Ongoing IFA or not

Malthusian

A round about admittance then that IFAs will still take a punter's money despite doing absolutely nothing for it! Why do you/they not, say, consider at least partial refunds when no review is required or undertaken?

As Greenglide says you could if you wished have no ongoing fee and only pay the IFA on a per-item or per-hour basis when work needed doing. The problem with this is that when something does need doing, or if you just want to have a conversation with the IFA about something you've seen in the paper, you may be loth to pick up the phone because you don't want to be charged. Most people who hire IFAs like the "option value", i.e. the knowledge that they can pick up the phone to the IFA at any time without getting a separate bill.

From the IFA's perspective it is also a much more pleasant working relationship when you are able to send emails along these lines: "Mr Bloggs, I feel that we should discuss the recent changes to pension allowances, I believe you could benefit from an additional £18,000 in tax relief, feel free to give me a call." Rather than "Mr Bloggs, you may have heard about the recent changes to pension allowances, should you wish me to look into this for you I would apply my standard rate of £300 per hour and if any further action was appropriate I would provide a full quote accordingly."

Rayling wrote:

I guess the above scenarios are what I personally would thing IFA was for me.

IFAs generally do not recommend switches because they have some mystical insight into the market. However, they may be able to recommend switches to reduce charges, or when the portfolio is unbalanced, or when a fund is closing. Apart from that you're more or less spot on about what an IFA would do.

Or finally I could skip the IFA and ask you good people who are really kind and knowledgeable with your help

On MSE forums you generally get extremely good responses - to the questions you ask, based on the information you provide.

What an Internet forum can't do is answer the questions that you didn't ask, or ask you for the information you haven't provided. Within the limitations of a bulletin board system it is impossible to build up a fully comprehensive picture of your circumstances in the way you can in a face-to-face meeting. It takes five seconds to ask a follow-up question face-to-face, 12 hours or 24 hours or longer on a bulletin board.

Virtually every thread on this board will have given very good advice if you accept the question at face value, but it can take something really simple that you neglect to tell the forum - such as an NHS pension, or guaranteed annuity rates - to turn a good answer into a bad one.

greenglide

Personally the main issue is over were to invest, how to build up a proper portfolio etc. Once this is done and you are happy with what you have then the last thing you want is to change on a random basis because "the markets have fallen", "emerging markets are doing well" etc.

If you are happy with what you have and you understand what you have and havent done then an IFA probably relevant.

But, of course, we can't know everything about you needs, personal circumstances etc.

DIY is great until you need to pay a professional to put it right.

IFAs by the nature of the regulations are not cheap. This is the problem.

AnotherJoe

Rayling wrote: »

Thanks for the reply
But I am struggling at the moment to see if an IFA can actually do anything for me that's worthwhile or not
I have no intention of changing, or moving my current pension so i guess no help required there
Indeed

BUT I am not sure if an IFA could monitor my pension then maybe phone me one day and say " hey I advise you switch funds" to this due to the way markets may be at that time.

Not really. As I said, that's the IFA that will own his own country.

Or

"Hey your getting dangerously close to retirement now I recommend derisking to a safer fund"

Well, you can do that yourself assuming you know when you are retiring..

Or

Maybe I can afford more disposable income per month and considering adding more to my pension contributions he/she could then advise on either yes add this on or no put any extra in an isa for example.

You can work that yourself. In general though, the closer to retirement you are the better it is to put it in a pension instead of an ISA, since you get tax relief on the way in (gaining you anywhere from an extra quarter to a half) and its not locked up for as long as you'll be that closer to retiring, so its not locked away for so long.

I guess the above scenarios are what I personally would thing IFA was for me.

As you can see, thats something you can do yourself. Just read these pages, read a few websites, a book or two. The basics are not complicated

Or finally I could skip the IFA and ask you good people who are really kind and knowledgeable with your help

Indeed you seem to have got it

dunstonh

BUT I am not sure if an IFA could monitor my pension then maybe phone me one day and say " hey I advise you switch funds" to this due to the way markets may be at that time.

You have a basic investment fund at the moment. So, little work is required. If you had a portfolio of funds then more work is required. Rebalancing, reviewing of the funds, revised asset allocations etc.

"Hey your getting dangerously close to retirement now I recommend derisking to a safer fund"

Which is referred to in my earlier post. Another thread on here at the moment is moaning about a 20% loss as they didnt de-risk in the lead up. They had no adviser to prompt them. So, they avoided adviser charges but has it ended up costing them more in the long run? (plus the product they are in is obsolete and an IFA could probably have moved it to a better option years ago. That difference in charges may have cover the fees).

Maybe I can afford more disposable income per month and considering adding more to my pension contributions he/she could then advise on either yes add this on or no put any extra in an isa for example.

That goes without saying.


If you are happy with your provider and fund and not open to changes then there isnt really much an IFA can offer you other than periodic comfort comments.

p.s dunstonh re Nutmeg and HL etc dont they wrap the SIPP fee into their scheme ? Or do they charge on top? If so you can always DIY it by putting your details into Nutmeg, they tell you what they would invest in, then do it yourself. Difference is they woudl rebalance, you'll have to DIY that. If the OP uses an IFA they will pay a SIPP fee plus IFA as well right? Are you saying these companies charge about the same as both combined?

HL and nutmeg are different. HL is a platform provider focused on DIY investors. They are more expensive than an IFA platform but they give absolutely no advice (so you dont get the cost of advice and this makes the bottom line cheaper). Nutmeg offer pre-built portfolios and charge more for doing so. They dont give advice but they have a robo system to help you decide which portfolio you should have. They are more expensive than HL and and often more expensive an an adviser (bottom line inclusive of platform/provider/fund/advice). Nutmeg is not that strong financially. it has a turnover lower than most small local IFA firms and is losing millions a year. Robo-advice (which is the term being used for these half way houses) is in the infancy in the UK and the early companies are hoping it will take off. So, they will suffer losses early on in the hope they get enough business to make them profitable later.

Rayling

A very big thanks to all of you guys above, you shared your experience with me and nice to see very constructive replies, I will take on board what you have advised, you have helped a lot
Thanks

Rayling

So today I see my pension fund has lost another £1000 taking the grand total loss to £10,000 in 20 months
It started at £126,000 and peaked at £136,000 and ive paid in £5,300 during this 20 months. It is now back to £126,000 so now I'm thinking of all the things I could have done with the £5,300 instead of flushing it down the toilet.
Am I right in thinking an IFA would not have prevented this or lessened the blow?
Using the Chrystal ball theory discussed to day I guess not

mania112

Rayling wrote: »

So today I see my pension fund has lost another £1000 taking the grand total loss to £10,000 in 20 months
It started at £126,000 and peaked at £136,000 and ive paid in £5,300 during this 20 months. It is now back to £126,000 so now I'm thinking of all the things I could have done with the £5,300 instead of flushing it down the toilet.
Am I right in thinking an IFA would not have prevented this or lessened the blow?
Using the Chrystal ball theory discussed to day I guess not

Investments will go down, and they will go up. Almost safe to assume they will never stay the same.

I would also wager, if you have been investing in your pension for a long time, your total contributions are still lower than £126,000 - meaning investment growth is still prevalent. We're experiencing a real tough time right now, but if there's still medium-long term remaining for your investment we just have to ride this wave.

What is important now (and how an IFA can help):

1) Don't make a panic change
2) Ensure your investments match your Attitude to risk, capacity for loss, and time horizons.
3) Have access to alternatives should a plan B be needed in the future
4) Don't watch the FTSE100 24 hours a day. Decent investment portfolios will only have a small slice in the FTSE100 and besides you'd go stir-crazy, leave it to the IFA to worry on your behalf.

mania112

dunstonh wrote: »

Nutmeg offer pre-built portfolios and charge more for doing so. They dont give advice but they have a robo system to help you decide which portfolio you should have. They are more expensive than HL and and often more expensive an an adviser (bottom line inclusive of platform/provider/fund/advice). Nutmeg is not that strong financially. it has a turnover lower than most small local IFA firms and is losing millions a year. Robo-advice (which is the term being used for these half way houses) is in the infancy in the UK and the early companies are hoping it will take off. So, they will suffer losses early on in the hope they get enough business to make them profitable later.

Going off topic I guess, because this isn't IFA - but i'm confident Robo will take off. I'm *slowly* building a program for my website to be used for clients who a) want to do it themselves to save a few bps against IFA and, b) have a lower value investment than warrants a full IFA service/cost.

I also hear Nutmeg are struggling, which is a shame because their site looks very smart. Too soon for them, but hopefully they can ride the early years.

Investment systems in the UK tend to be a few years behind the USA, and this is only just becoming viable in the States.

I think it will work best in the UK if Robo still has a face. My idea is that clients will still come into my shop and they will decide which route they want to go down. If simplified advice is right, they will be directed our website.

A lot of work to do, but i'm excited about this Robo-stuff.

dunstonh

Rayling wrote: »

So today I see my pension fund has lost another £1000 taking the grand total loss to £10,000 in 20 months
It started at £126,000 and peaked at £136,000 and ive paid in £5,300 during this 20 months. It is now back to £126,000 so now I'm thinking of all the things I could have done with the £5,300 instead of flushing it down the toilet.
Am I right in thinking an IFA would not have prevented this or lessened the blow?
Using the Chrystal ball theory discussed to day I guess not

£10k loss on £136k peak is a loss of just 7.35%. The stockmarket is down 20%.

An IFA is not responsible for gains or losses. The IFA can select investments which may tweak things either way but it will not produce gains in a falling market.

What an IFA should be doing with you is educating you on investments and explaining that you need negative periods to obtain long term growth and how you should view this as positive (as it is very positive for you). Plus how a tiddly 7% drop is nothing.

dunstonh

Going off topic I guess, because this isn't IFA - but i'm confident Robo will take off. I'm *slowly* building a program for my website to be used for clients who a) want to do it themselves to save a few bps against IFA and, b) have a lower value investment than warrants a full IFA service/cost.

It will take off with the internet generation. It is just a matter of when. The IFA portals are all building robo-advice portals that integrate with IFA software. I think traditional advice will fade away and it will become robo advice with a real adviser at the end of the phone or via email. A half way house between the two.

The portal we have allows multiple providers to be listed. So, you can have a mix of policies from Aviva, Scottish Widows, Cofunds, Elevate etc and display them in one place. Plus, we have that yodlee bank account integration available as an option. However, generally, we find most people like the phone call/email/visit but then we are East Anglia. That is the way it is. I still get given jam, cakes, runner beans, tomatoes etc when I do visits. That will die out in time as that is generational. The next generation will want an app for most things and the occasional guidance and probably wont want to pay for it either.