Stocks & Shares ISA's

dunstonh

More specifically, what guarantee does his £950 give him if the advice is poor and the fund sinks?

Poor advice has consumer protection. Funds will do whatever they will do. No adviser can influence that and should not be expected to. The advicer should recommend a fund (or selection) that is within the risk tolerance and capacity for loss of the person as well as within their knowledge and understanding.

and above what he would get from a wise man on this forum giving opinion?

There is bad advice on this forum given out as much as good advice. If I was to look at what I typically recommend and see what people "suggest" on this forum then i would say the forum members are generally much higher in risk in their investment selections. Experienced investors do often move up the risk scale over time. However, new investors without advice do frequently invest above their risk profile as well. And are more prone to panicking and pulling out at the worst times.

DIY can save money if you know what you are doing. It can cost you more if you dont.

mgarl10024

My initial reaction was that the fee was really high - but then having read the reasoning by dunstonh and BarrBru can see how the IFA would have to charge these rates when operating as a business.

It reminds me a lot of how, because I work in IT, people can have an expectation that fixing their computer should be something I do for next to nothing because I don't use any materials. It's the skills and knowledge that you're paying for.

Also reminds me of a recent experience with a mortgage advisor. He was a neighbour and was invited to our house to advise us on new mortgage products. Once inside, he professionally advised us of his fees etc.
During the meeting he happened to notice the media centre I had built humming away under the TV and said that he himself had been building his own media centre. He then proceeded to ask me questions about it etc. as he was a bit stuck.
I suggested that if he got some beers in I would be happy to go to his one evening and help him set it all up, and he readily accepted.
However, I pointed out that the relationship now seemed a little unfair - he was charging me for his time and for accessing his skills and experience, and yet would be getting my time, skills and experience in exchange for a few beers; and yet the amount of work seemed comparable.
While I could bill him for helping, it didn't seem neighbourly, so I suggested that perhaps we'd just help each other out. He'd help me by sorting out my mortgage and waiving his mortgage advisory fees, and I'd help him by sorting out his media centre - no money would change hands and we'd both be better off.
He then tried to explain that his costs were set by the company he worked for, and that there was absolutely no scope for changing them. I'm not sure he even tried.
I gave up at this point. The truth is that I probably would have done it for free as he was a neighbour - but once he failed to move on his fees, I didn't see why I should help him for free.

BarrBru

mgarl10024 wrote: »

While I could bill him for helping, it didn't seem neighbourly, so I suggested that perhaps we'd just help each other out. He'd help me by sorting out my mortgage and waiving his mortgage advisory fees, and I'd help him by sorting out his media centre - no money would change hands and we'd both be better off.
He then tried to explain that his costs were set by the company he worked for, and that there was absolutely no scope for changing them. I'm not sure he even tried.
I gave up at this point. The truth is that I probably would have done it for free as he was a neighbour - but once he failed to move on his fees, I didn't see why I should help him for free.

I'm afraid your neighbour was telling you the truth.

Because of both the liability and the compliance costs involved in him advising you, the only way he could properly advise you for free is for him to pay the fees himself.

I qualified as a PC engineer too and fix my family and pals PC's but for me to do that i don't need to go through a compliance process and write lengthy reports and have it reviewed by management.

Compliance and other costs are so high in the IFA industry that at the firm I worked at I saw them encouraging potential clients who only had ISA's to go elsewhere because the fee was to small for the hassle involved.

Archi_Bald

Poppycock. If the mortgage adviser had any decency, he would have knocked off some, or offered to pay in full, for having his music system fixed.

dunstonh

Archi_Bald wrote: »

Poppycock. If the mortgage adviser had any decency, he would have knocked off some, or offered to pay in full, for having his music system fixed.

From the comments, it appears he was an employed adviser. So, he probably couldn't. Had he been the partner/director/owner then he could have done it.

robatwork

I think only a few weeks or months spent on here for 30 mins each day would quickly reveal who the wiser posters are, I have in mind probably about 7 or 8 names I "rate"; I would certainly prefer to trust an aggregate of what I consider expert opinion in here than on the opinion of 1 expert (ie. an IFA).

Of course no guarantees either way, but if the OP does the above at least he is £1k up before he starts.

Archi_Bald

dunstonh wrote: »

From the comments, it appears he was an employed adviser. So, he probably couldn't. Had he been the partner/director/owner then he could have done it.

Even more poppycock. If the mortgage adviser had wanted to cooperate, he could have offered a deal. It is really not hard to figure out how, regardless of whether he was employed or self-employed.

Instead, he expected that mgarl10024 pays in full for the mortgage advise but would give his own expert time for free.

dale_cotterill

robatwork wrote: »

I think only a few weeks or months spent on here for 30 mins each day would quickly reveal who the wiser posters are, I have in mind probably about 7 or 8 names I "rate"; I would certainly prefer to trust an aggregate of what I consider expert opinion in here than on the opinion of 1 expert (ie. an IFA).

Of course no guarantees either way, but if the OP does the above at least he is £1k up before he starts.

But that would generally be the aggregate of what people on here would do themselves. Judging by what I have read so far, the people offering opinions seem far more risk averse than most of the OP's. It's also a lot easier when it isn't your money.

The aggregate would probably be a risk profile 2 or 3 times too high, and therefore unsuitable.

gadgetmind

IFA has suggested stocks & shares ISA for myself and wife at £11,880.00 each, Set up charge is £950.00 total for the 2 ISA,s is this a reaonable charge.

I've (belatedly) learned to do DIY, so wouldn't pay this now, but it's "only" 4% and bid offer spreads of 5% used to be common and (when younger and far less wise) I paid them.

dunstonh

Even more poppycock. If the mortgage adviser had wanted to cooperate, he could have offered a deal. It is really not hard to figure out how, regardless of whether he was employed or self-employed.

You have a strange understanding of employment.