IFA ongoing fee..Why pay?

AlanP_2

ZingPowZing wrote: »

To continue with bowlhead's Grand National simile:
Putting your trust in Uncle Ifa may be even more indulgent than you imagine:
It's not just that he divides all your money equally between forty horses, he may well trim your investment in those most likely to win as he "re-balances" your portfolio to reflect your "risk profile."

You really don't have a clue do you?

If one day you decide you need an IFA I sympathise with him in advance.

newatc

This thread is becoming more and more bizarre. I'm expecting someone to come along with an horoscope reading soon.

[Deleted User]

AlanP wrote: »

You really don't have a clue do you?

If one day you decide you need an IFA I sympathise with him in advance.

That day will never come, AlanP.

Unless that IFA is a unicorn - one of the 1% who can read the future, rather than the past.
Shout out!
If you are such an IFA, and think you can exceed me: please message me.
If you prove yourself, you shall be very well rewarded.

Eco_Miser

newatc wrote: »

I'm expecting someone to come along with an horoscope reading soon.

ZingPowZing wrote: »

... a unicorn - one of the 1% who can read the future, rather than the past.

Close, but I'm not aware of any horoscope system that includes a unicorn.

Aminatidi

I've been using this tool as a crude way of testing the impact fund and platform charges can have on total return.

https://www.vanguard.co.uk/adviser/adv/tools/costsimulation

It's absolutely terrifying.

[Deleted User]

Checking out tonight, good luck others

Stay strong

bowlhead99

Aminatidi wrote: »

I've been using this tool as a crude way of testing the impact fund and platform charges can have on total return.

https://www.vanguard.co.uk/adviser/adv/tools/costsimulation

It's absolutely terrifying.

Vanguard have built a reputation on being competitive on costs (whether passive or active) so no doubt their tools make it look 'terrifying' to incur any costs beyond the barest minimum.

It can be disconcerting to add up all the costs and charges you might pay over the life of an investment spanning multiple decades, and compare them to how much you cash you have available now to invest.

Fortunately the costs will be borne out of post-growth money, which growing over multiple decades should be substantial.

If you're losing a percent to fees, then after 20 years of gross 8% return you might be at +287% by taking your net 7% annual return instead of +366% if you could have accessed the gross 8% annual return without fees.

That difference between +366 and +287 of almost 80 sounds like a lot (and you'll think to yourself, "how does it cost me 80%, to pay 1% for 20 years" ?!). Part of the answer is that it's not an apples to apples comparison - it's not like you're paying 80% of what you have now and being left with 20% of what you have now. Instead you're being left with 387% of what you have now, and the gross-to-net difference is purely theoretical based on what you would have had over and above that, if you could have invested for free and accessed the exact same gross return.

Fees are one part of the net return, though clearly they aren't everything. Gross return and 'better' volatility / peace of mind than they'd have had from the cheapest solution, are other things that that contribute to how satisfied someone might be with the actual solution they use.

[Deleted User]

Is there any evidence that, overall, Financial Advisers have lifted the performance of stocks and funds across the industry?

Because otherwise, they are leeching from the industry.

Daniel54

Linton wrote: »

Seems a good summary though I would add 2 more caregories..
1) Those who start small and grow a reasonable pot by default without gaining experience - eg because they had a sensible default fund in their employers pension.
2) Those with no experience who achieve significant wealth as a lump sum eg as an inheritance.



Both of these may well benefit from paid-for advice and to try to persuade them into not to take advice could be grossly irresponsible.

This is just to endorse your point 2.

I use an IFA for the equvalent of a financial health check and for tax and estate planning .Costs me about the same as my annual spend on tree surgeons.My DB pensions and other assets leave me with no stress in semi retirement.

However my sister inherited over £250k on my mother's passing.This is her sole retirement fund,other than the state pension,and it frightens her.The IFA ( who is a very kind person) has been hugely helpful in terms of talking her through diversified investments,budgeting and retirement planning.

He will not get rich solely from the 0.5% she pays him,and this is not a responsibility I wanted to take on myself .Independent third party advice in such a case is,in my opinion,worth every penny.

[Deleted User]

Daniel54 wrote: »

my sister inherited over £250k on my mother's passing.This is her sole retirement fund,other than the state pension,and it frightens her.The IFA ( who is a very kind person) has been hugely helpful in terms of talking her through diversified investments,budgeting and retirement planning.

Let me get this right, your sister's IFA (who is a very kind person) will take £25 pw from your sister, for the rest of her life. For what?