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Are IFA's a con trick?

27 replies 621 views
Tight_GitTight_Git Forumite
7 posts
First Post
MoneySaving Newbie
I'm currently trying to get the best Equity Release deal and have consulted three IFA's (Independent Financial Advisors) all of whom claim to have access to the whole Equity Release market.
I gave each the same parameters, stressing that lowest interest rate was a priority, in order to minimise the reduction in my Daughter's inheritance.
They have now come up with three different products, all with considerably higher interest rates than the one I found simply by asking Google!
Is this sheer incompetence, or do they have their own agenda?
(Since I seem to be forced to use an IFA, I simply insisted that the one with the cheapest fee should proceed with the product that I found on Google.
This has potentially saved my Daughter many £000's but it seems unfair that I can't claim the commission!)


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Replies

  • ACGACG Forumite
    20.3K posts
    Tenth Anniversary 10,000 Posts Name Dropper I've helped Parliament
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    Even if you could apply directly, you would not get the commission. 
    The commission is paid for a variety of reasons - but in part, advisers carry the liability of poor advice. 
    Does seem strange than they can all access the cheaper product but none came back with it though, did you question them why that happened? 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • ACGACG Forumite
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    Just on a side note, why did you go to an IFA and not an equity release mortgage broker? 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Tight_GitTight_Git Forumite
    7 posts
    First Post
    MoneySaving Newbie
    Thanks for your reply.
    When I said IFA, I probably meant Equity release mortgage broker as I didn't appreciate there was a difference.
    All three firms advertise as : "Independent whole of market advice on Mortgages, Investments, Equity Release, etc".
    My comment about getting the commission was tongue-in-cheek, I'm just a bit miffed that I was the one who found the cheapest product but still have to pay their fee!
    But my real beef is why none of them came up with the cheapest option.
    They claim to be on my side, but I can't help wondering...
  • SonOfSonOf Forumite
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    There are some equity release products that have cheaper rates but lack future drawdown ability or have higher tie ins.   Often its a case of balancing the objectives with the best rate available and that does not always mean the cheapest rate overall.


  • ACGACG Forumite
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    Tight_Git said:
    Thanks for your reply.
    When I said IFA, I probably meant Equity release mortgage broker as I didn't appreciate there was a difference.
    All three firms advertise as : "Independent whole of market advice on Mortgages, Investments, Equity Release, etc".
    My comment about getting the commission was tongue-in-cheek, I'm just a bit miffed that I was the one who found the cheapest product but still have to pay their fee!
    But my real beef is why none of them came up with the cheapest option.
    They claim to be on my side, but I can't help wondering...
    Not wanting to be pedantic, but you do not have to deal with any of them nor do you have to pay their fee. I am sure there are other brokers who can help.

    But I do completely agree with your comments. We do not do equity release so I am not the best person to answer the question but if they can all access the deal you found, I would be asking why they did not choose that deal in the first instance, I would also be wondering if they had access to anything else cheaper still. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Tight_GitTight_Git Forumite
    7 posts
    First Post
    MoneySaving Newbie
    Thanks for the comments.
    Yes, going back to them would be the obvious course, but I'm 75 and frankly can do without the hassle of effectively questioning their honesty, no matter how indirectly.
    I was just pleased to be able to rid myself of the two most expensive advisors without any ill feelings.
    (In any case, you can bet they have a cast iron alibi!)
    I'm new to this forum, so can I ask if it's OK to name websites and companies?
  • Tight_GitTight_Git Forumite
    7 posts
    First Post
    MoneySaving Newbie
    SonOf said:
    There are some equity release products that have cheaper rates but lack future drawdown ability or have higher tie ins.   Often its a case of balancing the objectives with the best rate available and that does not always mean the cheapest rate overall.

    Agreed, but I stressed I wanted a loan with the lowest interest rate and any drawdown available would be a bonus.

  • edited 17 February at 1:47PM
    Whats_your_forteWhats_your_forte Forumite
    176 posts
    100 Posts Name Dropper Photogenic
    edited 17 February at 1:47PM
    What are the ERCs? This can have an impact on the advice being given and simply being asked to get the lowest rate may not be in the client's best interest. And when making that recommendation, there needs to be justification behind it. The ERC advice may also be looking to save your daughter £000s too.

    I've had this before when a rate can be seen online but for reasons X,Y and Z, I wouldn't not be recommending it.

    As for naming people, perhaps do so on the basis they have the right to reply divulging the details about you and the reasons behind their advice. If you just want to say ABC Mortgages were useless with no allowed come back, then I've no idea what purpose that will serve.
    I am a mortgage broker and IFA. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
  • fred246fred246 Forumite
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    Years ago IFAs used to work on commission so they used to try to sell you a whole range of products together, earning hundreds of pounds of commission on each. My IFA had missold me a pension and was trying to sell me some life insurance I hadn't asked for. She gave me a sheet of paper. She had searched the whole of the market and quotes ranged from £150 to £35 a month. Out of interest I googled life insurance and got a quote of £30 from Tesco in less than 10 minutes. A saving of £1500 over the life of the policy. So I took it out. She was FURIOUS because she had missed out on her commission. I quoted this story recently on another thread and Sonof made up a silly, incorrect story that it would be inferior insurance. IFAs always put their own interests before their customers.
  • SonOfSonOf Forumite
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    I'm new to this forum, so can I ask if it's OK to name websites and companies?
    I wouldn't name them.  There are certain companies out there who could make your life a misery by accusing you of defamation.  

    In reality, at this stage, it is unclear whether they have done anything wrong.  For example, did you go through the full process with them or were they just picking a provider as an example from the top of their head without running full research first?    Most wouldnt run full research on who is best until after you commit to using them.    As you went to three firms, it may be that happened as I doubt you employed all three of them to go through the advice process.
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