Commission query


Comments
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He acknowledges my amateur status, not qualified to give advice etc and we've prepared a document to reflect that.You can't disclaimer away breaking the Financial Services and Markets Act.Giving somebody personal recommendations which funds / shares to buy is financial advice / stockbroking which is a regulated activity.So, my question is this, what would be a reasonable amount to charge him?The reasonable amount to charge someone for committing criminal offences with their money is nil.Steer well clear. Your friend is probably going to lose his £400k to a scammer before too long, and you don't want the blame.Even if you did decide to break the law and manage his money, what do you think will happen when he gets disenchanted with you in turn?1
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Don’t do it.I am an Independent Financial Adviser (IFA). Any posts on here are for information and discussion purposes only and should not be seen as financial advice.0
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If he is a good friend then probably no harm in dispensing general guidance. Maybe even have a look at his portfolio and suggest some questions he could ask of his pro advisor . The sort of thing that happens on this forum in fact.
However running his portfolio for him is asking for trouble .1 -
Tell him you will wash and detail his car or mow his lawn for £1000 an hour. If he wants to ask his car wash guy or gardener for advice on what he should do with his retirement fund, after sharing information about his financial circumstances, that's all well and good. Maybe the gardener will go away and give it some thought between visits so that he can have a really constructive discussion about what the gardener would do if he had £400k and had the same personal circumstances.
Writing a 'contract' to say I'm not authorised to give any financial advice but I will sell you the service of reviewing an investment portfolio and advising what to buy, and charge you a fee for my unregulated investment advice - while everyone knows that the advice on what risks to take could unintentionally be really inappropriate and result in a mistake costing a six figure sum compared to what a regulated professional could achieve - seems a dodgy route.
Maybe you take a risk to buy Apple and Microsoft and Tesla and Amazon with a large portion of the portfolio and it drops in value by £105k when those stocks halve in the next crash... he gets nervous and decides to sell the investments before losing any more, because he thought he'd probably only lose £100k, and £105k is unacceptable. He then hates you for costing him several year's salary in exchange for a couple of thousand quid of fees for services that you weren't authorised under the financial services and markets act to provide. The friendship is destroyed and what was once an amicable 'I don't mind taking a bit of risk, help me out here?' becomes 'I hate you and will use some of my remaining few hundred thousand pounds to act vindictively towards you forever...'
Even for no fee, giving people your detailed thoughts on what they should do with their money has plenty of risk of it blowing up in your face. A few bob in your back pocket from a fee won't make you feel much better once the relationship is destroyed, but it will certainly make them angrier that you took some of their money for yourself while advising them to buy things that performed badly compared to other options in the financial market.
I help my parents out with their portfolios to make sure they aren't on a terribly wrong track, because they don't want to spend money getting proper advice. The portfolios are more conservative than they probably need to be, because of the personal reputational risk on the downside. They appreciate the help to get a better return than they see on a bank account and recognise that they probably shouldn't expect as much return as the most volatile funds because they don't want the biggest sort of crashes; the portfolios will be fine. However, nobody wants to be the 'we let our son help out with our ISAs and he lost us a hundred grand so we are now going to a proper advisor'.
Likewise 'I paid my buddy to help out with my portfolio and he lost me a hundred grand' is not a nice position to be in. The fact that the portfolio would have lost two hundred grand if he did it himself, and would have recovered quite nicely if he had let you keep looking after it as the market went back up, will easily be overlooked.3 -
I was going to say run dont walk away, but a bicycle or a car would be a more appropriate method to put a lot of distance between you and him financially. This would be madness.0
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So, my question is this, what would be a reasonable amount to charge him?
You cannot. You would be in breach of the Financial Services and Markets Act which requires anyone giving advice for a fee to be regulated.
. He acknowledges my amateur status, not qualified to give advice etc and we've prepared a document to reflect that.When you carry out illegal activity, disclaimers carry no weight.
He is disenchanted with his pro advisor.Often that, in isolation of other facts, can be a reason to be wary of a potential client. What is it that has made them "disenchanted". In my experience, it is often down to the adviser taking a level of risk appropriate for the individual but the person actually seeing higher returns on high risk stuff in the papers. Often it is a complete lack of understanding. Or the adviser is using more basic options as they dont feel the person has an understanding but the person is again, looking at higher risk more sophisticated options. Sometimes it is the adviser but you cannot rely on that.
Bottom line is that you would be in breach of the law putting you at risk. You would also be putting your own assets at risk.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thank you all for your advice and comments.0
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