Investors dumping IFAs by the bucket load

Archi_Bald

bigfreddiel wrote: »

Thought i was just making it up then?

No - just wanted some facts. Thanks for providing the URL, it adds a bit more meat to the debate.

Notably though, the article doesn't offer any help to people who are looking for ideas and/or guidance about successful investing. Neither does this thread.

What do you suggest I do as a virgin investor

• with no starting capital, at the age of 23, with no family, an annual income of £21K, no health problems, no debts, but with plans to emigrate?
• with £100K starting capital, small income from a pension, still working part time, at the age of 65?
• with £5K starting capital, male, recently divorced, paying maintenance for 3 kids, age of 39, probably facing redundancy, a couple of small company pension funds?
• etc

Will you give me your name, address and FSCS registration number so that I can verify that you are authorised to give financial advice?

If you don't want to give advice, what do you suggest people do when they want help with their investment decisions?

atush

Give it up Big Fred. you are acting like a troll.

You never link to the sites that give evidence for your claims, and as it is in this case you can't tell the difference between Fa's and IFAs.

bowlhead99

bigfreddiel wrote: »

Thought i was just making it up then?

Here it is:
[etc]

Yes, you were making it up. Firstly you said

bigfreddiel wrote: »

It's been reported that 30%+ of investors that have used an IFA in the last fove years are dumping them and going for the diy approach.

That is not what it said. Specifically, the telegraph article leads with the fact that 'one in three who have taken financial advice would never take it again'. As you acknowledge later in your post, a large proportion of people taking financial advice in the past were not taking it from IFAs but from FAs. These are tied to their bank or building society or insurance company with a limited set of products, typically quite expensive, and a higher level of complaints. So it's misleading to say that the 30%+ figure relates to IFAs.

The article then clarifies a bit further on its leading paragraphs from which you quoted, to say what the survey actually found, noting that the survey was actually based on those intending to invest again in the next 12 months. So there are likely people out there who are not investing new money in the next 12 months but have previously received satisfactory service, for example dealing with a plan to deploy windfalls such as one-off inheritances, property disposals etc; restructuring their affairs on the occasion of retirement; receiving advice on how to arrange their affairs for tax efficiency re IHT, CGT etc while setting them off with an investment plan etc - and would be perfectly happy to speak to the same or similar experts again.

People just don't like being taken for a ride by "hidden" charges and unscrupulous practices - you disagree and say everything is up-front - well I say the figures speak for themselves!

The article provided a quote saying "There has never been a more level playing field, with all advice providers giving information about services and costs in a more easily comparable format". The facts about the regulations speak for themselves.

Clearly, there are a larger number of cheap DIY providers around now than there were 5 years ago, no question. And high speed internet access penetration has increased across the population, facilitating DIY research. So it is not surprising that people have now paid for something and have been given pointers by a professional, are now willing to try a low cost approach like you do.

Anyway, the average cost to set an ISA up is £400 for a £10k portfolio - marvelous value

I work in professional financial services (I'm not an IFA). My employer would charge my time out at £300ph+ to its clients to cover their cost base and make a profit. It is not my fault or the IFAs fault if the client only has a small amount of assets and the advice appears expensive against what he has or how much per year he expects to be able to make from it. I am not going to get out of bed for nothing. I don't care that growth of £400 in real terms is your entire expected profits or the year. Why should you make money and I make a loss?

- but anyone can do a diy job just as well for £0 and be just as good at fund/stock picking - in fact a monkey with a pin does just as well!

The monkey or the uneducated human might deliver the same result for greater risk or greater volatility. He ends up with the same amount of pounds, by luck, on that occasion, but that is not necessarily 'doing just as well'.

Also, not everybody can do a diy job for £0 because some of them need to spend a lot of time learning investment concepts and some of them need to spend a lot of time researching what options are out there. An IFA can help you along the education process and save you time doing the filtering.

The monkey cannot have a conversation with you to learn whether you can afford to put £10,000 into a fund that might lose 60% of its value in a bad year. It might pick that one, which could be catastrophic for you, while the IFA would have found something that limited your upside potential and avoided an irrecoverable loss. That might be worth £4000 vs the £400 it costs on a £10k portfolio.

Not that I am suggesting most people see an IFA if they only have £10k to deploy because a couple of percent difference in return is only a couple of hundred pounds. When you have 100k and a 40% loss is a couple of years of your annual net salary and a 2% difference in return is a couple of thousand pounds each and every year, professional advice becomes more inherently valuable while costing a lower percentage.

bigfreddiel wrote: »

Richie(UK) wrote: »

I wouldn't, for example, undertake car repairs because I haven't the slightest clue about that sort of thing and would probably end up ruining my car - or worse, ruining my wife's car! Therefore, I pay a motor mechanic to do it for me.

thats because engineering is far more complex than finance

Well, I can get the Haynes manual for my specific car and be stepped through the process of changing the brakes or transmission fluid. In fact most of the bits of the car that might need doing, other than remapping the ECU. If in doubt on exactly what they mean I can go to youtube and watch someone do it.

It tells me exactly what to do - but I still prefer to pay.

In engineering we're talking about facts

in investing we're talking about sentiment

Well, by contrast to the above example, with investing I might pick up the first book Naked Trader and the second book Smarter Investing and be none the wiser about whether to hold or trade individual shares or hold indexes, or which particular index to hold and what purpose they all serve and which funds are synthetic vs physically replicated etc etc. And what is my specific tax situation with respect to all these opportunities I have? More research needed.

An IFA can read the books and the HMRC guidance for you and explain it in simple words. He can give you his opinion and know that you won't come back or recommend him to your mates if you find out it's garbage. He won't tell you the direction of any investment, because he can't know and he will get his !!! sued off if he tries it and is wrong. This is not to say he is not providing a service.

so how can they recommend any particular fund/etf/equity?

I would suggest that giving you a recommendation that XYZ fund is NOT suitable for your objectives is just as valuable, if you were otherwise about to let a monkey pick it out of a hat for you.[/quote]

risk i hear you say - thats just about as useful as a chocolate teapot and is a trick used to convince naive people to think the investments picked by an (I)FA is right for them - hard to realise this but its true.

Not quite sure what you mean here. How is the concept that different funds are more suitable for different goals, completely wrong, given that they can offer different return possibilities and expose you to different types of risk? Are you saying you literally don't know what a risk is or deny that it exists or what?

bigfreddiel

bowlhead99 wrote: »

Yes, you were making it up. Firstly you said


That is not what it said. Specifically, the telegraph article leads with the fact that 'one in three who have taken financial advice would never take it again'. As you acknowledge later in your post, a large proportion of people taking financial advice in the past were not taking it from IFAs but from FAs. These are tied to their bank or building society or insurance company with a limited set of products, typically quite expensive, and a higher level of complaints. So it's misleading to say that the 30%+ figure relates to IFAs.

The article then clarifies a bit further on its leading paragraphs from which you quoted, to say what the survey actually found, noting that the survey was actually based on those intending to invest again in the next 12 months. So there are likely people out there who are not investing new money in the next 12 months but have previously received satisfactory service, for example dealing with a plan to deploy windfalls such as one-off inheritances, property disposals etc; restructuring their affairs on the occasion of retirement; receiving advice on how to arrange their affairs for tax efficiency re IHT, CGT etc while setting them off with an investment plan etc - and would be perfectly happy to speak to the same or similar experts again.

The article provided a quote saying "There has never been a more level playing field, with all advice providers giving information about services and costs in a more easily comparable format". The facts about the regulations speak for themselves.

Clearly, there are a larger number of cheap DIY providers around now than there were 5 years ago, no question. And high speed internet access penetration has increased across the population, facilitating DIY research. So it is not surprising that people have now paid for something and have been given pointers by a professional, are now willing to try a low cost approach like you do.


I work in professional financial services (I'm not an IFA). My employer would charge my time out at £300ph+ to its clients to cover their cost base and make a profit. It is not my fault or the IFAs fault if the client only has a small amount of assets and the advice appears expensive against what he has or how much per year he expects to be able to make from it. I am not going to get out of bed for nothing. I don't care that growth of £400 in real terms is your entire expected profits or the year. Why should you make money and I make a loss?

The monkey or the uneducated human might deliver the same result for greater risk or greater volatility. He ends up with the same amount of pounds, by luck, on that occasion, but that is not necessarily 'doing just as well'.

Also, not everybody can do a diy job for £0 because some of them need to spend a lot of time learning investment concepts and some of them need to spend a lot of time researching what options are out there. An IFA can help you along the education process and save you time doing the filtering.

The monkey cannot have a conversation with you to learn whether you can afford to put £10,000 into a fund that might lose 60% of its value in a bad year. It might pick that one, which could be catastrophic for you, while the IFA would have found something that limited your upside potential and avoided an irrecoverable loss. That might be worth £4000 vs the £400 it costs on a £10k portfolio.

Not that I am suggesting most people see an IFA if they only have £10k to deploy because a couple of percent difference in return is only a couple of hundred pounds. When you have 100k and a 40% loss is a couple of years of your annual net salary and a 2% difference in return is a couple of thousand pounds each and every year, professional advice becomes more inherently valuable while costing a lower percentage.


Well, I can get the Haynes manual for my specific car and be stepped through the process of changing the brakes or transmission fluid. In fact most of the bits of the car that might need doing, other than remapping the ECU. If in doubt on exactly what they mean I can go to youtube and watch someone do it.

It tells me exactly what to do - but I still prefer to pay.


Well, by contrast to the above example, with investing I might pick up the first book Naked Trader and the second book Smarter Investing and be none the wiser about whether to hold or trade individual shares or hold indexes, or which particular index to hold and what purpose they all serve and which funds are synthetic vs physically replicated etc etc. And what is my specific tax situation with respect to all these opportunities I have? More research needed.

An IFA can read the books and the HMRC guidance for you and explain it in simple words. He can give you his opinion and know that you won't come back or recommend him to your mates if you find out it's garbage. He won't tell you the direction of any investment, because he can't know and he will get his !!! sued off if he tries it and is wrong. This is not to say he is not providing a service.

I would suggest that giving you a recommendation that XYZ fund is NOT suitable for your objectives is just as valuable, if you were otherwise about to let a monkey pick it out of a hat for you.


Not quite sure what you mean here. How is the concept that different funds are more suitable for different goals, completely wrong, given that they can offer different return possibilities and expose you to different types of risk? Are you saying you literally don't know what a risk is or deny that it exists or what?

brilliant - cheers - fj

bigfreddiel

want_to_save wrote: »

Since RDR there are even more stringent processes in place

perhaps you could list them?

failing that a link to a site that details the stringent process?

cheers

fj

bigfreddiel

atush wrote: »

Give it up Big Fred. you are acting like a troll.

https://en.wikipedia.org/wiki/Troll

even better - feeling good now - heheheheheh

fj

bigfreddiel

want_to_save wrote: »

Oh well if its in the telegraph it must be true.

well, just as true as all the other stuff on the web and forums i guess

fj

bowlhead99

bigfreddiel wrote: »

brilliant - cheers - fj

Happy to have cleared it up for you, no prob, any time.

bigfreddiel wrote: »

perhaps you could list them?

failing that a link to a site that details the stringent process?

Each business will have its own processes to address the regulatory requirements as appropriate to it and its customers.

The FCA's Conduct of Business Sourcebook will show you those requirements. If you were genuinely interested (haha) you could locate it here:
www.fca.org.uk/firms/being-regulated/retail-investments

Simply head to "Giving Financial Advice on Retail Investments"

_bigfreddiel wrote:

http://en.wikipedia.org/wiki/Troll_(Internet)
even better - feeling good now - heheheheheh

fj

I've corrected your typo ; no thanks required, just pay it forward.

Archi_Bald

bowlhead99 wrote: »

An IFA can read the books and the HMRC guidance for you and explain it in simple words. He can give you his opinion and know that you won't come back or recommend him to your mates if you find out it's garbage. He won't tell you the direction of any investment, because he can't know and he will get his !!! sued off if he tries it and is wrong. This is not to say he is not providing a service.

I admire most of our posts, bowlhead - - - but your implications that IFAs are all male sort of let your postings down.

bowlhead99

If you have read many of my posts you'll see I'm not usually short of words as it is.

Therefore to make things easier on the reader and to save a thousands words of typing per year I will typically write "he" instead of "he/she/it" and "his" instead of "his/hers/its", and let it be presumed that references to the masculine gender include the feminine and neuter genders and vice versa.