Before visiting the Financial Advisor

mike88

Don't go to a bank or building society as these people are often tied into particular - often not the best - products. You need to see an IFA. It is best to pay a set fee for advice as that is likely to be a far cheaper route than a commission based adviser. Before committing yourself to anything you need to become more financially astute as at present you are vulnerable to being sold products that might be bad for you but great for the adviser. Knowledge is strength when it comes to investing.

jimjames

mike88 wrote: »

Don't go to a bank or building society as these people are often tied into particular - often not the best - products. You need to see an IFA. It is best to pay a set fee for advice as that is likely to be a far cheaper route than a commission based adviser. Before committing yourself to anything you need to become more financially astute as at present you are vulnerable to being sold products that might be bad for you but great for the adviser. Knowledge is strength when it comes to investing.

As far as I'm aware, post rdr there is no such thing as a commission based adviser, all work on fees.

dunstonh

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

That is the method from 20 years ago. Things have moved on since then (although it is a good indication of a dinosaur should someone still use that method).

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.

That is how it is done. I wonder if your experience is more tied agent. Tied agents were more commonly pick a number between 1 and 5 and would document the investments as your choice. An IFA cannot do that.

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.

I have never known an IFA restrict like that.

It is best to pay a set fee for advice as that is likely to be a far cheaper route than a commission based adviser.

There is no commission any more. Its fee based only. Even single tied advisers have to be fee based.

DrSyn

Do the basics before asking for their advice.

Check your IFA is on the Finacial Service Register at www. fsa.gov.uk/register. If they are not I would not go there.

Check their qualifications are in the area of advice you want and check they hold those qualifications.

Find out their fees and how much it is going to cost you even if it is an only an estimate.

Rollinghome

mike88 wrote: »

Don't go to a bank or building society as these people are often tied into particular - often not the best - products. You need to see an IFA. It is best to pay a set fee for advice as that is likely to be a far cheaper route than a commission based adviser. Before committing yourself to anything you need to become more financially astute as at present you are vulnerable to being sold products that might be bad for you but great for the adviser. Knowledge is strength when it comes to investing.

Fortunately all the nonsense of IFAs selling products that paid them the most commission, effectively acting as salesmen for the insurance and investment companies, should now be behind us since RDR banned new sales involving commission. The FCA is also committed to gradually raising the qualifications required to practice as an IFA towards degree level.

It's true that the FCA has issued warnings of what it calls "dealing bias", where IFAs charge on the basis of a percentage of funds the client is encouraged to invest, rather than fixed fees, and that's something people getting advice should be aware of. See http://www.moneymarketing.co.uk/news-and-analysis/regulation/fca-chief-concern-over-adviser-charging-based-on-percentage-of-assets/1074584.article

The danger being that some advisers will encourage clients to invest more than they should even if remaining in cash savings or paying off debt might be more appropriate.

The simple answer is to avoid IFAs who want to charge on a percentage basis if possible and seek out those who are fully committed to fixed fees, rather than those who try to keep as close as they can to the old commission system.

On the whole though there's been a big rise since RDR in advisers recommending investments that have always paid little or no commission such as ITs and low-cost index trackers that they once dismissed: so we're clearly moving in the right direction towards better, more professional, standards of advice.

gadgetmind

Rollinghome wrote: »

On the whole though there's been a big rise since RDR in advisers recommending investments that have always paid little or no commission such as ITs

Ah great, recommending ITs at exactly the point that many of them are on historically high premiums.

The only ITs I'm buying right now are those in unloved sectors, but I'd hazard a guess that IFAs are recommending the big names in Growth and Income.

dunstonh

Ah great, recommending ITs at exactly the point that many of them are on historically high premiums.

Don't worry. There is no indication that there has been any significant rise. They still typically suffer from being classified as higher risk than the equivalent unit trust/oiec and more suited to someone with greater understanding of investments.

Rollinghome

gadgetmind wrote: »

Ah great, recommending ITs at exactly the point that many of them are on historically high premiums.

The only ITs I'm buying right now are those in unloved sectors, but I'd hazard a guess that IFAs are recommending the big names in Growth and Income.

More are moving in that direction but somehow I think it'll be a good while before we see a high percentage of IFAs who've been selling unit trusts and insurance bonds for years changing their habits.

Continuing to offer units trusts that they understand and can be replicated for every client is a lot easier for them than having to think about pesky discounts and the rest. Would expect to see the greatest use of ITs by IFAs specialising in HNW clients willing to pay higher fees for a customised service.

In the past, ITs were the territory of advisory stockbrokers. Will we gradually see a greater similarity between advisory stockbrokers and IFAs?

gadgetmind

Rollinghome wrote: »

Would expect to see the greatest use of ITs by IFAs specialising in HNW clients willing to pay higher fees for a customised service.

I've met a couple (one professionally and one socially) and TBH what they considered suitable investments for those with a few bob was enough to make your spine curve and your dog run away!

They seemed to think that "customised" had to mean "not something other IFAs would recommend for a variety of reasons" and therefore needed to come up with the unusual.

I guess it's a bit like really high-end chefs. Good ingredients, cooked well, simply don't cut it when you get to a certain price, so food has to be messed around with to an alarming degree.

dale_cotterill

gadgetmind wrote: »

I guess it's a bit like really high-end chefs. Good ingredients, cooked well, simply don't cut it when you get to a certain price, so food has to be messed around with to an alarming degree.

Hence the rise of discretionary fund management. Which doesn't really seem worth it but is sold as exactly that.