IFA Ongoing Fees

lisyloo

cloud_dog wrote: »

Absolutely, I don't disagree.

What I was trying to say was that in line with normal people IFAs do not actually really have a crystal ball so they cannot actually really choose a better performing fund. Yes, they can exclude the constantly underachieving investments and by that process they can help ensure a higher probability of 'making more' but the fund will go wherever the underlying investments take it; nothing an IFA can do about it other than to ensure its volatility fits within your tolerance profile (or at least the overall portfolio meets that requirement).

They can have knowledge of the fund companies, fund managers, platforms and get updated with industry news e.g. when Neil Woodford changes employer, or when a platform restructures its costs or when new funds are launched.
It’s a massive job for someone DIY to keep on top of all of that as well as geo political events.

I agree IFAs can’t make the funds produce mathematically better, results but the can make sure 100% of the time that you are invested in the correct funds for geo political events and any fund managers/fund/platform changes and that can still happen if my indidvidual IFA is on holiday/sick/paternity/compassionate leave.

I am not saying an IFA can’t beat a keen DIYer.
What I’m saying is that I think they will beat ME as I’m not inclined or enthusiastic about doing it.

If I accept that an enthusiastic DIYer can do the Job as well as an IFA, then can you accept that an IFA May be better than the performance of someone who’s not enthusiastic and knows they won’t do a good job as they aren’t interested in it?

lisyloo

Thrugelmir wrote: »

That's a very broad generalisation. Still requires selection of some kind.

As I said it was a very simple example as I’m an unsophisticated investor.

That’s precisely a good example of why an unsophisticated shouldn’t be in charge of selecting funds (especially if they aren’t interested).

What further evidence do you need that some of us won’t be good at it ? :T

You’re telling me I’m not clever enough and I’m agreeing with you.

Would you not agree that all those people that invested into LFC would have been better off consulting an IFA about their decision?

The mistake I think people are making is assuming that everyone has the capability (let alone the time or inclination) to make good asset/fund/platform/geo-political decisions when there is plenty of evidence to the contrary.
Lots of women undertaking childcare or elderly parent care simply don’t have the time.

shinytop

I agree with the above. My OH is intelligent (more so than I am in lots of areas) and I've no doubt she could learn to manage our finances/investments adequately. However, she would not want to and it would be very stressful for her. If I were to pop my clogs I'd rather she spent a few grand a year on an IFA than suffer that stress.

Malthusian

lisyloo wrote: »

Would you not agree that all those people that invested into LFC would have been better off consulting an IFA about their decision?

Ah, but they didn't need to consult an IFA as they were getting 8% per year growth without taking any material risk. Thus proving how much IFAs rip you off by charging for advice.

This is not said to add insult onto injury for LCF investors, but to illustrate the pitfalls of not querying your assumptions, and querying your assumptions all the way down. Or paying someone else to do it for you, who is liable and covered by a compensation scheme if they fail to do so.

Crabby

I agree IFAs can’t make the funds produce mathematically better, results but the can make sure 100% of the time that you are invested in the correct funds for geo political events and any fund managers/fund/platform changes and that can still happen if my indidvidual IFA is on holiday/sick/paternity/compassionate leave.

What utter ******** , in November 2007 with redundancy money in hand (I didn't have a clue about investing), my now ex IFA (I'd previously used him to set up a mortgage), suggested a portfolio of funds, after showing me lots of graphs of how well they where doing and promising me, (well it sounded like a promise at the time) 10% PA .
In April 2009 after losing nearly 40% in value, he suggested that my appetite for risk maybe wasn't so great. It took several years to get back to square one. When fees etc became transparent, I realised how much he had made from my money against how much I hadn't, why he could shop at Sainsburys, and I shopped at Aldi, that's when he became my ex IFA.

lisyloo

Crabby wrote: »

What utter ******** , in November 2007 with redundancy money in hand (I didn't have a clue about investing), my now ex IFA (I'd previously used him to set up a mortgage), suggested a portfolio of funds, after showing me lots of graphs of how well they where doing and promising me, (well it sounded like a promise at the time) 10% PA .
In April 2009 after losing nearly 40% in value, he suggested that my appetite for risk maybe wasn't so great. It took several years to get back to square one. When fees etc became transparent, I realised how much he had made from my money against how much I hadn't, why he could shop at Sainsburys, and I shopped at Aldi, that's when he became my ex IFA.

Have you compared this with how well you might have done yourself in the aftermath of the banking crisis?

segovia

Crabby wrote: »

What utter ******** , in November 2007 with redundancy money in hand (I didn't have a clue about investing), my now ex IFA (I'd previously used him to set up a mortgage), suggested a portfolio of funds, after showing me lots of graphs of how well they where doing and promising me, (well it sounded like a promise at the time) 10% PA .
In April 2009 after losing nearly 40% in value, he suggested that my appetite for risk maybe wasn't so great. It took several years to get back to square one. When fees etc became transparent, I realised how much he had made from my money against how much I hadn't, why he could shop at Sainsburys, and I shopped at Aldi, that's when he became my ex IFA.

Were you paying for ongoing advice as a % of the funds that failed?

Malthusian

Crabby wrote: »

What utter ******** , in November 2007 with redundancy money in hand (I didn't have a clue about investing), my now ex IFA (I'd previously used him to set up a mortgage), suggested a portfolio of funds, after showing me lots of graphs of how well they where doing and promising me, (well it sounded like a promise at the time) 10% PA .
In April 2009 after losing nearly 40% in value, he suggested that my appetite for risk maybe wasn't so great. It took several years to get back to square one.

And how much are they worth now, and how much would they be worth if you'd not taken advice and left the money in cash since 2007?

If you cashed them in how much would they be worth now if you'd followed his advice to not panic?

Crabby

Have you compared this with how well you might have done yourself in the aftermath of the banking crisis?

If I'd put it in the best paying savings ISA at the time I'd have had a few years of growth. But this really is a mute question.

Were you paying for ongoing advice as a % of the funds that failed?

Yes.

And how much are they worth now, and how much would they be worth if you'd not taken advice and left the money in cash since 2007?

Another mute question.

If you cashed them in how much would they be worth now if you'd followed his advice to not panic?

I didn't panic, with hindsight, (a wonderful thing), I realise he did, (by moving me into a less risky portfolio), I blindly followed the advice that I'd been paying for. I really did not have a clue, but who likes to look ignorant ( I know this is not a defence).

lisyloo

Crabby wrote: »

If I'd put it in the best paying savings ISA at the time I'd have had a few years of growth.

That is not a good pension investment strategy as it guarantees shortfall risk I.e. your capital will go down in real terms.

What we are comparing here is a DIY investing strategy and an IFA strategy.
It’s quite possible that passive investing would have done worse than your IFA (or DIY active investing).

So you don’t actually know whether your IFA benefitted you at all.
They should have explained to you that there would be periods where investments can fall.
If you don’t understand that then DIY investing is not really a suitable alternative.

If you felt you were missold - did you complain about the advice?
That is one of the things you CAN do if you’ve used professional advice.

If you claim you didn’t have a clue then what is your proposed alternative?
DIY or savings account/mattress are not suitable options.