Best source of investment advice

BananaRepublic

I've been investing for 20 years, so this question is more for interest than personal benefit.

Where is the best source of investment advice? As far as I can see, you either go it alone, or pay someone, and in the UK as far as I know the only people legally allowed to offer investment advice are financial advisors, be they independent or tied. Clearly this offers a way in for those who want the gains, but without the effort of spending time on research. This then raises the issue of how do you know if the FA/IFA you have found knows his onions. Clearly if your mate has dealt with an advisor for 10 years, and he's done well, you are sorted. But what if you are a Nobby No Mates, or have poor mates? As far as I know advisors do not publish performance charts, unlike trusts.

My own strategy has been using the past as a guide to the future when researching funds, combined with a basic knowledge of markets, sectors, and currency risks, and leaving money in funds for the long term, ignoring short term crashes. I have always considered the markets too unpredictable for anything other than broad brush methods, and I do not want to research individual companies. I reckon someone who wants to invest on their own, but lacks knowledge, can't go too far wrong with a UK tracker fund.

JohnRo

BananaRepublic wrote: »

I reckon someone who wants to invest on their own, but lacks knowledge, can't go too far wrong with a[STRIKE] UK [/STRIKE] Global tracker fund.

I think it more likely, with Brexit looking an unfathomable possibility, that the above is probably the better long term option.

Thrugelmir

Anyone can master a skill with 10,000 hours of practice.

Ultimately has to be own research. Or inside knowledge from working within a specific sector of industry or commerce. As at a point becomes gut instinct. Not always right though. As one can never know what tomorrow will bring. However balance of probabilities can be in ones own favour.

Linton

There is no best source of advice, certainly free advice. All of it comes with an agenda or the prejudices and limitations of the author. So the answer I believe is to read widely with an open mind and develop some understanding of economics, finance, how companies work and basic financial mathematics as well as investing to be able to question everything. Focus on how things work, not on techniques. You cant understand investing in isolation. With a broad understanding comes the confidence to rely on your own judgement rather than the advice of strangers.

bigfreddiel

BananaRepublic is correct, basically once you realise no one knows anything, even so called qualified advisors of any type don't know anything.

They're all just guessing based on past experience and in finance a chimpanzee with a pin could do just as well.

Broadbrush diverse global approach, not too greedy will work in long term.

Anyone out to help you is basically after your money. They are all just salesman, and that's putting it politely.

Nowadays most things you buy come with a warranty or refund offer, but not a financial product. These financiers aren't stupid when it comes to lining their own pockets, a bit like turkeys voting for Christmas!

Cheers fj

Undervalued

bigfreddiel wrote: »

BananaRepublic is correct, basically once you realise no one knows anything, even so called qualified advisors of any type don't know anything.

They're all just guessing based on past experience and in finance a chimpanzee with a pin could do just as well.

Broadbrush diverse global approach, not too greedy will work in long term.

Anyone out to help you is basically after your money. They are all just salesman, and that's putting it politely.

Nowadays most things you buy come with a warranty or refund offer, but not a financial product. These financiers aren't stupid when it comes to lining their own pockets, a bit like turkeys voting for Christmas!

Cheers fj

I don't have a problem with people making money out of me providing the overall transaction makes sense from my point of view.

If you buy a physical product, a piece of furniture maybe, both the retailer and the manufacture are presumably making money otherwise they wouldn't be trading. Why should a financial product be any different.

If I pay an IFA (as discussed in a recent thread) it would be for one of two reasons. Either to save my time (so no different to employing a cleaner or gardener) or because I believe they have greater knowelege than me so I would expect to earn a better return on my investments than if I went it alone.

Apart from that I expect anybody I employ to be honest and to do the job they are being paid for to the best of their abilities. Providing they do that, if they make a lot of money then good luck to them.

BananaRepublic

bigfreddiel wrote: »

BananaRepublic is correct, basically once you realise no one knows anything, even so called qualified advisors of any type don't know anything.

They're all just guessing based on past experience and in finance a chimpanzee with a pin could do just as well.

I don't think that is fair, a decent IFA will be able to guide someone, it is not just guessing.

bigfreddiel wrote: »

Broadbrush diverse global approach, not too greedy will work in long term.

Anyone out to help you is basically after your money. They are all just salesman, and that's putting it politely.

They are selling a product, which in this case is their knowledge of financial markets, and investment products, as well as some aspects of tax law. It is not unreasonable to charge for that. After all, if a financial advisor helps you maximise the money you pass down to your children on your death, is that not of value?

bigfreddiel wrote: »

Nowadays most things you buy come with a warranty or refund offer, but not a financial product. These financiers aren't stupid when it comes to lining their own pockets, a bit like turkeys voting for Christmas!

Cheers fj

Here I have some sympathy for your views, I feel that financial services are often more about marketing than reality, and perhaps about using Fear, Uncertainty and Doubt, the traditional marketing tool to convince people that something is too difficult for their pretty little heads, and they need an expert. But that is true of many products. That is why tracker funds became popular, but in my experiencd active fund managers do earn their extra fees.

BananaRepublic

JohnRo wrote: »

I think it more likely, with Brexit looking an unfathomable possibility, that the above is probably the better long term option.

Brexit will never happen. But even if it does, the UK is a sound long term bet. Until Corbyn gets in. At least that will cause the population to drop.:D

Undervalued

BananaRepublic wrote: »

They are selling a product, which in this case is their knowledge of financial markets, and investment products, as well as some aspects of tax law. It is not unreasonable to charge for that. After all, if a financial advisor helps you maximise the money you pass down to your children on your death, is that not of value?

Similarly, I have seen a number of talented people in the creative fields who struggle to make a living but refuse to use an agent. Generally they will say "I'm not giving somebody 25% of my work" so they self righteously have a 100% of little or nothing!

75% of what a good agent can get you can be can often be vastly more than they would ever achieve DIY.

However, there are idiots and sharks out there and if they sign up with the wrong one they can lose out substantially. The problem is it is difficult know who to trust and hard to quantify how well you would have done if you had gone down a different, hypothetical, route.

BananaRepublic

Undervalued wrote: »

Similarly, I have seen a number of talented people in the creative fields who struggle to make a living but refuse to use an agent. Generally they will say "I'm not giving somebody 25% of my work" so they self righteously have a 100% of little or nothing!

75% of what a good agent can get you can be can often be vastly more than they would ever achieve DIY.

However, there are idiots and sharks out there and if they sign up with the wrong one they can lose out substantially. The problem is it is difficult know who to trust and hard to quantify how well you would have done if you had gone down a different, hypothetical, route.

An agent for actors, for example, is quite different from a financial agent. The former markets the actor, and negotiates the maximum fee, from which they take a cut. But I take your points, they are quite reasonable. The question then is whether a good financial advisor - assuming you successfully find one - can outperform a decent DIY investor. I suspect not, but there is a lack of evidence out there.

I've even searched for evidence regarding trackers and active funds, and from what I can see the lack of knowledge of basic statistics in the articles I saw is shocking. Economics, the dismal science? Yup.

Apodemus

Undervalued wrote: »

I don't have a problem with people making money out of me providing the overall transaction makes sense from my point of view.

If you buy a physical product, a piece of furniture maybe, both the retailer and the manufacture are presumably making money otherwise they wouldn't be trading. Why should a financial product be any different.

If I pay an IFA (as discussed in a recent thread) it would be for one of two reasons. Either to save my time (so no different to employing a cleaner or gardener) or because I believe they have greater knowelege than me so I would expect to earn a better return on my investments than if I went it alone.

Apart from that I expect anybody I employ to be honest and to do the job they are being paid for to the best of their abilities. Providing they do that, if they make a lot of money then good luck to them.

While I agree with nearly all of the above, I have yet to meet an IFA who has the breadth of skills and knowledge to take a holistic view of all my finances. The analogy might be that it is easier to find a cleaner and a gardener and a plumber etc. than it would be to find a competent household manager that would take care of everything.

I have met with excellent investment advisors, who warn that you need to take separate pensions and tax advice. Excellent tax advisors, who advise you to speak to pensions or investment advisors. I met with a very good General IFA who gave me great advice, but was bemused when I mentioned share ownership and admitted defeat when I mentioned that I also own a private company.

So, I'm afraid my take on all this is that even once you have received good advice from a range of sources, you still need to have the personal level of knowledge to put all the strands together for yourself.