am i the only one ?

dunstonh

That is a tad harsh Darryl.
I think to maximise their commission they would wish to retain a customers business over a lifetime and hope that their customer would recommend them to his/her friends.

its harsh and mostly inaccurate. It is known that there are advisors out there that look at transactions on once only basis and dont care about servicing. However, those that maintain client portfolios will give the same service regardless of either method. Indeed, you may get better service with the commission as its based on the size of the fund. If the fund goes up, so does the commission. Fee based remains the same regardless of performance.

I have gained business from a fee based IFA because he charged a client £83 for three valuations. The client wanted commission based in future to avoid that happening again. He now gets a monthly statement posted to him along with a quarterly update. £83x12 = £960 and no reports. My commission is just over £600 a year.

You have a choice, fees or commission. Whichever you choose, the service from that advisor is unlikely to be any different as its the person that matters.

Darryl

Apologies Robert & DD.

Do not take my comments personally. They are also not inaccurate. My views are based upon my personal experiences, and these are both accurate what I share on these boards.

I simply wanted to highlight the fact that you don't have to use an IFA if you want to make a decision about an investment. Certainly talk to one, if you want to, and consider their recommendations. But, don't for one minute think that the IFA's choice/suggestion is the best one. And, if you shop around/do your own research, you may find you can buy your investment cheaper via discount brokers, etc.

Now, isn't that the kind of thing this website is all about? Finding the cheapest way to get what you want?

Darryl.

Robert_Sterling_3

.No need to apologise to me.
I was only objecting, mildly, to you saying "they have NO incentive" I think that they do have some incentive.

dunstonh

Now, isn't that the kind of thing this website is all about? Finding the cheapest way to get what you want?

Its about value for money. Cheap isnt always best.

You may have had experience that wasnt positive but it doesnt mean that it will be the same for everyone.

But, don't for one minute think that the IFA's choice/suggestion is the best one. And, if you shop around/do your own research, you may find you can buy your investment cheaper via discount brokers, etc.

Its time that you are referring to. If you have the time to spend and understand the workings of the various investment areas, then there is no harm giving it a go.

If you cannot commit the time then you have alternative options. One is just basic reporting, information and recommendations. The other extreme is passing responsibility totally over to somoene else. That is the most time consuming and the most expensive. In this it appears that it wasnt the most beneficial either. However, it could of been.

Reaper

I agree with DD on this one.

I COULD read all the car manuals and do the annual service on my car myself. Some do but I choose not to. I would rather have a garage do the hard work for me even though it costs me more. And even though I have occasionally gone to a garage which did a bad job it hasn't put me off getting my car serviced.

The financial world is much the same. Some people are scared of money, some are bored by it, some just don't have the time. Those people may find an IFA useful.

Personally I am willing to put the time in to do the research so I don't use them, but they are useful for those who would otherwise make poor decisions or worse - no decisions at all.

Robert_Sterling_3

A good analogy IMHO

A little example

Suppose you have a house worth over £500,000 [ well you can dream can't you?  Anyway who knows what the value of your property might be in 10...20...30 years time? ] and you know nothing about IHT.
You  may own your house as Joint Tenants with your wife or husband.
Someone tells you that if you owned your house as "Tenants in Common" then the IHT bill your children had to pay in due course could benefit from two nil rate bands rather than one and that this would save them £100,000 pound from the IHT bill.

This bit of information would be worth more than a Bob or two to you would it not.  For a few more pieces of gold you could end up paying no IHT at all.

The Queen Mother paid no IHT

Pal

The problem is that, because IFAs advice on investment is largely based on second hand research, marketing material magazines and past performance statistics, on average the advice they provide to clients is going to be mearly "average", with half of the people advised doing worse than average and half doing better.

Those people whose investments turn out worse than average then complain that their adviser was a greedy commission seeking conman, while those that benefited quietly spend their money. The overwelming published view then becomes that IFAs are all conmen.

To take this a step further, many of those investors who do badly may decide to "beat the experts" and invest by themselves. Pure random chance suggests that 50% of these people will do better than average, while 50% will do worse. However it is only those that do better than average who take the time to gloat tell people about it, again giving the impression to outsiders that individuals can invest better than the experts.

This is completely illogical. Someone with access to a full-time research department, a team of analysts and access to company management MUST stand more chance of investing better than a time-limited individual with no access to anything but past performance data (charts or company accounts) and online gossip.

I was reading a book recently on the dot.com crash which had statistics in it that confirmed that the majority of individual traders during that period performed worse than the index and many even lost money during one of the largest stock market rises in history.

The only reason that many investment funds do badly is that market performance is generally the average of all investment fund's performance, so someone has to be below average. They also underperform because they are unable to predict the largely random movements that stock prices are subject to (both positive and negative). Individual investors are obviously not immune to these random influences either.

My view is that stock market movements are so random (except perhaps over the very long term) that most people are better off using tracker funds as they are likely to end up better off over a long enough period. If people want to invest their own money then they should stick to those investment that can be analysed relatively easily by an individual, such as property, individual bonds that are held to maturity and so on.

Robert_Sterling_3

In a similar vein....

Many years ago I think it was Hubert Phillips wanted the Football Pools to be classed as a lottery.
He "proved" statistically that the newspapers' tipsters were no better at picking winners than someone use in a pin i.e. Picking at random.
He went on to point out that if you followed the tipsters as many peope did then when and if you won you would get a small prize ( sharing it with other winners) than if you used a pin.

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