Pensions. Is an IFA really worth it?

BritishInvestor

IvanOpinion said:

t8769 said:

I have a simple savings requirement, not a huge amount of money to invest.
Just need a pension, and to invest other finds in a mix of high, med and low risk.
Could I do this myself  or is it worth paying an IFA?
Would they get higher returns to make their fees worthwhile?
Nothing complicated about my requriements.

Thanks

The honest and simple answer is ... yes you can do this yourself.  Very easily.
If you don't have a lot of confidence then you could simply go with something like Vanguard lifestrategy (20, 40, 60, 80., 100 depending on your attitude to risk, your age etc.) or the HSBC Global strategy equivalents.  You say it isn't a huge amount so you could set up a SIPP on the Vanguard web site - that should keep costs low.  Others have mentioned other alternatives.

As far as risk is concerned go to various sites and go through their risk calculators and see how you fair.  They ask pretty much the same questions an IFA would so you will get the same answer.  You just need to interpret it correctly (I am sure some on this board would help).

Finally, you ask, will an IFA get higher returns.  The answer is that there is absolutely no guarantee of that.  If you pick a multi-asset or balanced fund that suits your risk assessment you should be able to sleep fine at night, knowing that the fund managers are doing the work - you do not need to pay the costs of an intervening salesman.

I am not dissing IFAs, they offer many services that those that require complex and detailed advice will benefit from.  But to make the analogies used earlier a bit more realistic

Can you change the timeclock on your boiler or would you pay an electrician?

Can you reconcile your credit card statement or would you pay an accountant?

Can you set up a few plant pots or would you pay a builder?

In all the above cases there is nothing wrong with paying someone to do it, but you don't have to and there is no guarantee that they will do a better job.

"They ask pretty much the same questions an IFA would so you will get the same answer."
A discussion around risk, is, or should be, far more than just a questionnaire
"you do not need to pay the costs of an intervening salesman."
I'd hope a typical adviser does a tad more than "sell funds"

ElephantBoy57

BritishInvestor said:

I'm assuming he is talking about a passive, multi-asset fund rather than an active fund.

It does get complicated if the OP is a novice. Many people looking to invest are older, is a SIPP or an ISA a better option?

Which is a question I am considering, as I am 59

Returns on shares or funds are small compared to tax relief.

Joey_Soap

The answer the OP seeks is "no". ZPZ is on the money here. And a solution from Vanguard or one of the robo-advisors is likely to be at least as good as an IFA will manage. Meantime, read as much as you can about building and maintaining a portfolio yourself. Then decide whether a robo/Vanguard style of portfolio is what you want. You can then decide for yourself whether managing your own money is for you. Or even if you want to use an IFA after all. My own opinion is that using an advisor should really be a last resort. But if you actively choose to do so from an informed point of view, then fine. HTH.

IvanOpinion

BritishInvestor said:

IvanOpinion said:

t8769 said:

I have a simple savings requirement, not a huge amount of money to invest.
Just need a pension, and to invest other finds in a mix of high, med and low risk.
Could I do this myself  or is it worth paying an IFA?
Would they get higher returns to make their fees worthwhile?
Nothing complicated about my requriements.

Thanks

The honest and simple answer is ... yes you can do this yourself.  Very easily.
If you don't have a lot of confidence then you could simply go with something like Vanguard lifestrategy (20, 40, 60, 80., 100 depending on your attitude to risk, your age etc.) or the HSBC Global strategy equivalents.  You say it isn't a huge amount so you could set up a SIPP on the Vanguard web site - that should keep costs low.  Others have mentioned other alternatives.

As far as risk is concerned go to various sites and go through their risk calculators and see how you fair.  They ask pretty much the same questions an IFA would so you will get the same answer.  You just need to interpret it correctly (I am sure some on this board would help).

Finally, you ask, will an IFA get higher returns.  The answer is that there is absolutely no guarantee of that.  If you pick a multi-asset or balanced fund that suits your risk assessment you should be able to sleep fine at night, knowing that the fund managers are doing the work - you do not need to pay the costs of an intervening salesman.

I am not dissing IFAs, they offer many services that those that require complex and detailed advice will benefit from.  But to make the analogies used earlier a bit more realistic

Can you change the timeclock on your boiler or would you pay an electrician?

Can you reconcile your credit card statement or would you pay an accountant?

Can you set up a few plant pots or would you pay a builder?

In all the above cases there is nothing wrong with paying someone to do it, but you don't have to and there is no guarantee that they will do a better job.

"They ask pretty much the same questions an IFA would so you will get the same answer."
A discussion around risk, is, or should be, far more than just a questionnaire
"you do not need to pay the costs of an intervening salesman."
I'd hope a typical adviser does a tad more than "sell funds"

Assuming I am responding based on the context of the OP then my answers would be....

And yet in any dealings I have had with all IFAs the questions were pretty much the same as online questionnaires

and

In the same way as a used car salesman does a tad more than 'sell cars'.

Linton

IvanOpinion said:

BritishInvestor said:

IvanOpinion said:

t8769 said:

I have a simple savings requirement, not a huge amount of money to invest.
Just need a pension, and to invest other finds in a mix of high, med and low risk.
Could I do this myself  or is it worth paying an IFA?
Would they get higher returns to make their fees worthwhile?
Nothing complicated about my requriements.

Thanks

The honest and simple answer is ... yes you can do this yourself.  Very easily.
If you don't have a lot of confidence then you could simply go with something like Vanguard lifestrategy (20, 40, 60, 80., 100 depending on your attitude to risk, your age etc.) or the HSBC Global strategy equivalents.  You say it isn't a huge amount so you could set up a SIPP on the Vanguard web site - that should keep costs low.  Others have mentioned other alternatives.

As far as risk is concerned go to various sites and go through their risk calculators and see how you fair.  They ask pretty much the same questions an IFA would so you will get the same answer.  You just need to interpret it correctly (I am sure some on this board would help).

Finally, you ask, will an IFA get higher returns.  The answer is that there is absolutely no guarantee of that.  If you pick a multi-asset or balanced fund that suits your risk assessment you should be able to sleep fine at night, knowing that the fund managers are doing the work - you do not need to pay the costs of an intervening salesman.

I am not dissing IFAs, they offer many services that those that require complex and detailed advice will benefit from.  But to make the analogies used earlier a bit more realistic

Can you change the timeclock on your boiler or would you pay an electrician?

Can you reconcile your credit card statement or would you pay an accountant?

Can you set up a few plant pots or would you pay a builder?

In all the above cases there is nothing wrong with paying someone to do it, but you don't have to and there is no guarantee that they will do a better job.

"They ask pretty much the same questions an IFA would so you will get the same answer."
A discussion around risk, is, or should be, far more than just a questionnaire
"you do not need to pay the costs of an intervening salesman."
I'd hope a typical adviser does a tad more than "sell funds"

Assuming I am responding based on the context of the OP then my answers would be....

And yet in any dealings I have had with all IFAs the questions were pretty much the same as online questionnaires

and

In the same way as a used car salesman does a tad more than 'sell cars'.

A used car salesman gets a commission from selling cars, an IFA does not get a commission from selling funds. So hardly a relevent comparison.

Thrugelmir

IvanOpinion said:

BritishInvestor said:

IvanOpinion said:

t8769 said:

I have a simple savings requirement, not a huge amount of money to invest.
Just need a pension, and to invest other finds in a mix of high, med and low risk.
Could I do this myself  or is it worth paying an IFA?
Would they get higher returns to make their fees worthwhile?
Nothing complicated about my requriements.

Thanks

The honest and simple answer is ... yes you can do this yourself.  Very easily.
If you don't have a lot of confidence then you could simply go with something like Vanguard lifestrategy (20, 40, 60, 80., 100 depending on your attitude to risk, your age etc.) or the HSBC Global strategy equivalents.  You say it isn't a huge amount so you could set up a SIPP on the Vanguard web site - that should keep costs low.  Others have mentioned other alternatives.

As far as risk is concerned go to various sites and go through their risk calculators and see how you fair.  They ask pretty much the same questions an IFA would so you will get the same answer.  You just need to interpret it correctly (I am sure some on this board would help).

Finally, you ask, will an IFA get higher returns.  The answer is that there is absolutely no guarantee of that.  If you pick a multi-asset or balanced fund that suits your risk assessment you should be able to sleep fine at night, knowing that the fund managers are doing the work - you do not need to pay the costs of an intervening salesman.

I am not dissing IFAs, they offer many services that those that require complex and detailed advice will benefit from.  But to make the analogies used earlier a bit more realistic

Can you change the timeclock on your boiler or would you pay an electrician?

Can you reconcile your credit card statement or would you pay an accountant?

Can you set up a few plant pots or would you pay a builder?

In all the above cases there is nothing wrong with paying someone to do it, but you don't have to and there is no guarantee that they will do a better job.

"They ask pretty much the same questions an IFA would so you will get the same answer."
A discussion around risk, is, or should be, far more than just a questionnaire
"you do not need to pay the costs of an intervening salesman."
I'd hope a typical adviser does a tad more than "sell funds"

And yet in any dealings I have had with all IFAs the questions were pretty much the same as online questionnaires

In a far wider context with person to person one has a far more informed discussion. An hour or two of time can be invaluable in the longer term. As peoples comprehension levels differ. Depending upon on their understanding of the topic. Online questionnaires are too easy to skim through. People rarely read pages and pages on screen. 

Too easy to be dismissive too quickly of what is on offer if one looks hard enough. 

BritishInvestor

IvanOpinion said:

And yet in any dealings I have had with all IFAs the questions were pretty much the same as online questionnaires

I would've hoped/expected a bit more 

BritishInvestor

Joey_Soap said:

The answer the OP seeks is "no". ZPZ is on the money here. And a solution from Vanguard or one of the robo-advisors is likely to be at least as good as an IFA will manage. Meantime, read as much as you can about building and maintaining a portfolio yourself. Then decide whether a robo/Vanguard style of portfolio is what you want. You can then decide for yourself whether managing your own money is for you. Or even if you want to use an IFA after all. My own opinion is that using an advisor should really be a last resort. But if you actively choose to do so from an informed point of view, then fine. HTH.

You'd have to provide evidence on the robo-adviser performance as most I've seen have very average outcomes (upon cursory inspection). 
A number of advisers I know used Vanguard in one form or another as part of the portfolio building blocks - investment management is commoditised so they don't tend to put it front and centre of their offering.

Joey_Soap

BritishInvestor said:

Joey_Soap said:

The answer the OP seeks is "no". ZPZ is on the money here. And a solution from Vanguard or one of the robo-advisors is likely to be at least as good as an IFA will manage. Meantime, read as much as you can about building and maintaining a portfolio yourself. Then decide whether a robo/Vanguard style of portfolio is what you want. You can then decide for yourself whether managing your own money is for you. Or even if you want to use an IFA after all. My own opinion is that using an advisor should really be a last resort. But if you actively choose to do so from an informed point of view, then fine. HTH.

You'd have to provide evidence on the robo-adviser performance as most I've seen have very average outcomes (upon cursory inspection). 
A number of advisers I know used Vanguard in one form or another as part of the portfolio building blocks - investment management is commoditised so they don't tend to put it front and centre of their offering.

BritishInvestor said:

Joey_Soap said:

The answer the OP seeks is "no". ZPZ is on the money here. And a solution from Vanguard or one of the robo-advisors is likely to be at least as good as an IFA will manage. Meantime, read as much as you can about building and maintaining a portfolio yourself. Then decide whether a robo/Vanguard style of portfolio is what you want. You can then decide for yourself whether managing your own money is for you. Or even if you want to use an IFA after all. My own opinion is that using an advisor should really be a last resort. But if you actively choose to do so from an informed point of view, then fine. HTH.

You'd have to provide evidence on the robo-adviser performance as most I've seen have very average outcomes (upon cursory inspection). 
A number of advisers I know used Vanguard in one form or another as part of the portfolio building blocks - investment management is commoditised so they don't tend to put it front and centre of their offering.

I suspect it's because the robo-advisor industry is rather immature. I have never met anyone yet who has used the services of an FA/IFA and doesn't feel ripped off. There must be someone though, I admit. Between a robo-adviser and a Vanguard solution, I would choose the latter. But I do advocate self education very strongly since only then can any individual truly make the best decision. My own feeling is that the more self education one gets, the less likely anyone will choose an advisor of any description. But if they do, fine. Though I absolutely never would.

Thrugelmir

Joey_Soap said:

BritishInvestor said:

Joey_Soap said:

The answer the OP seeks is "no". ZPZ is on the money here. And a solution from Vanguard or one of the robo-advisors is likely to be at least as good as an IFA will manage. Meantime, read as much as you can about building and maintaining a portfolio yourself. Then decide whether a robo/Vanguard style of portfolio is what you want. You can then decide for yourself whether managing your own money is for you. Or even if you want to use an IFA after all. My own opinion is that using an advisor should really be a last resort. But if you actively choose to do so from an informed point of view, then fine. HTH.

You'd have to provide evidence on the robo-adviser performance as most I've seen have very average outcomes (upon cursory inspection). 
A number of advisers I know used Vanguard in one form or another as part of the portfolio building blocks - investment management is commoditised so they don't tend to put it front and centre of their offering.

BritishInvestor said:

Joey_Soap said:

The answer the OP seeks is "no". ZPZ is on the money here. And a solution from Vanguard or one of the robo-advisors is likely to be at least as good as an IFA will manage. Meantime, read as much as you can about building and maintaining a portfolio yourself. Then decide whether a robo/Vanguard style of portfolio is what you want. You can then decide for yourself whether managing your own money is for you. Or even if you want to use an IFA after all. My own opinion is that using an advisor should really be a last resort. But if you actively choose to do so from an informed point of view, then fine. HTH.

You'd have to provide evidence on the robo-adviser performance as most I've seen have very average outcomes (upon cursory inspection). 
A number of advisers I know used Vanguard in one form or another as part of the portfolio building blocks - investment management is commoditised so they don't tend to put it front and centre of their offering.

 I have never met anyone yet who has used the services of an FA/IFA and doesn't feel ripped off. 

In a world where the race to cheapest is best. Hardly surprising. Yet expect to be highly paid in their own employment.