Are IFA's a con trick?

Whats_your_forte

Tight_Git said:

What's Your Forte: Sorry, I've no idea what ERC means. When I Google it, I get European Research Council!

Early repayment charges. Could be fixed or gilts. Your deal comes with a 10% fee so might be worth considering.

Also best way for daughter to protect her 'inheritance' is to possibly service the loan payments which can slow the increase of the debt or indeed keep it static; her choice.

As for the fee, it's not only for the advice but the protection going forward. You have cover under the FSCS for the advice with the adviser carrying that liability for the advice until they pop their clogs (depending on the set-up). But appreciate the nature of this site and indeed your user name, charges are something you are trying to avoid.

ACG

fred246 said:

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.

I am 99% sure it would have been an inferior product. 
If you took it out around 2010, I know the company who underwrote their policies as I worked for them. The policy was inferior to what we sold via intermediaries. 

The £150 policy is unlikely to have been life insurance, it would have been life and critical illness. 

fred246

I am 100% certain that it was not an inferior product and it was nowhere near 2010. The IFA herself never suggested it was she was just furious that Tesco had done a deal which undercut her. It was Sonof that made up the story that it would be an inferior product. Quotes ranged from £35 to £150. It's the same with car insurance quotes. Some are always so high you wonder why they bother quoting. It's exactly as the OP suggests. They tell you that they have checked the "whole of the market" the implication being there is no point you checking yourself. Then you find a cheaper quote yourself with a few minutes work.

fred246

I know it must sound silly but when I was young I thought that IFAs were there to make me richer. I thought she might even be happy for me that I had found a better quote. How wrong I was! I even ended up offering to pay her commission because her commission was less than the £1500 I would have paid extra buying her product.

ACG

fred246 said:

I am 100% certain that it was not an inferior product and it was nowhere near 2010. The IFA herself never suggested it was she was just furious that Tesco had done a deal which undercut her. It was Sonof that made up the story that it would be an inferior product. Quotes ranged from £35 to £150. It's the same with car insurance quotes. Some are always so high you wonder why they bother quoting. It's exactly as the OP suggests. They tell you that they have checked the "whole of the market" the implication being there is no point you checking yourself. Then you find a cheaper quote yourself with a few minutes work.

Out of curiosity, how do you know it was not an inferior product? 
Appreciate in the main life insurance is life insurance, but there are ways to cut the premium down that are easy to be missed. I am not saying it was, I am just sparking a conversation. Knowing how Tesco operate (having worked for 2 companies where they put their stamp on the other companies products) I am inclined to think it was but obviously you have the key facts documents. 

Life insurance is nothing like car insurance or home insurance. Car insurance varies wildly depending on an insurers attitude to risk for you and your car. Life insurance companies offer a long term product where usually there is no or little switching, their prices are generally speaking based on the amount of cover, your age and your health, having spent 3 years working for a life office and 8 years as a mortgage broker, life insurance premiums do not vary by 400%, you would generally find if you are getting a premium that much higher, they would not even quote. 

Your posts come across very confident but I think in reality you probably know less than you think you do.

Just to add, I am not sticking up for the IFA, they should not be furious for you going elsewhere. I lose life insurance quotes to cheaper alternatives. I explain why their quote is cheaper (assuming there is a reason) and they either accept or decline. I understand why people go with the cheaper products when on the face of it they look the same but we are also liable for the advice where as if you buy it online or through a supermarket there is no advice so if you get it wrong the buck stops with you. 

SonOf

It was a cut down version.    I thought it was reviewable premiums with GIO options removed and no free accidental death coverage during underwriting.  Fred says it wasnt. 
Tesco ran with two different providers at different points.  One of which was Aviva.   It was the Aviva one that was inferior to the normal Aviva product.

ACG

SonOf said:

It was a cut down version.    I thought it was reviewable premiums with GIO options removed and no free accidental death coverage during underwriting.  Fred says it wasnt. 
Tesco ran with two different providers at different points.  One of which was Aviva.   It was the Aviva one that was inferior to the normal Aviva product.

Prior to that it was Friends Prov/Friends Life - I used to work for them and can confirm this was the case.