Cost of financial advice

Audaxer

beamyup wrote: »

Seriously now though, are we really thinking that IFAs can pick funds that beat the market after charges (fund charges that is - not theirs obviously !)?

No, but for someone not confident about selecting funds for a large portfolio, a good IFA with reasonable charges is probably the best option. I think the difficultly is finding a good IFA, as they are mostly in small firms that don't need to advertise. The large companies that do advertise, seem to be mostly Wealth Management companies with even higher charges.

dmelife

What’s the point of trying to convert you to my way of thinking. You can’t be objective and neither can I.

I know our portfolios, of individual shares or funds, can beat most passive funds by a significant margin. I check this regularly so that I can demonstrate it to clients. Our process has been developed over 17 years and we have a vey highly qualified full time investment manager who monitors and constructs the portfolios and a full time analyst to support the research. We are not your average IFA and we don’t buy the average funds. We do consider costs, but we believe that it is often worth paying about 0.6% per annum extra for the longer term gains and lower volatility.

We do have a passive portfolio for clients who are more concerned with cost than performance but when presented with the choice, most ask for active. We don’t benefit from our active portfolio, our charges are the same for our advice regardless. Plenty on here could do with remembering that you pay for the advice not performance. An IFA is not there to just pick a couple of funds.

If you are clued up enough to manage your own investments then great, but most are not and they can’t be bothered either so they choose to pay for advice.

DT2001

AnotherJoe wrote: »

I suspect your IFA is doing this because it gives you the impression that its necessary to cycle your investments and of course since you cant judge what to do thank goodness you have someone [STRIKE]leeching[/STRIKE] charging 0.5% who can. How many funds have you got and whats their average lifetime?

I have 13 funds in my ISA’s, 3 pots for SIPP’s each with about 8 funds in each (some overlap).
I have a lowish risk portfolio that has produced about 5% p.a. net of all charges. In has not fluctuated as much as the markets.
My IFA saved me more than the initial fees with good advice when I invested a bonus payment.
I do not want to spend the amount of time researching funds and more importantly strategies that I think is necessary to achieve sufficient knowledge. It is an ongoing time constraint.

If my investments produce enough income for us to do what we want without spending the time doing the role of the IFA surely that is the point.

cfw1994

DT2001 wrote: »

I have 13 funds in my ISA’s, 3 pots for SIPP’s each with about 8 funds in each (some overlap).
I have a lowish risk portfolio that has produced about 5% p.a. net of all charges. In has not fluctuated as much as the markets.
My IFA saved me more than the initial fees with good advice when I invested a bonus payment.
I do not want to spend the amount of time researching funds and more importantly strategies that I think is necessary to achieve sufficient knowledge. It is an ongoing time constraint.

If my investments produce enough income for us to do what we want without spending the time doing the role of the IFA surely that is the point.

Good to hear you are happy with your advice!
Curious if you can share the 'good advice' they gave you when investing the bonus payment?
Thx

DT2001

Deleted_User wrote: »

Reviewing holdings and changing funds twice a year is an excellent way of ensuring underperformance.

My comment should have read, one fund change per year not per review, if that makes any difference.

When I was younger and bought and sold shares and funds I reviewed more often and fiddled with the portfolio regularly. Had some spectacular failures but luckily more steady successes. Overall I was lucky, IMO, and I tried to do a lot of research.

If the changes are for changes sake then your comment is valid however if the portfolio achieves what I hope for (steady progress) and would have allowed my SWR, it has performed?

DT2001

cfw1994 wrote: »

Good to hear you are happy with your advice!
Curious if you can share the 'good advice' they gave you when investing the bonus payment?
Thx

It was twofold. Salary sacrificing the bonus to reduce NI and utilise previous years allowances. Then George Osborne tweaked the annual allowance rules and I was able to pay in to reduce income below HRT threshold and ‘keep’ my child benefit.