IFA advice to 'hold on to my cash' post Brexit!

sunshinesadly

Hello

I recently (pre-Brexit vote) surrendered an endowment policy with a view to investing the money in a Stocks and Shares ISA.

Yesterday an IFA advised, by email, that I should hold on to my cash unless I was feeling 'ultra brave'.

Is this sound advice, or is investing in a multi-fund S+S ISA in the current climate a perfectly sane and reasonable thing to do??!!

TheTracker

sunshinesadly wrote: »

Hello

I recently (pre-Brexit vote) surrendered an endowment policy with a view to investing the money in a Stocks and Shares ISA.

Yesterday an IFA advised, by email, that I should hold on to my cash unless I was feeling 'ultra brave'.

Is this sound advice, or is investing in a multi-fund S+S ISA in the current climate a perfectly sane and reasonable thing to do??!!

What does the IFA you should do with the Stocks and Shares you already hold?

dunstonh

Is this sound advice, or is investing in a multi-fund S+S ISA in the current climate a perfectly sane and reasonable thing to do??!!

Depends on your risk profile and level of understanding and knowledge.

I have several cases on hold and I have some that are being processed as normal. Each one has had an individual conversation and a decision made after that.

TheTracker

If nothing else, it is a good opportunity for you to discuss Home Bias with your IFA. Home currencies tend to tank when the home market does, meaning foreign funds held locally are not greatly affected. What % of your portfolio is UK equity? A global tracker like VWRL, or even a multi asset fund with a hefty dose of UK funds like VLS100, are now at 1 year highs, albeit with Sterling a big part of that story.

dunstonh actually explained it quite well here.

I would also seek in writing from the IFA in writing what conditions in their opinion would precipitate a return to the market, and if relevant why they didn't advise you of this before the referendum.

bigfreddiel

sunshinesadly wrote: »

Hello

I recently (pre-Brexit vote) surrendered an endowment policy with a view to investing the money in a Stocks and Shares ISA.

Yesterday an IFA advised, by email, that I should hold on to my cash unless I was feeling 'ultra brave'.

Is this sound advice, or is investing in a multi-fund S+S ISA in the current climate a perfectly sane and reasonable thing to do??!!

Your post seems to say the IFA just mailed you out of the blue!

Do you actually know him?

Have had your initial meeting?

Does the IFA know your risk profile.

Cheers fj

sunshinesadly

bigfreddiel wrote: »

Your post seems to say the IFA just mailed you out of the blue!

Do you actually know him?

Have had your initial meeting?

Does the IFA know your risk profile.

Cheers fj

IFA emailed on the back of an email I sent to him, so no, not out of the blue. If it had been out of the blue I would have considered it spam and ignored it.

I do not 'know him' yet, would be the accurate answer. He took over from someone I was dealing with at the company who left mid-advice, so to speak. I guess he would like a professional relationship because he'd like me to buy stuff off him.

All dealings over the phone, see above. Original dealings with his colleague.

The IFA should know my risk profile if he's read my file properly. Which, in itself, is a good reminder thanks- I should go ask him!

sunshinesadly

TheTracker wrote: »

What % of your portfolio is UK equity? A global tracker like VWRL, or even a multi asset fund with a hefty dose of UK funds like VLS100, are now at 1 year highs, albeit with Sterling a big part of that story.

I was going for the Vanguard LS 60, has a fairly good spread but from memory not sure what percent is UK. Would have to go look it up!

sunshinesadly

TheTracker wrote: »

What does the IFA you should do with the Stocks and Shares you already hold?

The only other S+S I have are in a stakeholder pension. Advise was along the lines of 'if you are not already invested' then sticking with cash is the safe option. So presume his advice would be leave them alone.

Thinking of the other posts here it does seem clear that the advice was flippant and off-the-cuff and he may not have read up on my risk profile.

dunstonh

sunshinesadly wrote: »

The only other S+S I have are in a stakeholder pension. Advise was along the lines of 'if you are not already invested' then sticking with cash is the safe option. So presume his advice would be leave them alone.

Thinking of the other posts here it does seem clear that the advice was flippant and off-the-cuff and he may not have read up on my risk profile.

He may well be considering your knowledge and behaviour. You have no past investing history and you have a basic pension product that is largely obsolete. So, going in at a volatile time does cover greater risks than normal.

Yes, a pension is an investment product. However, just by having it does not make you knowledgeable or have a sufficient understanding of risks. The fact is is a stakeholder would suggest that you don't really follow investments and if you read ombudsman decisions, you will see that they do not consider the fact you have unit linked funds in a pension as sufficient grounds to indicate you know that investments will go down as well as up because it doesnt mean you read the statements or engage with the investments in any way. You may do but then the question is, why do you have a stakeholder pension then?

Risk profiling covers attitude to risk, capacity for loss, behaviour, knowledge and understanding. You could have a high attitude to risk in answering the questions but your behaviour may suggest otherwise. I have a client who periodically phones up to ask to invest more in higher risk areas. Typically funds she has read about in the press. However, consistently I have to remind her of the levels of losses but do it in a roundabout way to get her to realise it. What she says and what she does are two different things. So, you cannot just rely on a few questions when looking at risk profilers.

All that said, it may well be an off the cuff remark. It may also be a test on your risk profile. For example, if you agreed then it would support a more cautious view. If you disagreed and told him you wanted to proceed then it would indicate a more adventurous view. That conversation is great audit trail for an IFA in supporting the risk level selected.

sunshinesadly

dunstonh wrote: »

The fact is is a stakeholder would suggest that you don't really follow investments and if you read ombudsman decisions, you will see that they do not consider the fact you have unit linked funds in a pension as sufficient grounds to indicate you know that investments will go down as well as up because it doesnt mean you read the statements or engage with the investments in any way. You may do but then the question is, why do you have a stakeholder pension then?

I have a stakeholder because it was provided for me by my previous employers. No brainer. They paid in. The charges are low. I rejigged the funds my stakeholder was investing in to get a spread of funds nearer to my risk profile (within the limited range allowed by the stakeholder). Had some positive feedback from one IFA I discussed this with.

I am late to investing. I have some basic knowledge, done a lot of reading and some discussing with a financial coach (non-selling ex-IFA) but don't 'follow the markets'. My risk profile is medium to high/medium (I think IFAs score this at 6 or 7 perhaps).

sunshinesadly

dunstonh wrote: »

Risk profiling covers attitude to risk, capacity for loss, behaviour, knowledge and understanding. You could have a high attitude to risk in answering the questions but your behaviour may suggest otherwise. I have a client who periodically phones up to ask to invest more in higher risk areas. Typically funds she has read about in the press. However, consistently I have to remind her of the levels of losses but do it in a roundabout way to get her to realise it. What she says and what she does are two different things. So, you cannot just rely on a few questions when looking at risk profilers.

Appreciate your views. I realise that risk profiling is probably a blunt instrument, and am thankful for your reminder.