How to find a decent IFA - or best not to?

grey_gym_sock

Undervalued wrote: »

Having established a risk profile (say on a scale of 1 to 10) why are there not 10 matching portfolios knocking around on the internet.

well, there are lots of portfolios knocking around the internet, because there are different opinions on how to do it. some model portfolios will give you a range of risk levels, as you suggest. others won't, but you can adjust the risk level yourself by varying the proportions in equities versus bonds (i.e. more bonds lowers the risk - assuming the bonds are relatively safe bonds: it won't work quite the same if there are a lot of high-yield bonds included).

dunstonh

OK, so how do they do that bit? Presumably some are better at it than others. Or is it like Doctors and drugs? The better the corporate hospitality........

Financial services companies are not allow to offer any "hospitality" or gifts or anything like that any more.

We pay for research tools and research from research companies and carry out due diligence on the funds. If you see a mortgage IFA then chances are their knowledge, tools and software on investments is going to be limited compared to one that focuses on that area.

Undervalued

OK, that still leaves the question of how to actually find a reliable person or firm who specialises in the right area.

That of course is what I had hoped I had done on the two previous occasions and ended up disappointed.

Linton

Undervalued wrote: »

OK, that still leaves the question of how to actually find a reliable person or firm who specialises in the right area.

That of course is what I had hoped I had done on the two previous occasions and ended up disappointed.

Much the same as finding a reliable plumber. Go for a local one rather than a national or city company unless your needs are highly specialist/complex. Ask family and friends for recommendations. Choose 3 or 4 local ones, out of the yellow pages if necessary, and have a free initial chat to judge which one you feel you can work with. Once you made your choice work to make on an ongoing relationship with interchange of ideas. Be open to new suggestions - dont go in believing that you have the answer and you just want someone to sort out the details and implement it.

Undervalued

Linton wrote: »

Much the same as finding a reliable plumber. Go for a local one rather than a national or city company unless your needs are highly specialist/complex. Ask family and friends for recommendations. Choose 3 or 4 local ones, out of the yellow pages if necessary, and have a free initial chat to judge which one you feel you can work with. Once you made your choice work to make on an ongoing relationship with interchange of ideas. Be open to new suggestions - dont go in believing that you have the answer and you just want someone to sort out the details and implement it.

I take your points but that is pretty much what I tried to do before, although I didn't have three or four initial meetings mainly due to lack of time.

Regarding the "interchange of ideas" again point taken but is it not also possible just to buy a very specific service. Obviously they are free to decline the work for whatever reason but, if they take it on, then surely there is no excuse for doing it badly.

Linton

Undervalued wrote: »

(A) I take your points but that is pretty much what I tried to do before, although I didn't have three or four initial meetings mainly due to lack of time.

(B) Regarding the "interchange of ideas" again point taken but is it not also possible just to buy a very specific service. Obviously they are free to decline the work for whatever reason but, if they take it on, then surely there is no excuse for doing it badly.

A - That's a pity

B - The difficult part is the design not the implementation. If you know the design it shouldnt be too difficult to DIY the implementation. Your requirements in terms of the financial objective need to be very clear. How that is best achieved should be up to the IFA to propose and then you both to discuss - that is the reason you employ him. Same as your plumber, probably best not to insist he implements what he may consider to be a poor detailed design.

dunstonh

Speak to several on the phone. If they cant describe their investment process then it probably means they dont have one. An elimination for you.

Regarding the "interchange of ideas" again point taken but is it not also possible just to buy a very specific service. Obviously they are free to decline the work for whatever reason but, if they take it on, then surely there is no excuse for doing it badly.

Some firms wont want that. But many firms will be more than happy to. There is no problem not having full reviews. Focused are fine. indeed, focused typically outnumbers full across most advice firms (that do both).

Undervalued

Thank you both.

I have rather more time available now than I did when I tried this before. As I say, I feel I have good admin skills and attention to detail so I'm not looking to pay someone to do this for me.

Obviously if they can obtain a particular product cheaper than I could direct then that would be fine. What I don't want is a repeat of IFA two telling me they can and then finding out it is not true. Tat is the fastest way to lose all trust.

TheTracker

What do you want from the IFA? Unless I missed it I didn't see much information on your circumstances.

You sound clued in to me, and anyone with half a brain can perform risk profiling on them self, become proficient in risk based asset allocation, choose funds that fit, and understand the effect of fees. In fact you sound a bit like the type of person who is going to check the IFAs homework in that regard anyway.

Perhaps you have some unusual or complicated circumstances that need advice.

One way of thinking about the purchase of services is to set clear success criteria. Toilet unblocked, boiler reliable, car mileage ok. Sometimes we come away from a service disappointed but it's down to unrealistic or undefined exit criteria, maybe that's what happened last time. So what's your success criteria for the IFA service? What will you ask them to do, and how will you measure the value of the service?

dunstonh

Obviously if they can obtain a particular product cheaper than I could direct then that would be fine. What I don't want is a repeat of IFA two telling me they can and then finding out it is not true. Tat is the fastest way to lose all trust.

Product providers exist to retail via the intermediary market and others exist to retail direct to consumer. An IFA will not want to use a product that retails direct to consumer as they cannot complete their due diligence and it will not likely integrate with their systems. Plus, there is far more to it than cost. Cost is always a secondary requirement and there are plenty of DIY options that are more expensive than intermediary options.