Don't use Hargreaves Lansdown

[Deleted User]

I agree from my my experience.

So, straight away, the report is a balance between the interest of the client and that of the adviser.

Which makes it tricky for the client.

SonOf

ZingPowZing wrote: »

I agree from my my experience.

So, straight away, the report is a balance between the interest of the client and that of the adviser.

Which makes it tricky for the client.

In the FCA's eyes, it is a document that details the advice. It should be a short and to the point as possible.
In the FOS eyes, if it didn't appear in the suitability report, it didn't happen.

So, effectively you have conflicting positions between the two bodies on what the report should be. Because advice is regulated and is legally required to be protected under PI insurance, you have compliance, regulatory and insurance company requirements going into the reports.

They used to be known as reason why letters. However, the industry started referring to them as reason why not letters because of the amount of text that went into them that actually explained all the other things that were not being done exceeded how the amount of text on the reasons why something was being done.

To this day, the advice often boils down to one or two pages. The rest is risk warnings, alternative options, calculations or more detailed explanation. Also, the FOS have guide that they assume people stop reading after 7 pages (in reality, most dont read it at all). So, you have to front load the advice in summary and then have pages in detail.

One thing to be clear is that advice is advice whether it is to something or do nothing. Both carry liability.

Malthusian

ZingPowZing wrote: »

It's unlikely those compelled to buy advice from an IFA will be comforted by the claim that he is covering his behind from both directions, as Malthusian reports.

Nobody is compelled to buy advice. You can just stay in the DB scheme.

Anyone for whom the case to transfer is overwhelming (e.g. on their deathbed with no spouse and a choice between a six-figure CETV paid to their heirs or a four-figure return of contributions) is unlikely to carp much about paying four figures to an IFA.

If they would, that's fine - there is still no compulsion to buy advice as they can simply let their heirs inherit four figures.

Since you have to employ one to comply with regulations, and there's an even chance any particular IFA will provide the correct advice

Not true. As long as you select a reputable IFA (i.e. one who has been in business for many years with numerous satisfied long term clients) the chance that particular IFA will provide the correct advice is over 95%, as demonstrated by FCA complaints statistics. If you select a scammer (i.e. you take advice from a business that has been around for less than three years because they offered you chicken and chips), the chance is 0%.

[Deleted User]

Nobody is compelled to buy advice. You can just stay in the DB scheme.

That is disingenuous; everyone should explore the option of transferring imo.

My case wasn't overwhelming but two reputable IFAs arrived at opposite conclusions. I could go into detail of the points finessed by either to justify their respective recommendation. Each made a recommendation predicated on his own interest.

I didn't like paying for either but if I had taken the first recommendation at face value, I would have far more to regret than his fee.

SonOf

My case wasn't overwhelming but two reputable IFAs arrived at opposite conclusions. I could go into detail of the points finessed by either to justify their respective recommendation. Each made a recommendation predicated on his own interest.

I thought you used HL who said it was bad and an IFA that said it was ok. Are you now saying that there was another IFA who said it was bad to transfer it as well?

[Deleted User]

No, my Financial Adviser at HL made a negative recommendation, another guy made a positive one.

SonOf

ZingPowZing wrote: »

No, my Financial Adviser at HL made a negative recommendation, another guy made a positive one.

For reference, HL are not IFAs. They are restricted FAs. Restrictions can vary firm by firm but typically can be on product choice (will not consider certain products), investment choice (will not consider particular investments) and may also be on methodology and internal rules. IFAs are not allowed to restrict. Any hint of a restriction and they are not allowed to refer to themselves as IFAs.

[Deleted User]

Oh right. I did not know that. What HL were keen to stress at the outset was that their adviser was FCA registered, and that he could potentially arrange a transfer along the lines that I envisaged; that is with full control over all investment decisions. I assume others have that arrangement with HL.

If my choice does raise an eyebrow or two, I should add that my top concern looking in was to protect against a scam and HL are the biggest name in the business. Also, I am quite local to their office; I thought it would be useful to be able to drop in! To be fair to Hargreaves Lansdown, their adviser did say at the beginning that HL persevere with a conservative approach to investment. That too seemed a plus to me. I thought a rigorous examination of all the angles a good thing - I thought that I had a clear case to transfer but was definitely open to persuasion.
The inducements HL offer is that they are likely to be able to give a clear indication of what their recommendation would be before committing to the report stage and that the client can, in any case, just find another provider in the event of a negative recommendation. Neither proved true in my case.

SonOf

Oh right. I did not know that. What HL were keen to stress at the outset was that their adviser was FCA registered, and that he could potentially arrange a transfer along the lines that I envisaged; that is with full control over all investment decisions. I assume others have that arrangement with HL.

All advisers have to be authorised by the FCA. However, not all advisers are equal. The major difference is FA vs IFA. FAs are allowed to restrict their advice. IFAs are not allowed to restrict their advice. That is why you always see people stating that if you need advice you should use an IFA. Not an FA.

I should add that my top concern looking in was to protect against a scam and HL are the biggest name in the business.

No they are not. They are big but not the biggest. And the bulk of their size is down to the fact they run their own platform and its mostly DIY investors that go with them.
IFAs won't run their own platform as you would then question how they can be independent if they did that (note, that is something that is in development at the moment as there are software providers looking to build platforms for IFAs to use which are whole of market and allow the IFA to have no platform charges).

To be fair to Hargreaves Lansdown, their adviser did say at the beginning that HL persevere with a conservative approach to investment.

I would criticise that comment. An adviser is there to give advice that matches your needs. They should not impose their views on risk on to you. If you are a cautious investor then they should position your portfolio to match you. If you are adventurous then they should match that. Irrespective of what they feel at a personal or corporate level. It is your advice. Not theirs. Indeed, that "conservative" approach may well be what led to them to the not to transfer decision. So, what you feel was a plus to you, could actually be a negative.

I thought a rigorous examination of all the angles a good thing - I thought that I had a clear case to transfer but was definitely open to persuasion.

You may feel they were being rigorous but then they were still recommending Woodford's income fund right up to when it was suspended. Whilst many of the IFA research providers had long dropped it due to its high level of illiquid investments. Size does not mean quality. IFAs are generally small firms of 1-6 advisers. They usually buy in their research data from independent third parties who do not have commercial interests to promote funds in the same way HL did.

So, in part, your reasons for selecting HL, led to the outcome you received.

The larger the firm is, the greater the systems and controls need to be on their staff. So, its very common to find larger firms are more "conservative" in their approach even when it's not in the interests of the consumers they are advising. This is in part why most large firms have ceased to be IFAs and moved to FA status.

[Deleted User]

Thank you SonOf..

I would agree with all of the above and hope that it deters others from approaching Hargreaves Lansdown and replicating my mistakes. But I imagine there are others already in the cement-mixer.

Those in the process of buying their advice please take note before committing past the analysis stage.
Those at the end of their process and not satisfied, please take your case to the Financial Ombudsman.