IFA Advises Pension Move to True Potential : Thoughts Please?

fred246

I remember the last time I employed an IFA. She didn't like me reading everything. She just wanted me to sign. So you employ an IFA and they keep recommending things. They expect you to go along with everything they recommend. It really is disgusting. Any respectable IFA would agree it was wrong. Trying to defend this sort of behaviour shows how crooked they are.

TBC15

The one and only time I employed an IFA (for a pension transfer) I found him professional and very good value. Same as all walks of life you will find all sorts.

Albermarle

TBC15 said:

The one and only time I employed an IFA (for a pension transfer) I found him professional and very good value. Same as all walks of life you will find all sorts.

For Fred there is only type of IFA , and they will never be  professional or good value 

fred246

Well you have to question why a list of people is so valuable? They are valuable because they are a list of people who are happy to pay silly money for 'financial advice' year after year. If the financial advice actually cost what people were paying then there would be no profit in the list. IFAs charge silly amounts and people keep paying it so that list is potentially massively profitable.

dunstonh

So if the OP does NOT move to True Potential, will they still pay the IFA some fee?  One would assume not, given the business is not passed over.....

The fee ends the minute the OP ends the service.

 however, I would suggest it is rather different to Unilever buying Ben & Jerry's.

Not at all different.   New owner can discontinue loved brands or change the recipe.   Just look at Cadburys and how the new owner changed the chocolate used in creme eggs.

 B&J customers might not like the direction Unilever take, but they are not having their funds taken over. 

So, the OP moves them or appoints a new IFA.    

fred246

This thread is truly shocking. Somebody who feels incapable of managing their own finances wants to enlist an IFA for help. They have read dunstonh's posts and know FAs are terrible people who should always be avoided in favour of an IFA. So they find an IFA who they think they can work with. They then trust them to look after their money and provide advice. The customer doesn't does his own financial research because he knows he can trust his adviser. He agrees to everything the IFA advises. Then suddenly the IFA recommends that a change is made. This change is only for the IFAs benefit and is detrimental to the customer. The customer is then suddenly supposed to know that this is not in their best interests and should break the relationship at this point and engage a new IFA.
Dunstonh reports that money can pass between hands 'behind the scenes' but this isn't true. Under FCA rules 6.1A.4B the customer should be told.
One of the rules for paying the 8% 'commission' that's not commission is that the customer must be paying 0.5% in 'ongoing fees'. How right am I? That 0.5% is the bit that IFAs charge that's totally unjustifiable. 'Servicing fees' for 'reviewing a portfolio' Something that in reality takes no more than a few seconds but IFAs charge thousands of pounds for.
I do enjoy reading exchanges between IFAs. There are some out their who have morals and ethics but not many. They are always treated as being a bit strange. They are always overruled by the 'stuff your own faces with money and run' brigade.
The fees end up at 0.4% platform, 0.8% fund fees 0.5% to 0.75% 'advice fees'. My overall fees are less than a tenth of that and I invest in funds which perform much better. That's the bit that always makes me feel happy about investments. If people can make money and be happy paying 2% fees surely I must make loads of money at less than 0.2% fees?

cfw1994

dunstonh said:

So if the OP does NOT move to True Potential, will they still pay the IFA some fee?  One would assume not, given the business is not passed over.....

The fee ends the minute the OP ends the service.

 however, I would suggest it is rather different to Unilever buying Ben & Jerry's.

Not at all different.   New owner can discontinue loved brands or change the recipe.   Just look at Cadburys and how the new owner changed the chocolate used in creme eggs.

 B&J customers might not like the direction Unilever take, but they are not having their funds taken over. 

So, the OP moves them or appoints a new IFA.    

First bold (I'm no good at multi-quoting parts!):
So the fee is an on-going one?  Much like a commission, which we are often told no longer exist?   
I assumed True Potential were paying a one-off sum to retiring IFAs to take on their clients.   Maybe I am wrong.  

Second bold:
We will have to disagree on this.   Changing a recipe or taste might indeed upset people...but it won't financially affect the rest of their lives!

& yes, the OP really should find a new IFA to help them.  Or take the leap to manage things themselves.   I realise that is a big leap for some who lack confidence.  Perhaps they need to objectively ask themselves what the IFA actually did to change how their money grew.....& year on year, what changes they made to improve their financial position.   Did they get their pot back to pre-Covid levels by Aug/Sept, for example.

dunstonh

So the fee is an on-going one?  Much like a commission, which we are often told no longer exist?   

There is only an ongoing fee if the client employs the adviser to provide an ongoing service.

And no, it is not like a commission.  Commission was paid by the provider but not the policyholder.  However, the charges would often reflect the payment of commission but usually not on a like for like basis.   In some cases, consumers could benefit from commission and in some cases they would be worse off as the shape of the commission often did not match the shape of the fees.  In some cases, the providers benefitted more with commission as they would keep the commission where there was no adviser.   Whereas on fee basis, they cannot do that.

I assumed True Potential were paying a one-off sum to retiring IFAs to take on their clients. 

They are. 

We will have to disagree on this.   Changing a recipe or taste might indeed upset people...but it won't financially affect the rest of their lives!

But the person has a choice to eat something else or suffer the change.      When an adviser finishes and puts in place an alternative, the person has a choice to appoint someone else or suffer the change.

AlanP_2

fred246 said:

Well you have to question why a list of people is so valuable? They are valuable because they are a list of people who are happy to pay silly money for 'financial advice' year after year. If the financial advice actually cost what people were paying then there would be no profit in the list. IFAs charge silly amounts and people keep paying it so that list is potentially massively profitable.

Why do you have to question why a list of people is so valuable?

It is the main asset of most organisations offering services rather than products and it is valuable because it is a potential ongoing revenue stream for the acquirer.

My local mechanic has just sold up and retired, his dilapidated workshop is not the high value item he "sold", that was the list of regular clients that go back 2-3 times a year for service / MOT / tyres / batteries etc. Some of those clients may not like the new owner, or may decide his new pricing (if it goes up) is too high and will go elsewhere, that is the chance the buyer takes.

I spent many years working for large IT companies and protecting their customer list was a key consideration for "cant' approach them" clauses in contracts and the automatic enforcement of 3 months gardening leave for sales staff going to a competitor. That list, and the deals being worked on, was worth a hell of a lot of money to them.

fred246

It all comes down to the way it is communicated. The IFA only gets his massive 8% if he manages to persuade the customer on to True Potential. Dustonh is always saying how IFAs are so much better than FAs. So if the IFA writes "I am sorry but I am retiring. I have received a fantastic offer that I can't refuse. If you go onto this new platform I will be given loads of money for my retirement. You will no longer be with an IFA which is why you engaged me in the first place so it will be worse for you. However because it is better for me I am recommending it. The best thing for you is to find a new IFA but please don't do that I want my cash." That would be an honest way of doing it. I can't imagine many IFAs doing that.