs and SIPPs as tax efficient vehicles, or have other complex issues they could help.

Just be clear what you want from an IFA. They do not have crystal balls any more than I do

Also if you put some research time in you may find investment is a great and enyoyable passtime. :beer:

dunstonh

I want to invest around £80k for the medium to long term (want a steady income in 15 years time). Is it worth talking to an IFA?

Using an adviser is like any other area where you get someone to do something for you if you do not wish to DIY. Is it worth it? If you cant or dont want to DIY then yes. If you can DIY and do it well then it can save you money. Get it wrong and it can worth out more expensive than an IFA.

I realise from reading threads on this forum that £80k is considered a "small" investment for an IFA.

Not at all. Indeed, over that timescale, using an IFA could be cheaper on a transactional basis.

I imagine the charges would be lower than an IFA and no up front fee to pay

The adviser would require you to pay for advice but the ongoing charge of what you are looking at is more expensive than a transactional IFA.

which could more than outweigh the better returns I would expect (but obviously not guarantee)

There is no guarantee with anything. A transactional IFA is likely to use different investments to a servicing IFA. A portfolio run on non-advised basis but a one size fits all option may or may not beat any of the other options.

An IFA is not there to get you the best returns. It is to make sure you have the right tax wrappers, right investments for the risk profile, do due diligence on the funds and to make sure your objectives are there to be met in the best way possible. They will certainly aim to give you what is right but that almost certainly will not be the best performing option there is as no-one knows that and typically, you wont have the risk profile to have that.

grizzly1911

dunstonh wrote: »

and typically, you wont have the risk profile to have that.

What sort of percentages do you find fit into the risk categories. Do you get many that are high risk hungry or do the majority go low risk?

dunstonh

What sort of percentages do you find fit into the risk categories.

Experienced investors tend to be more medium/high. Inexperienced investors tend to be low. The difficult ones are the ones that think they are higher risk until a loss event occurs. The FOS generally regards the average UK consumer as cautious unless shown otherwise. That is a lot lower risk than the average new poster here who asks about investing. However, it has been identified that DIY investors do tend to take on more risk (whether they know it or not) than an advised investor. Probably a mixture of experience and acceptance of risk as well as new DIY not knowing what they are doing.

gadgetmind

IvorBiggun wrote: »

I want to invest around £80k for the medium to long term (want a steady income in 15 years time). Is it worth talking to an IFA?

Maybe, but perhaps also look at the "Investment Trusts and Unit Trusts" and "Investing for Income" forums on Motley Fool. Buying a basket of slightly more growth oriented Investment Trusts is easy, cheap, and it would be very easy to do much worse.

If you do your own research up front, then you'll at least have a baseline to compare IFA advice against.

gadgetmind

dunstonh wrote: »

The difficult ones are the ones that think they are higher risk until a loss event occurs.

Yes, I can see that.

I've had the misfortune of working with people who thought they could take on a high (but asymmetric) risk business venture but who then go to pieces with the most likely scenario plays out.

As with other investments, the key is diversity.

as new DIY not knowing what they are doing.

I don't think investing is something that you can learn on the job. The feedback channel of whether you're doing a good/bad job just doesn't work on a timescale that we've evolved to be able to easily comprehend, and many of the key principles are deeply counter-intuitive.

dunstonh

I don't think investing is something that you can learn on the job. The feedback channel of whether you're doing a good/bad job just doesn't work on a timescale that we've evolved to be able to easily comprehend, and many of the key principles are deeply counter-intuitive.

Many a time I have come across people who have said one investment they had before was rubbish but the new one they have is better. yet nearly always it is down to time period. One went through a crash. the other went through the recovery.

Totton

gadgetmind wrote: »

Maybe, but perhaps also look at the "Investment Trusts and Unit Trusts" and "Investing for Income" forums on Motley Fool. Buying a basket of slightly more growth oriented Investment Trusts is easy, cheap, and it would be very easy to do much worse....

I'd certainly agree with reading the Motley Fool forums mentioned although I am not so sure that now is a good time to buy into IT's as many have closed their discounts or are trading at premiums, hence higher risk in the event of a downturn or a particular trust falling out of favour. Personally I have closed several IT positions and gone into funds such as the Vanguard LifeStrategy range although realise that will go down with the index.

HTH,
Mickey