Do you have to have an IFA?

bostonerimus

Andrew31 wrote: »

:rotfl:

Perhaps we should start a dentisty forum, see how many people are interested.

By the way, i am all for saving money, but somethings should not be done DIY.

Managing your own finances is one area where DIY can be very successful. For most people it does not take much skill - follow a few simple rules and you'll do just fine. Of course it is not in the interests of financial professionals to promote that as they do well out of the status quo.

SonOf

Managing your own finances is one area where DIY can be very successful.

And it can be unsuccessful. A read of this website in this section and the investments section has plenty of failures where people have lost lots of money.

Of course it is not in the interests of financial professionals to promote that as they do well out of the status quo.

Of course, its not in the interests of those that promote DIY to point out the failures where people went DIY.

bostonerimus

SonOf wrote: »

And it can be unsuccessful. A read of this website in this section and the investments section has plenty of failures where people have lost lots of money.

People often make things more complicated than they need to be and can definitely make poor decisions during market turmoil...that goes for professionals and the DIYer. With a little education and a few simple rules the DIYer and the IFA/FA will be on a level playing field. The notion that managing your finances is difficult is incorrect. [/quote]

Of course, its not in the interests of those that promote DIY to point out the failures where people went DIY.

I have no vested interest in this, just my own experience of doing ok without using professional advisors. I won't defend stupid actions by anyone and obviously people do silly things all the time. The finance industry capitalize on the fear of failure and sees that as a reason to empIoy an IFA, I see it as a reason to give people the education and tools to DIY sensibly.

If people want to use an IFA then it does not hurt me in anyway as I am not getting paid by anyone. But if people decide to DIY it obviously hurts financial advisors. I'm sure most financial advisors believe that they provide a valuable service and I can think of situations where that might well be the case, but the financial industry is not altruistic and so their publications and motivations do have to be examined carefully.

zagfles

bostonerimus wrote: »

People often make things more complicated than they need to be and can definitely make poor decisions during market turmoil...that goes for professionals and the DIYer. With a little education and a few simple rules the DIYer and the IFA/FA will be on a level playing field. The notion that managing your finances is difficult is incorrect.

I have no vested interest in this, just my own experience of doing ok without using professional advisors. I won't defend stupid actions by anyone and obviously people do silly things all the time. The finance industry capitalize on the fear of failure and sees that as a reason to empIoy an IFA, I see it as a reason to give people the education and tools to DIY sensibly.

If people want to use an IFA then it does not hurt me in anyway as I am not getting paid by anyone. But if people decide to DIY it obviously hurts financial advisors. I'm sure most financial advisors believe that they provide a valuable service and I can think of situations where that might well be the case, but the financial industry is not altruistic and so their publications and motivations do have to be examined carefully.

Indeed. For people who are clueless and who don't have the ability or inclination to learn the basics then using an IFA can be a good idea.

But the comparison with dentistry is :rotfl:A better one would be driving. Some people CBA learning to drive, or are incapable of driving, and they should pay others to and get a taxi or the bus, rather than risking their life (and that of others). But most people are capable of learning to drive, however it's important that they're aware of the rules of the road and potential dangers otherwise they could end up in serious grief. Same goes for finances.

I don't even think the DIY label is appropriate. I pay fund managers to invest my money, that's not DIY. DIY would be buying individual shares/bonds etc. Not paying a fund manager to decide which shares to buy.

And just like fund managers can things wrong (eg Woodford), so can IFAs. I've lost count of the number of times I've pulled IFAs up on here either directly or indirectly (reports from people of what IFAs have told them) for spouting utter tripe.

waveydavey48

bostonerimus wrote: »

With a little education and a few simple rules the DIYer and the IFA/FA will be on a level playing field. The notion that managing your finances is difficult is incorrect.

That resonates with me and, I imagine, lots of people. Would you mind elaborating on what the "few simple rules" are please. This is a genuine question as I would prefer to DIY. My own situation is that we can live happily on secure income but also have a DC pot of about £165k. My thoughts at present are that I will probably put that in the Vanguard SIPP when it starts using LS60/40 and forget about it.

I would then have diversity, automatic adjustment and low costs. What could an IFA add to that, apart from charges?

lisyloo

I would then have diversity, automatic adjustment and low costs. What could an IFA add to that, apart from charges?

Ideally



. an extra layer of safety (from fraud, hackers) e.g. there are manual steps to withdraw from my ISA.
. advice on personal situation e.g. estate planning, protection in the event of divorce
. professional assesment of geo political risks (I've seen the forum standard and it would be fair to describe as variable)
. professional knowledge of fund managers e.g. neil woodford


Personally I don't agree that this is not difficult/involved to do thoroughly, for example how would you get industry knowledge about an individual fund manager that was not in the public domain?

[Deleted User]

“Professional assessment of geo-political risks.”

Go on, then, lisyloo; throw us a crumb..

lisyloo

Not sure I'm entirely comfortable copying and pasting but consider the ability of the average poster to consider the implications of



us trade deal with china
us federal reserve
eurozone and appointment of lagarde
japanese rollout of increase to VAT (I wasn't aware of this)

japanese services and manufaturing data
emerging markets
russia
Fixed interest markets
central banks


there are some very intelligent and educated posters on here Im sure and almost certainly some wiht a background in finance, but the average joe?


Do you think they can assess and manage their portfolio against all the above risks?
I wouldn't compare it to driving myself more like root canal surgery and would you let your neighbour do that DIY.

Each to their own.


Is the average person well prepared for divorce, incapacity, death?
In most cases the answer is no.


I suspect that we will never agree on this, but I constantly see issues here that have already been proactively dealt by my IFA so I'm just answering the question about the benefits which are many.

[Deleted User]

Root canal work in the interest of the patient is good; root canal work in the interest of the dentist? Not so much.

But - as you say - each to their own.

SonOf

My colleague had a client who had been reading online (could be here for all I know) and he said he wanted to end ongoing servicing to reduce his charges and invest in VLS60 which was better for him and lower cost than what we had done.

The returns on his portfolio arranged by us had outperformed VLS60 consistently after charges. He was surprised at this because he had been told online that it was better to not use an IFA.

Then he mentioned that he was going to transfer two other pensions into this new direct pension. We had previously told him not to transfer but he forgot that. One of the pensions had a something like a 60% protected tax free cash entitlement that would be lost on transfer. The other one was a lump sum retirement benefit scheme that has 100% tax free cash available but lost on transfer plus it had £1800 transfer penalty. He hadn't spotted either of those. So, again, had he not had the adviser, he would have made two costly mistakes as well as having the misconception that VLS and DIY is the answer to everything.

This is why, time and again, the DIY vs IFA debate needs context. If you know what you are doing, then you can save money if you DIY. If you do not know what you are doing, it could lead to costly errors.