Advice please - first visit to IFA

dunstonh

Do you think there is ever justification for the approach noted here?

I can understand the multiple stage charge (advice, research, report). That is fair enough. The amount is just greedy.

However, ignoring greed, it is a standard business pricing method that if you work less but can earn more than you should do so. So, perhaps he has found that signing up 1 in 4 people is more profitable than charging a quarter of the current charge and signing up 4 people.

gadgetmind

It sounds like going to a nutritionist and being charged a huge sum for the advice to go to Waitrose and buy nothing but a huge trolley load of whatever is their most expensive ready meal.

AlwaysLearnin

With a reasonable/good household income and being gifted £300k, it could be assumed OP is from a fairly affluent area. Sounds like this might be an IFA taking advantage of local people who are 'cash rich; time poor'.

OP - you sound fairly comfortable financially, but if I were you I'd still be inclined to give that particular advisor a wide birth and take some time to build my understanding to make sure the end result was right for me rather than someone else. The monevator site linked above has some very good articles for beginners. As has also been alluded to above, current markets aren't exactly rock bottom prices with bargain investments at the moment so arguably no need to rush in (although, we have no way of saying where we are in the cycle of course - there could be plenty of upward room, or there could be drop on the horizon...)

Good luck

bigadaj

dunstonh wrote: »

I can understand the multiple stage charge (advice, research, report). That is fair enough. The amount is just greedy.

However, ignoring greed, it is a standard business pricing method that if you work less but can earn more than you should do so. So, perhaps he has found that signing up 1 in 4 people is more profitable than charging a quarter of the current charge and signing up 4 people.

Fair enough but I don't see how anyone can claim to be a professional with that approach. There should be a reasonable cost build up and justification, ripping off an innocent consumer should be absolutely unacceptable. More people need to understand this approach rather than timidly accepting such things without question, and financial advisors can't be considered a profession with such an approach.

dunstonh

bigadaj wrote: »

Fair enough but I don't see how anyone can claim to be a professional with that approach. There should be a reasonable cost build up and justification, ripping off an innocent consumer should be absolutely unacceptable. More people need to understand this approach rather than timidly accepting such things without question, and financial advisors can't be considered a profession with such an approach.

It is normal in all walks of life. Years ago, I wanted my garden redesigned and rebuilt. I had quotes that varied by over £10,000 between them.

However, this is why fees are disclosed before you commit to anything.

gadgetmind

dunstonh wrote: »

I had quotes that varied by over £10,000 between them.

Out of interest, how many parties were between you and the guys with the spades?

Thrugelmir

dunstonh wrote: »

I can understand the multiple stage charge (advice, research, report). That is fair enough. The amount is just greedy.

However, ignoring greed, it is a standard business pricing method that if you work less but can earn more than you should do so. So, perhaps he has found that signing up 1 in 4 people is more profitable than charging a quarter of the current charge and signing up 4 people.

Then along will come the equivalent of Aldi. Simple straightforward and no frills. Knocking the old dinosaurs out of business. Can only be a matter of time.

dunstonh

Thrugelmir wrote: »

Then along will come the equivalent of Aldi. Simple straightforward and no frills. Knocking the old dinosaurs out of business. Can only be a matter of time.

Simplified advice has been coming for over 20 years and hasnt got here yet. The main reasons it has yet to arrive is liability for when simplified advice is wrong. And it is wrong in about a quarter of cases. With the FOS charging £500 a go on complaints, even when rejected and your liabilities only ever increasing and annual costs only ever going to increase, there has been no firm brave enough to put their money there yet. The FCA seem to want it but in the past the FSA said advice was advice and there was no half way house. The FOS look at complaints on non-advice cases and if there is a hint of advice, they class it as advice and expect advice standards.

It is stupid that it is more difficult to set up an investment plan, pension or whatever than it is to borrow money. Time, compliance and liability are the main costs and until they go down, charges stay high.

atush

bigadaj wrote: »

Do you think there is ever justification for the approach noted here?

There's obviously an argument for shopping at waitrose rather than lidl or buying a Mercedes rather than a Kia, but very difficult to demonstrate any value in cases like this. I suppose if the OP was after something unusual or specialist then it could be partially explained, but those are rare cases.

Just strikes me as an incredibly unprofessional approach.

a bit out of order here. He said it was expensive.

The approach above should not be justified (unless he was so high an IFA that 300K was 'below' his interest level).

IFAs sometimes do try to put off clients with a high fee so they will go elsewhere. rather than thinking as you do (ie they are trying to rip people off). I see it as the classic English bias of not wanting to say something awful/uncomfortable. So they say this is the price hoping you will go away.

I see this all the time, esp with poor service in restaurants. The UK bias is to accept bad service (even with a fee) rather than complain about bad service.

bigadaj

atush wrote: »

a bit out of order here. He said it was expensive.

The approach above should not be justified (unless he was so high an IFA that 300K was 'below' his interest level).

IFAs sometimes do try to put off clients with a high fee so they will go elsewhere. rather than thinking as you do (ie they are trying to rip people off). I see it as the classic English bias of not wanting to say something awful/uncomfortable. So they say this is the price hoping you will go away.

I see this all the time, esp with poor service in restaurants. The UK bias is to accept bad service (even with a fee) rather than complain about bad service.

As I've stated before it is an unacceptable approach. It's different in a business to business environment but this is unacceptable in my opinion when dealing with an inexperienced consumer. Interesting analogy to compare poor service at a restaurant to being ripped off by nearly ten grand by a so called professional adviser.

Read the original post, it sounds like a fairly obvious case of trying to rip off an uninformed customer, no indication that the ifa didn't want the work in which case he should have made that plain.