IFA has changed company, wants me to go with him

Malthusian

bostonerimus wrote: »

So 1.25%.....that's a massive drag on a portfolio...get rid of the IFA and use trackers and maybe you can get the costs to less than 0.5%, which is still high IMHO.. The UK needs some serious changes, not least being the investor's attitude towards charges.

By "high" do you mean more than the going rate or more than you think you should pay? The UK platform market is pretty cutthroat and the difference between the major platforms is in the realm of 0.1% and 0.2% per annum. There are greater disparities in the DIY sector but mostly because of the proliferation of fixed fees, which can either be stunningly cheap or eye-wateringly expensive depending on portfolio size and how much attention the investor is paying. Charges for tracker funds are down to less than 0.1% for mainstream stockmarkets like the UK and US.

People who decide to cut out the cost of an IFA frequently end up paying more than those who take advice (e.g. those who invest on Hargreaves Lansdown and are influenced by the slick presentation into buying Wealth 150 funds or multi-manager portfolios). Obviously, this doesn't apply to savvy MSErs who select cheap tracker funds for themselves or buy Vanguard, but MSE is only a small section of the DIY market.

The post from Bellpenny is interesting. My initial thoughts were that there must be rules against taking clients from one company to another if an IFA moves.

There would normally be a restrictive covenant of some kind. But such covenants have been thrown out in court in recent years. In a nutshell, Bellpenny can stop the departing adviser from taking his address book and ringing round all his old clients to poach them, but if the clients decide for themselves to seek out their old adviser, they can't stop them from moving - they don't "own" the client. It is a grey area and no-one can say for certain whether a restrictive covenant is enforceable until it is tested in court.

In this case it sounds like either the adviser doesn't have a restrictive covenant, or he does and just ignored it.

cloud_dog

bostonerimus wrote: »

So 1.25%.....that's a massive drag on a portfolio...get rid of the IFA and use trackers and maybe you can get the costs to less than 0.5%, which is still high IMHO.. The UK needs some serious changes, not least being the investor's attitude towards charges.

bostonerimus, you appear to have a far too simplistic or even blinkered approach to the different nuances that need to be considered on an individual case by case basis.

I have no qualms with ensuring costs are as cheap as possible, and in trying to ensure consumers drive the market costs lower further but it is naive to simply take a single view approach for all investments for all people. If I wasn't around to assist with my mother's holdings I would much rather she pay 1.25% total cost of ownership for professional advice than for her to have the worry and uncertainty around the where / what / how / balance / re-balancing / holdings focus as time goes on, etc, etc of the investments.

bigadaj

bostonerimus wrote: »

So 1.25%.....that's a massive drag on a portfolio...get rid of the IFA and use trackers and maybe you can get the costs to less than 0.5%, which is still high IMHO.. The UK needs some serious changes, not least being the investor's attitude towards charges.

The post from Bellpenny is interesting. My initial thoughts were that there must be rules against taking clients from one company to another if an IFA moves.

Well as you are in the us then you're opinions about the uk aren't really very valid.

People have plenty of options to diy if they want, though financial education and investor awareness isn't great and could be improved.

I'd be interested to see what adviser charges are in the us, logically it's probably a more expensive environment to operate in being more litigious and so expensive for pi cover.

Why do you think there are rules on an adviser taking clients if he moves? This is purely a commercial arrangement and depends on many things, whether he is an employee, an agent or simply part of a network, the contract of employment or agreement that is legally relevant. Also questionable whether any agreements or contracts are legally enforceable or are restrictions on trade or employment rights.

I thought you were a fan of free markets?