Pensions independent financial advisors

Al.

Dave,

That's a big problem; aka the advice gap. I sympathise with you, it's a crazy situation.

bigadaj

brewerdave wrote: »

A lot depends on how big your DC pot is. As I found when I phoned around local IFAs last year ,unless it is more than £100k they are unlikely to want to deal with you !!

Well they probably wouldn't have a problem in dealing with you, it would just be uneconomic to do so. An ifa would no doubt undertake work for you but have minimum fees that they decide are worthwhile, so whilst this flat rate would be reasonable on a larger pot then it would be a large percentage of a smaller sum.

There's no magic about the majority of what ifas do, and spending some time learning and understanding the investment and financial management process can lead to large savings in professional fees. Also many people have other areas of their financial life that ifas may not focus or advise upon, from personal property to buy to let's and simple savings, so it's always preferable for an individual to have an understanding of their position and be able to manage this, utilising resources like ifas as and when they feel the need.

dunstonh

Al. wrote: »

Dave,

That's a big problem; aka the advice gap. I sympathise with you, it's a crazy situation.

This was warned in advance of the RDR. It has happened. It is one of the reasons why the Treasury has instructed a new review into advice.

One of the biggest issues is the sheer volume of documentation an adviser has to have on file to protect their backside in the event of a complaint to the FOS. The FOS would argue that actually, the fear of complaint is greater than the figures suggest. However, the system is currently set up that the good are paying for the bad. The good are largely paranoid and the bad dont give two hoots.

Al.

Agreed. Why should I pay for the consequences of advisory cowboys? I shouldn't.. but I am. This impacts on my ability to advise. My latest levy is obscene.

brewerdave

bigadaj wrote: »

Well they probably wouldn't have a problem in dealing with you, it would just be uneconomic to do so. An ifa would no doubt undertake work for you but have minimum fees that they decide are worthwhile, so whilst this flat rate would be reasonable on a larger pot then it would be a large percentage of a smaller sum.

My experience with 4 small pots,potentially totalling ~ £66k ??- firm A blew me off in about 30 seconds -quite unpleasant suggesting that they offered "wealth" services!! Adviser B was only prepared to see me if I put all my investments "on the table" and firm C came to the same conclusion as you suggest, not economic for me to retain them albeit in a much more pleasant manner.
Ended up moving them all to a SIPP with HL, using a mix of multi manager funds and a couple of trusts that have performed reasonably well for me within ISAs.:)

magpiecottage

Al. wrote: »

Agreed. Why should I pay for the consequences of advisory cowboys? I shouldn't.. but I am. This impacts on my ability to advise. My latest levy is obscene.

And there is the problem.

The FSCS charges advisers to compensate the customers of the cowboys. The good advisers have to pass that cost on to their own customers.

I was looking at one firm's figures earlier this year. For every £100 it needs to charge for its own costs (including regulatory fees, insurance and general running costs) and profit, it has to charge a further £3 simply to meet the FSCS levy.

Protection from the FSCS is not free. It is paid for by what amounts to a stealth tax.

TheTracker

magpiecottage wrote: »

And there is the problem.

The FSCS charges advisers to compensate the customers of the cowboys. The good advisers have to pass that cost on to their own customers.

I was looking at one firm's figures earlier this year. For every £100 it needs to charge for its own costs (including regulatory fees, insurance and general running costs) and profit, it has to charge a further £3 simply to meet the FSCS levy.

Protection from the FSCS is not free. It is paid for by what amounts to a stealth tax.

3% of expenses and profit? Not quite sure what that means - 3% of turnover? How much does the average customer get charged to subsidise the levy?

I imagine most customers would be content that some of the fee they pay, probably even 3%, provides for a compensation scheme. What's that, about 0.03-0.1% of the value for being insured? Bargain.

Al.

People don't want to pay for some IFA to rock up, pinch their biscuits and show them a glossy brochure about some daft fund, before waving them goodbye with the business never to be seen again.

These days, it's all about self help, messageboard peer to peer engagement, online brokerage or robo-advice. IFA need to wake up to that.

dunstonh

People don't want to pay for some IFA to rock up, pinch their biscuits and show them a glossy brochure about some daft fund, before waving them goodbye with the business never to be seen again.

And is that what you think an IFA does?

These days, it's all about self help, messageboard peer to peer engagement, online brokerage or robo-advice. IFA need to wake up to that.

robo-advice barely exists. It is something that the regulator wants to improve on but its actually regulation that is holding it back. DIY is still in minority. Its a significant minority and growing but DIY also has its issues. Some can do it well. Others make a right pigs ear of it. Also, DIY investors tend to invest above their risk profile and more inclined to suffer fashion investing. With investments that need ongoing work, many lose the initial enthusiasm that they had.

There is room for both DIY and advice but some DIYers need to wake up to the fact that some people just cannot DIY.

Al.

No, and although I've only been an IFA for about 8 years, some of those types of adviser still existed when I started. Thankfully, they're fewer and further between these days. Maybe I think back to the IFA I have come across in my younger days.

All that isn't the issue though. The real issue is public perception - read the piece in this morning's Professional Adviser about how much people will pay for advice. People still think that stereotype exists, and that's what counts.

My robo-service launches in the next week; it offers (even though I say it myself) superb support facilitation with risk/loss mapping as good as any I've seen. I will also screen out those with significant debt, uncertainty of income and low cash reserves.

There is a place for both types of service but many advisers won't accept it.