Before visiting the Financial Advisor

wigglefish123

But it's worth knowing the options, self select or otherwise, before talking to the IFA. The IFA should perform an attitude to risk assessment, and should advise on all types of investments as a result, including - if appropriate - a self select route, with advice

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How can you have self select with advice? - surely self select is just that ? and therefore is not advised??

gadgetmind

wigglefish123 wrote: »

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How can you have self select with advice? - surely self select is just that ? and therefore is not advised??

IFAs tend to be all or nothing. This is why (TBH) I go for nothing,

With a car I can do the bits that take smarts+skills and use others for the stuff that involves ramps+grease+grunt, but with investments it seems harder to use a layered approach.

dale_cotterill

gadgetmind wrote: »

IFAs tend to be all or nothing. This is why (TBH) I go for nothing,

With a car I can do the bits that take smarts+skills and use others for the stuff that involves ramps+grease+grunt, but with investments it seems harder to use a layered approach.

The liability that they take on makes that 'somewhat' prohibitive.

There was a firm up in Scotland a few years ago who produced a full recommendation for the client, and said it was going to cost about £10k.

Client rejected the fees, but paid £1k for the report and recommendation, walked down the street into another IFA and asked them to perform the transaction on an execution only basis.

Client later complained, the execution only said that as they didn't give the advice then it was nothing to do with them. The original firm ended up paying over 200k in redress.

The same would presumably apply if the client was to pay less for a report, and then do it (correctly) on a self select basis. Remember, you are paying almost exclusively for the advice not for the thing to be set up.

For people like you, it probably isn't a problem as you are more than likely knowledgeable and confident enough to do it yourself. But there are many people who have money who really have no interest, knowledge, confidence or time to do it themselves. It seems improbably that many are going to go to an IFA to be told. A S&S ISA would be best suited to your here, and you indicate you are medium to low risk. And then the person to turn around an say, 'oh that's great, thanks. I can pick my own funds now.

Aegis

wigglefish123 wrote: »

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How can you have self select with advice? - surely self select is just that ? and therefore is not advised??

It's perfectly possible for the advice to be limited to the selection of appropriate wrappers following a discussion of the individual's financial goals. I'm finding this approach more and more common these days, therefore it's important to be able to accommodate clients that wish to distinguish between advice/planning and implementation.

A good adviser should add the most value at the planning stage, therefore the implementation should almost be minimally charged. That said, it's a rare client willing to pay the majority of the project fees before implementation starts, so I usually still have to have a report fee and a slightly larger implementation fee to make the client happy.

robatwork

gadgetmind wrote: »

I personally found this was the part of the process that felt the most like art and the least like science, which is something that turns me off. However, each to their own.

This has always given me a problem too.

Every person visiting an IFA who isn't psychotic wants no risk and the highest reward.

If the IFA has done a full fact find, knows all about the family of the person involved and all their income and savings, then the IFA as the expert should be able to ascertain that person's appropriate exposure to risk.

I've always found it faintly preposterous to be asked what level of risk I am prepared to accept from 1 to 5.

I'm not attacking IFAs, I just believe if they do their job thoroughly then they should be the ones recommending funds/strategies of appropriate perceived risk to the client, not the other way around.

gadgetmind

Aegis wrote: »

it's important to be able to accommodate clients that wish to distinguish between advice/planning and implementation.

I'm pleased to hear you say that as I have *never* previously met an IFA who didn't insist that it was an all-or-nothing deal.

Aegis

gadgetmind wrote: »

I'm pleased to hear you say that as I have *never* previously met an IFA who didn't insist that it was an all-or-nothing deal.

A shame really, as that's very much a throwback to the days of being product salesmen rather than advisers/planners.

Rollinghome

gadgetmind wrote: »

I'm pleased to hear you say that as I have *never* previously met an IFA who didn't insist that it was an all-or-nothing deal.

Interesting as when I 'roadtested' several IFAs a short while back in order to find a half decent IFA to recommend to a relative (just before RDR) I found the opposite.

It might depend on how/what you're invested in. Most of my investments are in individual shares and ITs. I gave them all a full list but none of the IFAs made any reference to the shares and even seemed unaware that several were ITs - one expressed surprise when told that 3i was an IT.

They were just interested in taking over my unit trust investments and investing the cash I held; and in one case flogging me insurance bonds. I know you now hold ITs so might now find a difference to what you found before.

It couldn't have worked because the investments they recommended took absolutely no account of the bulk of my investments.

I'd suggest that if anyone uses an IFA for less than a full service then the adviser must have at least some understanding of the other investments and be able to take them into account. Otherwise it's likely to all come out a touch wonky.

gadgetmind

Rollinghome wrote: »

I
They were just interested in taking over my unit trust investments

Oh, so just the stuff that paid commission!

I know you now hold ITs so might now find a difference to what you found before.

Mainly ETFs and trackers, but I'm sure that RDR will have (at last!) shaken things up.

It couldn't have worked because the investments they recommended took absolutely no account of the bulk of my investments.

Well, quite.

I'm sure I'll use an IFA or "wealth manager" to sanity check my plans just prior to retirement, and I may well tweak wrappers and allocations in the light of this. I even had an initial meeting with an IFA but his views were, um, idiosyncratic!

Rollinghome

gadgetmind wrote: »

Oh, so just the stuff that paid commission!

That thought hadn't crossed my mind.

gadgetmind wrote: »

I'm sure that RDR will have (at last!) shaken things up.

Certainly seems to have for one of them: there's now a To Let sign up for two of the three shop units he was using.

gadgetmind wrote: »

I'm sure I'll use an IFA or "wealth manager" to sanity check my plans just prior to retirement, and I may well tweak wrappers and allocations in the light of this. I even had an initial meeting with an IFA but his views were, um, idiosyncratic!

That was partly in my mind when I did my roadtesting but I wouldn't want to use or recommend any of those I looked at. Perhaps I'll repeat the exercise post-RDR to see if there's been any improvement.