Do professionals in finance make it overly complicated?

bigfreddiel

Professionals working in the finance industry make it complicated for their own esteem, when in reality it's all very simple?

With a small amount of research, and all the info available for free online, I believe anyone can set up an effective portfolio quite easily and cheaply. The finance industry deliberately frightens most people to go it alone so they can keep on earning from advice that anyone can discover for themselves and then realise it's all just guesswork.

It's a bit like buying a newspaper and then paying someone to read it to you!

Without any advice I've managed to go fro unemployed and on the dole less than twenty years ago to a net worth well in excess of £1m and a pension of £30k after tax. I've never been a higher rate tax payer either, well not until now that I've retired so the part time job I do will have to go.

Had I tried harder, I would have been at least £2m+ over my current worth easily.

It's not hard so don't let anyone tell it is! Good luck fj

Thrugelmir

bigfreddiel wrote: »

With a small amount of research, and all the info available for free online,

I never realised all research is free and available online. Vast majority of quality research has to be paid for. With the situation only going to get worse.

darkidoe

bigfreddiel wrote: »

Professionals working in the finance industry make it complicated for their own esteem, when in reality it's all very simple?

With a small amount of research, and all the info available for free online, I believe anyone can set up an effective portfolio quite easily and cheaply. The finance industry deliberately frightens most people to go it alone so they can keep on earning from advice that anyone can discover for themselves and then realise it's all just guesswork.

It's a bit like buying a newspaper and then paying someone to read it to you!

Without any advice I've managed to go fro unemployed and on the dole less than twenty years ago to a net worth well in excess of £1m and a pension of £30k after tax. I've never been a higher rate tax payer either, well not until now that I've retired so the part time job I do will have to go.

Had I tried harder, I would have been at least £2m+ over my current worth easily.

It's not hard so don't let anyone tell it is! Good luck fj

Would be good to hear your journey to retirement. I think the funamentals are the same for everyone, high savings rates, reinvesting dividends, compounding. It is the execution that is difficult and takes some deliberation.

tacpot12

I do think we in the finance industry make simple things complicated, and in some cases that this is done to justify the fees for services and advice.

I work in finance, in mid level management , so I understand many of the concepts that I see being over complicated. In my own company I see care being taken to prove high quality services, but little regard for reducing costs so that they actually represent the value that we add. I also little regard for keeping things simple.

I was looking around the market for the first time yesterday for information on a basic savings account where you could temporarily invest money that was left to two children in trust in a will, and was bewildered by the different explanations given by different providers of trusts and their products; a really common requirement and yet a bewildering array of jargon and complexity!

One of the main things I think we get wrong is how we talk about risk. It is my opinion that we over emphasis the risks of investing, in part, to justify high fees for professional 'risks takers'. If I invest in a big-brand main-stream equity fund based in the UK am I really likely to loose money in the long term? History says not. Simple concepts such as diversification, actively reviewing the asset classes and markets you are invested in on a regular basis and investing in via the lowest cost methods produce the biggest increases in wealth and reduce the risk of loss. These are what the professionals do, but the lay person can also do it for very low cost.

enthusiasticsaver

I would agree that anyone could invest providing that they do their research and invest appropriately for their level of risk. I actually am a naturally risk averse person so logically I should not be investing at all but being in control of my own investments makes me feel more secure. I understand the benefits of diversification, keeping a lot back in cash so I don't need to access the pot at the wrong time and the impact of high charges. Should have started years ago. I always thought you needed to be rich to invest and needed an IFA. I have also got to the point where I don't worry about the up and downs of the market.

I would encourage anyone who has a small amount spare to look into investing after doing a lot of research. I do think you need to be interested in it though. It is not like sticking a bet on a horse, or it shouldn't be.

manuel_ritz

I agree with you! Whenever you consult professionals in this industry it seems like they always involve in their talks about the risks and disadvantages which makes things more complicated to understand.

BananaRepublic

bigfreddiel wrote: »

Professionals working in the finance industry make it complicated for their own esteem, when in reality it's all very simple?

With a small amount of research, and all the info available for free online, I believe anyone can set up an effective portfolio quite easily and cheaply. The finance industry deliberately frightens most people to go it alone so they can keep on earning from advice that anyone can discover for themselves and then realise it's all just guesswork.

It's a bit like buying a newspaper and then paying someone to read it to you!

Without any advice I've managed to go fro unemployed and on the dole less than twenty years ago to a net worth well in excess of £1m and a pension of £30k after tax. I've never been a higher rate tax payer either, well not until now that I've retired so the part time job I do will have to go.

Had I tried harder, I would have been at least £2m+ over my current worth easily.

It's not hard so don't let anyone tell it is! Good luck fj

Without doubt there's a lot of truth in the above. That said, a lot of people are quite happy to pay an 'expert' to look after their investments, and want to spend their time doing more interesting things, and good for them. And some people are just not good with numbers, and cannot get their heads round the basic concepts. But like you I think most people can understand enough to do well, it's not rocket science is it?

I know people who use IFAs and seem quite happy with the service provided. I manage my own finances, and overall I think I've done pretty well. But I am an engineer who does a job for the fun of it, so I suspect I was never going to be wealthy. Property has been a big source of profit and I missed out on BTL.

Incidentally, if you Google IFA salaries, you might be surprised. They make huge salaries, or at least that is what my search suggested.

BananaRepublic

enthusiasticsaver wrote: »

I actually am a naturally risk averse person so logically I should not be investing at all but being in control of my own investments makes me feel more secure.

As I am sure you know, it is all about risk management. In the long term Western stock markets have been a low risk high return investment. Once you understand risk, you realise that stock market investing can in reality be low risk, as long as you understand the basics e.g. don't panic, don't pull out your money after big falls, diversification, using collective investments not single company shares, and so on.

enthusiasticsaver wrote: »

I do think you need to be interested in it though. It is not like sticking a bet on a horse, or it shouldn't be.

Quite right, it can be if done badly. I have met quite a few people who put some money on a stock market, see it fall in value, take the money out, and never invest again having had their fingers burnt. In reality they did not understand what they were doing and paid the price.

But you don't really need to spend much time on investing, once the basic ground work is done. My best investment fell from grace some years back, professionals said change to other funds, but now it is the top (or near the top) fund in its sector over the last 5 and ten years. I stuck with it, and benefited. No-one knows what the future will hold. We might end up in a 'bend over and apply lips to one's own backside and bid it farewell' situation in ten years for all we know.

BLB53

With a small amount of research, and all the info available for free online, I believe anyone can set up an effective portfolio quite easily and cheaply.

In theory this is true but in practice only a small percentage of the population actually do have a go and of those that do, most fail to get a decent return compared to the market.

There are lots of reasons of course, lure of managed funds, industry advertising, lack of a good plan, inappropriate allocation, unrealistic expectations...I suspect only a small minority could win the game as you have done.

Pincher

What's so complicated?

It's the pilfering that is disguised.

It's the same as building a property, there is no way that you can possibly check up on the foundation, the damp proofing, or even the wall ties. Even if I wanted to, Berkeley Homes imposed a "Black Out" period, to deliberately stop me from visiting the site and check. They even altered the plot plan to steal four feet from my ceiling height in one room.

If the "professionals" are not profiteers, you can just pay into With Profits funds, and TRUST them to allocate the returns fairly.

BookerTee

Pincher wrote: »

What's so complicated?

It's the pilfering that is disguised.

It's the same as building a property, there is no way that you can possibly check up on the foundation, the damp proofing, or even the wall ties. Even if I wanted to, Berkeley Homes imposed a "Black Out" period, to deliberately stop me from visiting the site and check. They even altered the plot plan to steal four feet from my ceiling height in one room.

If the "professionals" are not profiteers, you can just pay into With Profits funds, and TRUST them to allocate the returns fairly.

I am sure that if Warren Buffet had an IFA by his side from day one he would be worth nearly a $million by now. Although his IFA would have long since retired to his private island.