Deferred IFA

dunstonh

Whenever percentages are used for initial, it needs to be put into a monetary context. 2% on £25k is good value. 2% on £100k is top end. 2% on £250k is damned expensive.

but I've been left with nothing definite. Frustrating :-|

Because you haven't paid for anything yet. The free meetings are concepts and ideas and to see if you can work together and be of benefit. Solutions are what you are paying for. Not what you get for free.

orwen

"2% on £250k is damned expensive"

Thanks. The property alone comes to more than that!

:-o

Am getting worried about he IFA situation now, this article also mentions independent advisers. The last two blinded me with science yet what I requested was uncomplicated, a basic budget & a check that my investments are reasonably sound.

http://www.dailymail.co.uk/news/article-2599337/Seven-ten-financial-advisers-mislead-clients-charges-year-promised-crackdown-rogue-firms.html

I have kept the notes I made during both interviews, by comparing what each advisor said I can begin at least to take stock of where I am and where I'd like to get to.

maximumgardener

you can do a lot yourself as well. helps frame your options......

have a look at

https://www.retireeasy.co.uk

and put in your numbers

dunstonh

Am getting worried about he IFA situation now, this article also mentions independent advisers.

Forget the article. It is rubbish. It over sensationalises what was a routine review.

The FCA did a review of 113 advisers (out of over 20,000) on charging disclosure. The FCA had up to that point given very little guidance on what it was looking for (despite requests for what they consider good). That is the way the regulator works. It would come up with a general guideline it wanted firms to follow but give no information on how to achieve it and leave it very vague or wishy washy. It would let each firm decide for itself what it does. It would then check the things later and tell the firms if they got it right or not. Often following it up with a further document which then tends to show good and bad examples. This then allows firms to see exactly what the FCA was looking for. That is the usual cycle of events. This was the first review after the 2013 changes.

If you look at the FCA review document itself it says:
The first cycle found that firms had made progress in implementing the RDR, but identified
some areas where they were failing to meet our requirements, particularly around adviser
charging disclosure.1
In response we published a thematic report with good and poor practice,
the findings from linked consumer research, and a factsheet to help firms
-
So, you can see the tone is very different to how the Daily Mail is presenting it.

The follow up review said (Dec 2014)

What we found
Overall, we believe the findings from this review provide further evidence of the increasing
professionalism of the financial advice sector.
We found a material improvement in the way firms disclose the cost of their advice, their
scope of service, and the nature of their services to clients. This suggests firms have responded
positively to the findings from the second cycle of our review and made use of the supporting
materials we published. As a result, clients should be in a better position to understand the
nature of firms’ services and the charges that apply.

The follow up review, of course, didnt get published by the DM as they cant sensationalise that and it has no pictures of anyone in a bikini.

The last two blinded me with science yet what I requested was uncomplicated, a basic budget & a check that my investments are reasonably sound.

What type of advisers were they? Were they general practitioners or did they have a focus on high net worth clients looking at more advanced options? Did you tell them you didnt understand? The advisers are going to have their own investment processes and carry out their own due diligence. If you have been DIYing then that usually means taking you off that and putting you on to their structured process. The use of tax wrappers is key when dealing with larger amounts.

I have to say I was not given a single chance to say what I wanted.

On that particular point, i know the sort of adviser you mean. There are some out there who operate on the basis that you fit their model and not the other way around. There is one chap I see at various meetings who thinks his model is better than everyone elses and he goes on and on. Whilst you can regulate the profession, you cannot regulate personality (or lack of).

orwen

Thanks maximumgar & dunstonh,

Approached several IFAs with some confidence & in good faith. The interviews I have had did not give me any confidence in either of them. I am sure they are very good at what they do but had the distinct impression that I was 'potential business' full stop. The idea of helpful advice seemed to be antithetical to what either IFA was proposing, they were saying 'give your finances over to our control and we will do the rest'. Can you see why this does not work? Unless you have confidence in someone you are unlikely - and ill-advised - to hand over your savings to them.

I explained in great detail over the phone to the second IFA, after my experience with the initial one exactly what I wanted. This was disregarded when he came round several weeks later. I'd been primed by Jem to request prices and packages and had to wait 2 hours before I could even ask that basic question which was immediately evaded. I am since informed that the 2% he was suggesting is way too expensive in terms of my estate - the exact size of which he made it his business to ascertain. You will remember I had asked specifically for assistance planning investments & pension provision.

Am left with little confidence now, these people have put me on my guard instead of filling me with confidence that my financial planning will soon be in hand. I am alarmed by the IFA 'investment risk' questionnaires which seen de rigueur: if you can't sit down with someone and after 2 hours they still need to issue you with a multiple options questionnaire 'to better understand the needs of the client' then either something's wrong with their cognitive faculties or they're hiding something from you. That is how sceptical these two interviews have left me I am sorry to say.

My gut reaction is now to let Hargreaves advise, I will be getting an HL biased picture but they are a known quantity, neither IFA praised HL to the skies but neither did they speak poorly of them. HL would be giving me advice on investments and pension options and the percentage I'd pay would be on my investment portfolio, it would not draw in the value of my property. I'm told banks are useless for advice and solicitors can't be trusted to suggest impartial IFAs, my options are narrowing it seems to me?

dunstonh

I am alarmed by the IFA 'investment risk' questionnaires which seen de rigueur: if you can't sit down with someone and after 2 hours they still need to issue you with a multiple options questionnaire 'to better understand the needs of the client' then either something's wrong with their cognitive faculties or they're hiding something from you. That is how sceptical these two interviews have left me I am sorry to say.

Most IFAs can tell the risk profile of the individual very quickly and in a conversation style. However, a conversation provides no audit trail. A questionnaire does. It can also provide valuable information on understanding when used in discussion. A number of the questions are there to ask the same thing in a different way. Designed to see if the person really understands or not. With the face to face ones I have done I would say most require me to question further as there is a contradiction in the response to how the conversation went. Even the postal/internet completed ones I get often require me to throw out an email or phone up for clarification on conflicting answers.

Every IFA out there can tell you that people will say they understand or accept risks and know it can go down but they dont mind. However, when it goes down, a number of those will phone up questioning why it has gone down and they didnt know it would. The questionnaire gives an audit trail on one hand and helps discussion and understanding on the other.

neither IFA praised HL to the skies but neither did they speak poorly of them.

If HL don't get you to do a risk profiler, I would be amazed. However, no adviser is in a position to really comment about another adviser reliably beyond facts. The fact they did not speak poorly of them is to their credit. There isnt much you can say about HL in the negative other than they are not IFAs and they are expensive and they charge VAT (which is usually avoidable)

L would be giving me advice on investments and pension options and the percentage I'd pay would be on my investment portfolio, it would not draw in the value of my property.

That is the normal way. You dont include property with any IFA.

'm told banks are useless for advice and solicitors can't be trusted to suggest impartial IFAs, my options are narrowing it seems to me?

Solicitors are no longer required to recommend IFAs. They can recommend restricted now. Banks only recommend their own sales reps.

jem16

orwen wrote: »

"2% on £250k is damned expensive"

Thanks. The property alone comes to more than that!

Forget the property - it's nothing to do with it.

Your investments are around £260k. 1.5% and 2% of that amount is damned expensive as dunstonh says.

Percentages are fine if they have a cap on them. I would have thought you should be aiming for no more than £2k initial fee but perhaps Dunstonh can give you an idea if that's reasonable or not.

orwen

Thanks to all - I haven't looked at this link yet http://www.retireeasy.co.uk/

It's a relief to learn that the property value won't be included in the percentage charged. The last IFA gave me a link to an online risk questionnaire, I completed it but it did not return a satisfacory acknowledgement. The IFA then said he'd send the questionnaire as a paper exercise, this never materialised. It has made me rather sceptical of these exercises, I have the irrational notion that I am not giving the answers that the IFA wants, whatever they are?

bigadaj

orwen wrote: »

Thanks to all - I haven't looked at this link yet http://www.retireeasy.co.uk/

It's a relief to learn that the property value won't be included in the percentage charged. The last IFA gave me a link to an online risk questionnaire, I completed it but it did not return a satisfacory acknowledgement. The IFA then said he'd send the questionnaire as a paper exercise, this never materialised. It has made me rather sceptical of these exercises, I have the irrational notion that I am not giving the answers that the IFA wants, whatever they are?

The answers the ifa wants are primarily to fill in the files that he'll be audited on. An unfortunate consequence of detailed regulatory scrutiny is that the paper trail needed to justify their advice is the first thing that needs to be completed.

I wonder if anyone has complained that they've been set up with investments that are well below their tolerance for risk and volatility, with a probable reduction on returns, that would be my bias in a similar situation, ie invest below someone's risk tolerance rather than above it.

LXdaddy

@Orwen we have just been through these same initial meetings with three IFAs so I can understand your position.


The initial meetings are free of charge and do indeed serve the purpose of the IFA finding out if you would be a worthwhile client. But they also let you decide if this is a person who I could have a relationship with, would they be ale to help me as I go forward.


You certainly won't get any specific advice in the initial meeting but you should understand if the IFA is knowledgeable in the specific area that is of significance to you.


I'm close to moving into retirement so I wanted to find someone who could advise on the transition and how to refocus us from wealth accumulation into income generation. One of the IFAs I picked from unbiased.co.uk actually put me on to his partner who was more appropriate than himself.


On the question of the value of your house - that becomes interesting in terms of the total value of your estate for inheritance planning purposes. But where a percentage fee is quoted it is applied against the "Funds Under Management" value - so the house value would certainly be excluded as would any other assets or savings that the IFA was not managing for you.


Our chosen IFA quoted a fixed price (based on about 6 hours of charge) for the fact finding (which was a second meeting of about 2 hours) and initial preparation of our plan, then if we want him to implement the proposals 1% of the funds under management. Annual reviews from then would be 0.5% of the funds under management. We do have an option of using an hours based fee too. And of course we can take the approach of not having him implement the proposals and doing it ourselves.