IFA recommended funds

Ian_W

I'd be very wary about putting too much faith in BestInvests portfolio gismo. Personal experience is that when you alter the risk factor very little changes and they trot the same funds out time and time again. It can be useful for Geographic spread - I think - but is, to say the least, very generalised for asset allocation.

You'll notice that there is 2 lots of Schroder European - that seems to be a fault in the system that it sometimes [often in my experience] doubles up in some sectors, often the European Alpha plus. Just personal experience and opinion for which I may be shot down!

Morning Star has a portfolio XRay
you have to register but it's free to use so if you want double check that list to see where it's invested and what the split is between, shares, bonds property etc. Health warning there though is that funds sometimes take well over 12 months to be analysed so you may find a fair bit of it is down as "other".

Wouldn't dream of commenting on the quality of the funds suggested or whether they meet your risk profile as I'm very much a learner myself but I do think the free tools you get on the net should be treated as a guide only - with a good deal of caution - to work out the spread you want, rather than an instant answer.

HTH.

peterg1965

ElephantJuice wrote: »

Just a quick question - what's NMA pricing please?

NMA = New Model Advisor - a new type of IFA. Dunstonh knows more (he might even be one)! Basically it describes how the finanical advice is paid for, usually proportional to the increase in the value of investments.

dunstonh

NMA = New Model Advisor - a new type of IFA. Dunstonh knows more (he might even be one)!

I am one. I was one of the early adopters. Hence why I can now do 1% plus 0.5% trail. Indeed, I am now capping that 1% as well. More recent adopters start at 2-2.5% and reduce over time when they can afford to. The business model relies on the 0.5% not the upfront. Sometimes with very large amounts I take virtually nothing or even nothing because the 0.5% is what you are after.

The FSA RDR proposals for IFAs do have the NMA model of "customer agreed remuneration" as a requirement to exist to be able to call yourself an IFA. So, getting an NMA IFA now means that adviser is working close to or the same as what the FSA have in mind.

EdInvestor

Dithering Dad

I suggest you spend a bit of time finding your way around this website:

http://www.citywire.co.uk/Funds/Home.aspx.

It divides all the funds out there up into their "official" categories, and then rates them over 3 months, 1,3,5 and 10 years.There are two groups - ABI for insurance company funds and IMA for fund management company funds.

This rating system enables you to compare funds' long and short term performance.The site also rates fund managers, which many see as the key to performance.

You can type each fund in the search box to find which category it's in and then click on the category to find its rating.

Looking at your list above, the first choice is Artemis Income.This is in the Equity Income fund category, it's number 12 out of 78. So a reasonable performer near the 10. But it's not apparent why you would pick it above the country's most popular fund, Invesco Perpetual Higher Income, which has been top of the performance tables over every time span and has a history going back nearly 20 years.:)

The second choice is Artemis UK Special Situations.This is in a giant ragbag category entitled "UK All companies." It's at no 53 out of 329 funds over 1 year, at 77/129 over 3 years, and at 18/244 over 5 years. You get the impression that this fund, like Fidelity Special Situations, might have seen better days.

A better choice might be the Old Mutual UK select mid cap fund at 12/329 or the Merrill Lynch UK Special Sits, at 47/329 but with a long and distinguished track record and a very experienced fund manager.

Fidelity SS's downhill progress may be of interest. It's gone from 2/139 10 years ago to 13/244 5 years ago to 43/291 three years ago to 90/329 now,out of the top quartile. This slide has happened as its long-time top fund manager Anthony Bolton gradually departs, turning the fund over to newbies.

To my mind a startup investor is bets to take things step by step, first by getting his asset allocation right to reflect his attitide to risk.

Roughly,assets fall into 4 main classes from high to low risk:

Commodities
Equities
Property
Bonds
Cash

Choose which percentage you want in each. There are gradations of risk within each class as well. IMHO to stop confusion setting in it is worth sticking initially to UK funds until you have got the basic idea firmly in your mind.

whiteflag_3

how things have moved on over the last few years -

IFA recommends 100% balanced managed fund - gets slated by Dh and others
Now IFA recommends a portfolio of funds that have already been through Scot Equitable's due diligence process - gets slated by Dh and others


back to thread

While im not a particular fan of the Scot Eq FPP, its a shame Dh hasnt pointed out that the effect of the loyalty bonuses over the longer term result in very favourable reduction in yield figures. Given that the OP is running his own business it should be a fair assumption that the pension will stay in place for the entire term. Also didnt mention its got a sipp option as well!


Im also surprised the OP chose this IFA after his initial meeting and getting the menu ? Could have shopped around rather than blaming the IFA

dunstonh

Now IFA recommends a portfolio of funds that have already been through Scot Equitable's due diligence process - gets slated by Dh and others

Its not the funds I have concerns over. Its the lack of a defined strategy. 10% here, 10% there. Mixing and matching balanced/cautious managed with focus sector funds willy nilly (not a problem when used with asset allocation but that doesnt appear to be the case here).

If you are going to pick funds at random then what value does that add?

While im not a particular fan of the Scot Eq FPP, its a shame Dh hasnt pointed out that the effect of the loyalty bonuses over the longer term result in very favourable reduction in yield figures.

I did mention it in post 14. Even with the bonus though the RIY is still on par with a SIPP/fund supermarket pension. Given the choice where the charges are the same, I would go fund supermarket/SIPP every time.

Im also surprised the OP chose this IFA after his initial meeting and getting the menu ? Could have shopped around rather than blaming the IFA

On a thread we only get part of a story but if we just look at two things.

1 - he is taking maximum upfront commision and offers no ongoing servicing.
2 - fund choice appears almost random.

Not mis-sales by any means but what value is being added. IFAs have got to realise that they need to add value otherwise what is the point of using one.

It doesnt matter if the strategy chosen is sector allocation, asset allocation or HYP. Each has its merits and that is down to personal opinion. However, at least you know there is a reason for the funds chosen and its not hit and hope.

Full commission in this case is greed. What has the IFA done to earn £6k?

As I said, nothing mis-sold here but where is the quality that you expect?

EdInvestor

dunstonh wrote: »

Not mis-sales by any means but what value is being added. IFAs have got to realise that they need to add value otherwise what is the point of using one.

Absolutely.Couldn't agree more.

whiteflag_3

dunstonh wrote: »

Its not the funds I have concerns over. Its the lack of a defined strategy. 10% here, 10% there. Mixing and matching balanced/cautious managed with focus sector funds willy nilly (not a problem when used with asset allocation but that doesnt appear to be the case here).
 
If you are going to pick funds at random then what value does that add?
 

There is no evidence that the funds were randomly selected though- might have used the Scot Eq risk profiler.

I did mention it in post 14. [code]
 
Yes you did mention it , but i didnt think you highlighted the effect on the RIY
 

Even with the bonus though the RIY is still on par with a SIPP/fund supermarket pension. Given the choice where the charges are the same, I would go fund supermarket/SIPP every time.
[/code]

It would be interesting to see a comparison -

On a thread we only get part of a story but if we just look at two things.

1 - he is taking maximum upfront commision and offers no ongoing servicing.
2 - fund choice appears almost random.

Not mis-sales by any means but what value is being added. IFAs have got to realise that they need to add value otherwise what is the point of using one.

It doesnt matter if the strategy chosen is sector allocation, asset allocation or HYP. Each has its merits and that is down to personal opinion. However, at least you know there is a reason for the funds chosen and its not hit and hope.

Full commission in this case is greed. What has the IFA done to earn £6k?

As I said, nothing mis-sold here but where is the quality that you expect?

Couldnt agree more , but dithering dad chose the IFA not the other way round

Dithering_Dad

whiteflag wrote: »

Im also surprised the OP chose this IFA after his initial meeting and getting the menu ? Could have shopped around rather than blaming the IFA

whiteflag wrote: »

Couldnt agree more , but dithering dad chose the IFA not the other way round

Bit harsh - I haven't "chosen" anything - I've simply contacted an IFA that was recommended by my accountant and discussed my pension options. He came back with the funds as I listed in the OP and I had a few concerns. I posted the bare facts on MSE to see what people thought of his selections - uncoloured by my own personal thoughts. Dunstonh and others pretty much reflected my concerns - the 10% here and there and the 100% up front commission payment and no ongoing investment servicing.

I therefore decided not to go forward with this IFA and so the search continues.... I haven't signed up for anything, I asked for a pension review by this particular IFA, got one, didn't think it was a particularly good effort and so decided not to pursue it any further. I'm not sure where I have apportioned any blame to the IFA - I've nothing to blame him about as I didn't take his advice.

As you advised, I am shopping around.