How to invest without FA

Borja

I am struggling to justify the 3% comission + fee charged by our slelected financial advisers. I understand they have an access to a wider range of products but in this current low interest environment I don't believe their offer is far from the top picks by MSE.
Will a FA advise outperform my decision to put 1/3 to my current pension, 1/3 to best MSE ISA and 1/3 to an FTSE 100/250 index tracked fund?
Or do they have an access to 4-5 or more% saving/ISA accounts and high yielding funds?
Thanks

bowlhead99

Borja wrote: »

I am struggling to justify the 3% comission + fee charged by our slelected financial advisers. I understand they have an access to a wider range of products but in this current low interest environment I don't believe their offer is far from the top picks by MSE.

It seems like you don't really understand what your selected financial advisers are doing for you. A 3% fee is high if the amount they're investing is hundreds of thousands. But if you're only investing £50k it will only cover a few hours work. If you are spending high fees, at least check that they are independent financial advisers (IFA) rather than people earning money for simply advising you to buy their most suitable product from the things they want to sell.

You say you don't think their offer is "far from the top picks by MSE". But MSE does not provide advice on regulated investment products. "Best MSE ISA", ie the one with the highest fixed or variable rate, is a savings deposit product. You would not use a financial adviser to buy a savings product because you could just contact the provider direct and deposit your money for a guaranteed secure return. By contrast you would use advisers for investments where you want to take on investment risk to grow or maintain the value of your money in real terms to meet some long term objective, or perhaps navigate some tax planning problem in an efficient way, and don't know how (or don't have the time) to do it yourself.

Will a FA advise outperform my decision to put 1/3 to my current pension, 1/3 to best MSE ISA and 1/3 to an FTSE 100/250 index tracked fund?
Or do they have an access to 4-5 or more% saving/ISA accounts and high yielding funds?

If your decision to put 1/3 of your money in your current pension is a poor decision, an IFA may give you a better performance.

If your decision is to put all of your non-cash, non pension money into a FTSE100/250 tracker, they will probably make a less illogical decision and recommend a much better portfolio - including funds holding shares on foreign stock markets and other types of assets. However, there is no guarantee that investing in a good portfolio will give a better result in any given year than investing in a dumb portfolio and getting lucky. That doesn't mean it's wise to invest in a dumb portfolio limited to tracking one particular country's stock market as you propose.

No IFAs have access to 4-5% savings accounts, as such accounts don't exist. They all have access to high yielding funds, though high yielding funds will generally be either riskier or offer lower total growth than lower yielding funds. An adviser would talk you through your objectives and make recommendations and help you implement a plan.

If you have selected some advisers and don't understand what they would do for you and they can't explain what they would do for you, you should probably not keep paying them 3% for advice on implementing the plan. Either (a) spend the money with an independent adviser who could explain why you will be better off if you spend the money, or (b) don't spend the money and implement your own plan.

If you avoid paying an advice fee, you will have £100 instead of £97 to be invested. But if you then stick it all in the FTSE250 instead of a balanced mixed asset portfolio and it falls by 50% instead of 25% you will have £50 left over, instead of £73, which will be annoying if you are a cautious person who was not aware you could lose so much value by tracking the FTSE250 as you only looked at the charts for the last ten years when it was generally giving positive returns.

Or likewise if you invest in the FTSE 100 and it goes up by 150% from £100 to £250, you might have preferred to invest in the FTSE All World and it go up by 300% from £97 to £388, except you didn't think to invest in the All-World because you were taking advice from a bloke down the pub or your own limited research.

So, the initial £3 is not the important thing. Making sure you have something suitable for your objectives and risk profile is the important thing. If you can do that without needing to buy advice, great.

SonOf

I am struggling to justify the 3% comission + fee charged by our slelected financial advisers.

Commission has been banned on investments since the end of 2012. It has to be fee based only now. If there is commission and a fee then something is wrong.

3% initial could be cheap or it could be expensive. on £10,000 it is cheap. On £100,000 it is ballpark. On £250,000 it is expensive. So, the percentage needs to placed in monetary terms for it to decide if it is cheap or expensive.

I understand they have an access to a wider range of products but in this current low interest environment I don't believe their offer is far from the top picks by MSE.

Your thread title says FA. FAs tend to be limited range or have restrictions. IFAs have access to the whole of market. Although there are providers that will not make their products available to IFAs or IFA providers that will not make their products available direct to the public. You should not be using FAs but instead aim to use IFAs if you need advice.

MSE doesnt rate or review investments. So, there are no top picks by MSE.

Will a FA advise outperform my decision to put 1/3 to my current pension, 1/3 to best MSE ISA and 1/3 to an FTSE 100/250 index tracked fund?

That would be pretty bad quality investing. So, it is likely it would be beaten.

Or do they have an access to 4-5 or more% saving/ISA accounts and high yielding funds?

As Bowlhead mentions above, FAs and IFAs do not do savings accounts. They deal with investment class business. Not savings class.

JohnRo

SonOf wrote: »

Commission has been banned on investments since the end of 2012. It has to be fee based only now. If there is commission and a fee then something is wrong.

That's not strictly true, you're talking specifically about new 'clean' retail products and the advisers and platforms involved in marketing them post RDR.

Legacy investments do still legitimately operate under the old system of trail commission paid to advisers and/or platforms which may or may not be rebated.

https://www.fca.org.uk/consumers/trail-commission

bostonerimus

Borja wrote: »

I am struggling to justify the 3% comission + fee charged by our slelected financial advisers. I understand they have an access to a wider range of products but in this current low interest environment I don't believe their offer is far from the top picks by MSE.
Will a FA advise outperform my decision to put 1/3 to my current pension, 1/3 to best MSE ISA and 1/3 to an FTSE 100/250 index tracked fund?
Or do they have an access to 4-5 or more% saving/ISA accounts and high yielding funds?
Thanks

If those are your investment choices then a "professional advisor" might well do better. But it is easy enough to develop an straightforward portfolio using your company pension, SIPP and ISA. Read up about asset allocation and diversification. One bit of advice I would give you is that you should look to invest in global equities rather than restricting yourself to the FTSE 100/250 and you don't need to have much more than 6 months spending in cash accounts unless you have a specific use for it like retirement safety or buying a house.

[Deleted User]

Borja wrote: »

I am struggling to justify the 3% comission + fee charged by our slelected financial advisers. I understand they have an access to a wider range of products but in this current low interest environment I don't believe their offer is far from the top picks by MSE.
Will a FA advise outperform my decision to put 1/3 to my current pension, 1/3 to best MSE ISA and 1/3 to an FTSE 100/250 index tracked fund?
Or do they have an access to 4-5 or more% saving/ISA accounts and high yielding funds?
Thanks

Does your financial adviser propose to charge an ongoing annual fee as well?