Knowledge acquisition

Thrugelmir

Sunnylifeover50plan wrote: »

I get monthly valuations on one fund and my only ever gripe is how that fund is performing against the 3 others my wife and I invest in.

The art of investing is to gain an overall positive return from a portfolio. Constantly tinkering because one in particular is underperforming isn't the way to run a portfolio. As Warren Buffet once said "If making money were that easy everyone would be a librarian". While running your own portfolio maybe appealing. Are you prepared for the fact that you may make expensive mistakes.

SonOf

I'm a bit miffed given the increases in ftse 100/250 through 2019 that my "growth" fund had limited exposure to equities & especially UK equities.

The UK is 4% of the global ecomomy.
Have you also considered the larger losses that the FTSE250 had during the years before?

You cannot have the upside without the downside.

Thrugelmir

Sunnylifeover50plan wrote: »

It seems instead to have been positioned to cope cautiously with the Brexit uncertainty expected October 19 being the published leave date - do or die - lol.

The China\USA trade war is impacting on global companies. Likewise there's a trade dispute between Japan & Korea. The engine of the Eurozone, Germany, has been spluttering for the past year. In 2019 UK companies issued more profit warnings that any time since the Financial Crash. The list goes on.

As an "investment manager" you will need to do your own analysis and research to position your portfolio. Herd instinct investing could lead you over a cliff edge. As markets can soon turn with vengance.

[Deleted User]

Sunnylifeover50plan wrote: »

3 out of 5, moderate appetite for risk.

The appropriate level of risk is hard to evaluate for a third party, more so when they try to fit a standard scale.

People answer the same question about risk tolerance differently, depending on the latest news on the stockmarket, the weather and several other factors.

If you remove behavioural issues, most people tend to be too low on equities. They often ignore fixed income they have outside portfolio (salaries, pensions, etc) and significant long term risks associated with bonds.

On the other hand, people are not logical. Very hard to evaluate what level of volatility a person can actually withstand without doing something stupid. Only individual himself can do this reasonably well, and only if he is educated on what it’s really like.

[Deleted User]

“If you look at the curriculum of a typical IFA course, most of what they learn is focused on rules and best practices for selling and would be irrelevant”

“This is incorrect

The curriculum is readily available; anyone can check out the syllabus. https://www.cii.co.uk/learning/qualifications/diploma-in-regulated-financial-planning-qualification/

Training takes a few months, A-level maths is not a prerequisite, let alone advanced statistics. Exams are multiple choice tests and take a score of 65% to pass. A little underwhelming.

Of course there will be a few well educated, knowledgeable and smart advisors but it’s not a requirement.

bigadaj

To be fair to son of then I think the objection was to the phrasing and the emphasis on sales that could be construed from the original comment rather than a claim that an ifas job is especially complicated or specialist.

Sales isn't a specific part of ifa training but is a necessary part of many jobs, especially that of the self employed. Many older ifas will have come from sales force jobs that owuld have historically emphasised sales though this has reduced very much in recent years as the job has become more consultant than salesman.

People need to assess whether an IFA is if use to them, no different to an accountant, plumber or others service provider, like in all of these areas diy can save a lot of money so long as people have a reasonable idea of what they are doing.

Malthusian

Deleted_User wrote: »

The curriculum is readily available; anyone can check out the syllabus. https://www.cii.co.uk/learning/qualifications/diploma-in-regulated-financial-planning-qualification

Which is "Financial services, regulation & ethics", "Investment principles and risk", "Personal taxation", "Pensions and retirement planning", "Financial protection" and "Financial planning practice".

I imagine I'm about to be told that "Pensions and retirement planning" is clearly about how to sell pensions and "Financial services, regulation & ethics" is a course in sales because it's about how to pretend to clients that you're ethical.

A-level maths is not a prerequisite, let alone advanced statistics.

As someone who has done advanced statistics at university, I can tell you that's because it's mostly irrelevant. You would have been on stronger ground pointing out that there's no prerequisite for A-level Psychology.

Exams are multiple choice tests and take a score of 65% to pass. A little underwhelming.

There's enough of an advice gap as it is without being the only profession to deny bog-standard professionals the right to practice. Bog-standard lawyers, bog-standard accountants and bog-standard doctors are all allowed to scrape the pass mark and embark on a long and bog-standard career.

No profession in the world tries to violate Sturgeon's Law and insist that you can only practice if you are AAA-quality and everyone else has to go stack shelves. Not even ones where bog-standard professionals will kill a few people. People who want AAA-quality IFAs are free to look for one.

Sunnylifeover50plan

Deleted_User wrote: »

“If you look at the curriculum of a typical IFA course, most of what they learn is focused on rules and best practices for selling and would be irrelevant”



The curriculum is readily available; anyone can check out the syllabus. https://www.cii.co.uk/learning/qualifications/diploma-in-regulated-financial-planning-qualification/

Training takes a few months, A-level maths is not a prerequisite, let alone advanced statistics. Exams are multiple choice tests and take a score of 65% to pass. A little underwhelming.

Of course there will be a few well educated, knowledgeable and smart advisors but it’s not a requirement.

So is it true that if you see an IFA displaying DipPFS after their name it's effectively these CII qualifications/ accreditations?

[Deleted User]

Malthusian wrote: »

Which is "Financial services, regulation & ethics", "Investment principles and risk", "Personal taxation", "Pensions and retirement planning", "Financial protection" and "Financial planning practice".

I imagine I'm about to be told that "Pensions and retirement planning" is clearly about how to sell pensions and "Financial services, regulation & ethics" is a course in sales because it's about how to pretend to clients that you're ethical.

Well, no. Not about pretending. And nothings wrong with having this course; it should be there and most professions like engineering have similar requirements. It’s just that it’s a complete waste of time for an individual who wants to educate himself about investments so he can secure his family’s future

Malthusian wrote: »

As someone who has done advanced statistics at university, I can tell you that's because it's mostly irrelevant. You would have been on stronger ground pointing out that there's no prerequisite for A-level Psychology.

Agreed; Behavioural investment psychology is very important. I should have added a reference on that to post #2, e.g. “Your money and your brain” by Jason Zweig.

Disagree that statistics isn’t important. While as a passive investor I don’t actually apply it, knowledge of stats helped to understand advantages and disadvantages of various approaches. Quants base their whole risk analysis on advanced statistics.

And, looking at the details of these modules, why are they missing even the most rudimentary security analysis? Where do they study the difference between money weighted and time weighted returns? Do they even have the maths required to understand it? How about history of investment? Surely that’s hugely important?

Malthusian wrote: »

There's enough of an advice gap as it is without being the only profession to deny bog-standard professionals the right to practice. Bog-standard lawyers, bog-standard accountants and bog-standard doctors are all allowed to scrape the pass mark and embark on a long and bog-standard career.

No profession in the world tries to violate Sturgeon's Law and insist that you can only practice if you are AAA-quality and everyone else has to go stack shelves. Not even ones where bog-standard professionals will kill a few people. People who want AAA-quality IFAs are free to look for one.

Lawyers and accountants go through years of university training and tough selection. There are better and worse ones for sure but the standard is MUCH higher than for financial advisors. I just think that most people who delegate investment picking, and hence their financial security to IFAs don’t know this.

bowlhead99

Sunnylifeover50plan wrote: »

So is it true that if you see an IFA displaying DipPFS after their name it's effectively these CII qualifications/ accreditations?

Yes, the DipPFS is the basic one which paraplanners might do, apparently 600 or so hours of study. The better one APFS is another 600 hours on top to upgrade your 'level 4' qualification to a level 6, and then you can be Chartered if you have 5 years of practical experience on top of the advanced diploma.

The 'rival' organisation LIBF (used to be IFS) has the equivalent DipFA and Adv DipFA qualifications.

As you say you only want to be self-serving and don't need to worry about the products in which you might not be interested, nor the ethics or regulations involved in advising customers and all that malarkey, it would suit you to cherry pick from the modules which make up the qualifications and only sink time into studying those, or parts of them. It doesn't really matter which of the modules are multi-choice, coursework, written or case study, because you don't need to actually take any exams or get the letters after your name. You could just buy the materials.

So the study requirements for you, vs a full-blown IFA, would be lower, which would mean you don't need to stop at the rudimentary 'certificate' or 'diploma' stuff; you could look at the advanced stuff, as well as financial theory such as you would find in an accounting or finance or business degree. Though again, some of it would be an irrelevance - assuming you are not actually going to evaluate individual companies or take on projects on behalf of a corporation and ponder their weighted average cost of capital etc etc.

Deleted_User wrote:

And nothings wrong with having this course; it should be there and most professions like engineering have similar requirements. It’s just that it’s a complete waste of time for an individual who wants to educate himself about investments so he can secure his family’s future

An issue is perhaps that people who would hope their IFA to be smart and knowledgeable and answer their ad hoc questions because he 'knows about all that sort of stuff', presume that it would be nice to know what he knows - and thereby they will get there themselves if they do the same courses he did.

However, the IFA was training himself to be able to answer particular types of questions or produce plans or interpret research in a specific way to assist people with backgrounds and circumstances you simply don't have, so some of the stuff he learned in a structured way, just isn't relevant to you.

And the stuff in the course is only a small part of what he knows - an IFA with many years of experience who has been through ups and downs, will have come across stuff other than the 'textbook' answers due to seeing different products, market conditions, clients with different personalities etc; and discussed them with his colleagues, bosses, juniors, suppliers and research providers etc, as well as with his clients. He keeps his knowledge of regulations and products up to date with ongoing education after the initial stuff he learned.

But clearly you don't need the full range of knowledge and experience, if you're not preparing to deal with all the circumstances you could come across when dealing with the public, and the relevance of any of the regulatory stuff is more about what you can get access to, or what has to be disclosed to you, or what consumer protection you get (all of which is pretty straightforward) , than why the regulations are what they are or how you should demonstrate that you are 'treating customers fairly', etc.

So, bluntly, what is on the course is only part of what you might need, and much of what is on the course is stuff you don't need.

People sometimes ask me where I got my knowledge about investments or finance generally (or other work-related stuff), what book or course? But after school and uni and professional exams a couple of decades ago, it's mostly come from a few tens of thousands of hours of working in business and finance, sometimes internationally, and generally being curious about stuff along the way and asking people about it or doing some reading about it. As a result, I haven't felt the need to engage an IFA.

That doesn't mean that if you want to wrest some investments away from an IFA you need to do XYZ qualification and then log x thousand hours of professional experience in some tangential field. I mean, they say every little helps, but most of those hours won't help a jot, just like many of the questions in a diploma. Perhaps ahead of a PFS/CII or IFS/LIBF course, the first thing to look at is an assertiveness course so you can sit down with the IFA and have a proper conversation about what it is you feel you are not getting from him.