Financial Advisors - True Potential

CNJ

Hi, I am wondering whether anyone has experienced, or heard of, the following.


My wife and I received a phone call from our financial advisors; a firm we have dealt with for ten years or so, who have provided friendly advice and management of our savings. Without a long explanation basically they were giving us the big elbow. Our savings are invested through an investment management business used by our advisors and they want us to leave the existing investment management firm and join True Potential. Our existing investment managers are, by the way, one of the investment partners of True Potential.


The reason given for wishing us to change the manner of our business dealing was due to the ever increasing administration needed to comply with more and more FCA regulations. To undertake these compulsory tasks will require the advisors to increase staff, a road they do not want to go, or cut back on their existing client base to a level whereby, the remainder can be adequately serviced with their existing resources.


We are not to be totally abandoned, however, and have been left with three choices. 1) We may stay with the existing advisory firm but be charged increased servicing and administration costs. 2) End our relationship with the firm and find new advisors or undertake the investments ourself. 3) Transfer our investment to another firm of financial advisers.


I have read the forums involving True Potential and I am not convinced their business methods are suited to our needs. Also the reason given for the need to change investment managers is , to say the least, obtuse. I will be interested to read any replies that are based on similar occurrences. Thank you in advance.


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SavingisFun

I know TP quite well. What exactly do you want to know?

SonOf

The reason given for wishing us to change the manner of our business dealing was due to the ever increasing administration needed to comply with more and more FCA regulations.

That sounds like a cop out. What it could be interpreted as saying is that they will save a lot of money and earn more by moving to a highly restricted service that offers a one provider solution.

FCA regulation is the same for FAs as it is for IFAs. The exception is a few extra bits covering target market and typical products use. However, when an FA goes to a single tied provider, then the provider does all the documents on a one-size-fits-all basis.

The regulatory changes in the last few years that have created a significant new burden are the RDR (2013) and MiFIDII (2018). However, both of those things put the same burden of work on the adviser-client relationship whether they are restricted or independent.

No IFA goes to a tied provider for the benefit of their customers. It is detrimental as the IFA is whole of market for selection of products and a tied provider can only offer their own product.

The general rule of thumb is to either DIY or use an IFA. Not an FA and not a firm that has "wealth management" in their name or tagline/description.

bostonerimus

[STRIKE][/STRIKE]I've never heard of True Potential, but the name puts me off immediately. Some googling shows me a fancy website of a Wealth Manager that seems to work with some big financial companies to sell some funds and portfolios to FAs and charges around 1% ongoing fees on the funds. I took a look at their Growth Portfolio as it has a similar percentage of equities to my portfolio. Over the last 4 years it had a cumulative return of 44% while my mostly index portfolio returned 47% over the same time and I did absolutely nothing worth any sort of fee, so what are your financial people doing for their money...or rather your money.

I would try to eliminate layers of administration wherever possible and if you go with a professional use an IFA and not an FA who sub contracts to someone who subcontracts to someone else etc.

[Deleted User]

It seems as if your friendly advisers are being squeezed out of the market and have succumbed to the temptation of a potential kick-back from True Potential. That alone should make you suspicious of the True Potential business model, and rightly so imo.

CFrood

No IFA goes to TP for the benefit of their customers. It is detrimental.

Could SonOf explain why please? Is it for the reasons given by bostonerimus?
My IFA advised me to move my old DC pension to the TP platform. Before making the move however, he has gone to work for TP as he is close to retiring. Should I take his advice or look for another IFA? He still says moving to TP is a good deal (the platform fee is high but there are no fees for putting money in or taking it out), he was recommended and I trust him, but I now have this nagging doubt....

capital0ne

Well, looking at their little performance table https://www.tpllp.com/true-potential-portfolios/ it doesn't look that good or that bad, Anyone with a nice balanced portfolio of equities could do exactly the same with very little effort.

SonOf

CFrood said:

No IFA goes to TP for the benefit of their customers. It is detrimental.

Could SonOf explain why please? Is it for the reasons given by bostonerimus?
My IFA advised me to move my old DC pension to the TP platform. Before making the move however, he has gone to work for TP as he is close to retiring. Should I take his advice or look for another IFA? He still says moving to TP is a good deal (the platform fee is high but there are no fees for putting money in or taking it out), he was recommended and I trust him, but I now have this nagging doubt....

An IFA can select from the whole of market.   As everyone is different, an IFA may use a certain simple option for people with low understanding or a product/investment for transactional clients or a different option for high value clients or knowledgeable investors or ethical/sustainable investors etc etc.    Platform pricing can suit different values.  So, an IFA may place business with 3 or 4 different platforms or several different providers depending on the consumer and will use different investments within them to suit different types.    A restricted single tied option can only offer from their own product range for everyone.    So, chances are it will not be the best option for everyone.  It may be the best within their product range.  It will almost certainly be suitable for you in terms of suitability.   But its unlikely to the best when compared to what is available from the whole of market.

A rep of TP is not an IFA.  They are an FA.  So, you should stop referring to him as an IFA. 

In most cases, cost is where tied agents tend to suffer.   What is your bottom line ongoing cost?   

CFrood

Thanks CapitalOne and SonOf.
The platform fee is 0.4%, fund fee 0.8% and 0.5% advisor fee. 

fred246

You need to knock those fees down a bit and then you'd see the true potential of the investments.

fred246

'Whole of market' always makes me laugh. An IFA gave me quotes for life insurance. She had scoured the 'whole of the market' for ages to get me the best deal. Our of interest I quickly googled life insurance and 10 minutes later had a better quote from Tesco. £5 a month cheaper. £1500 cheaper for the lifetime of the policy so I took it out. She was absolutely furious because she missed out on her commission. She wanted me to be £1500 worse off.