Views on advisors

[Deleted User]

I won’t speak for Fred but the accusation that I am trolling is a perfect inversion of what normally happens, as on this thread.  OP asked for practical examples of questions to ask at an introductory meeting. If my immediate respondent tells the forum (sic) “Hopefully a good IFA will explain, in the nicest possible way, why your question is foolish,” he had better be able to explain on what his hopes are based.
My posts are frequently at odds with the financial adviser narrative whose writ runs on this board. Why bother?
I happen to believe that the OP could forfeit hundreds of thousands of pounds long term on the basis of the decision under consideration.
On other threads just this week there is someone who appears to be paying adviser charges of 0.75% per month; another seems to be paying £180 per month to an absentee adviser. If I have a consistent message for MSM readers it is, Don’t be those guys. The idea that I post to try and get someone banned is not only baseless but insulting.

DiggerUK

The OP ended their opening thread post....."On the face of it I'm thinking it's unnecessary with enough research and care, but unsure if that's a reasonable view, or very naive."

Those of us who have no pecuniary interest in, but have many criticisms of the financial advisor cabal are accused of being trolls. 

It is quite a cheek to hear this from the usual suspects at the same time that the OP is being urged to "hear from all sides" 

Well ChilliBob, I don't think I will surprise you when I say that financial advisors do what they do for a living, so they ain't free. 

But it is easy  for those expert in the arts of sharp practice to make clients believe they are on an altruistic mission on your behalf.
The history of the financial industry shows it is not all saints, many sinners flourished in it's hallowed halls. And don't forget, no matter how sincere they may be, they accept no moral hazard if their advice leaves you realising that the 'value of your investments can go down, or even disapear'..._

AlanP_2

BananaRepublic said:

AlanP_2 said:

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

I had to sort out numerous bodge jobs done by professional trades including an electrician. You shouldn’t try and scare people, there are good and poor professionals and good and poor DIY enthusiasts. 

I am not trying to scare people, if you work back through the post I was responding to you will arrive at a post that effectively says " we don't get many posts on here about how bad someone's DIY investing has turned out for them and they now want to find an IFA".

Why would anyone looking for an IFA come on here and tell us, aren't they more likely to go to a site / use google and look for an IFA?

Whether the IFA will do a better or worse job is not relevant to where you would go looking for an IFA.

DiggerUK

AlanP_2 said:

BananaRepublic said:

AlanP_2 said:

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

I had to sort out numerous bodge jobs done by professional trades including an electrician. You shouldn’t try and scare people, there are good and poor professionals and good and poor DIY enthusiasts. 

I am not trying to scare people.........

Yes you are. 

The difference with a repair to a motor vehicle is that consumer protection laws mean you will be reimbursed if the repair fails to hold after a length of time. You don't get a promise that 'the repair may last forever, but there again it might not last till you get home.'
Financial advice comes with a flip, 'you may lose everything, if you do, well then tough'

There's no moral or financial hazard for the advisor, only the client..._

Sailtheworld

The OP might see an IFA and it'll probably work out just fine. The biggest error of judgement would be to think they can defer responsibility for their financial affairs to another person in exchange for a fee.

Whether it's being able to talk about boiler selection and pipework routing with a plumber or fund selection with an IFA time spent trying to understand the basics is never wasted. It could prevent someone being ripped off and, at the very least, ensure that both parties understanding what's expected from the transaction.

NottinghamKnight

AlanP_2 said:

BananaRepublic said:

AlanP_2 said:

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

I had to sort out numerous bodge jobs done by professional trades including an electrician. You shouldn’t try and scare people, there are good and poor professionals and good and poor DIY enthusiasts. 

I am not trying to scare people, if you work back through the post I was responding to you will arrive at a post that effectively says " we don't get many posts on here about how bad someone's DIY investing has turned out for them and they now want to find an IFA".

Why would anyone looking for an IFA come on here and tell us, aren't they more likely to go to a site / use google and look for an IFA?

Whether the IFA will do a better or worse job is not relevant to where you would go looking for an IFA.

The difficulty is that many of those looking for an ifa, and those that need one are a fairly small group of the population, will struggle to find one and then don't have the ability whether to determine whether who they have found is a good choice, which is why SJP is such a profitable and large company. I say the numbers are small as those that really 'need' an ifa are generally those who have recently come into substantial sums by inheritance, business sale etc; if you are younger then you have the time to learn how to DIY and minor mistakes on smaller sums are going to be less damaging. IFAs are reducing in number and there are no performance tables, so if someone can find someone who is prepared to interact with them, and they like and are happy with, then the forum can act as a sounding board to determine whether the advise looks sensible and also whether the proposed charges are in line with what might be expected.

NottinghamKnight

DiggerUK said:

AlanP_2 said:

BananaRepublic said:

AlanP_2 said:

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

I had to sort out numerous bodge jobs done by professional trades including an electrician. You shouldn’t try and scare people, there are good and poor professionals and good and poor DIY enthusiasts. 

I am not trying to scare people.........

Yes you are. 

The difference with a repair to a motor vehicle is that consumer protection laws mean you will be reimbursed if the repair fails to hold after a length of time. You don't get a promise that 'the repair may last forever, but there again it might not last till you get home.'
Financial advice comes with a flip, 'you may lose everything, if you do, well then tough'

There's no moral or financial hazard for the advisor, only the client..._

No there is risk for an adviser but in reality it's quite low. To use your motoring analogy the IFA performs a review of the problem and then recommends the fix, so the mechanics would be the fund managers who undertake the investing. The IFAs job is to investigate the customers situation and requirements and then come up with a package that meets those objectives, what he detremines may be good or not, if it is sufficiently poor to not reasonably achieve the clients expectations the client would claim from the adviser or more probably their insurers and/ or involve the regulator. The client is perfectly able to undertake these works and save the costs, that's what I do as I believe I wouldn't get value from using an advisor, whether I would or not is up for debate. Many people don't feel comfortable with accepting the risk and responsibilities, are not numerate or think their time is more worthwhile, the latter being a big call at £150-£200 an hour, I've also met people who claim an adviser as a badge of honour (richer than yow for example). This forum is a useful area for people to ask these questions and receive a range of responses and opinions, it's better that it exists than doesn't. So long as people state their opinions reasonably it should work out, the difficulty is many asking for 'advice' want a simple answer and it rarely is.

AlanP_2

DiggerUK said:

AlanP_2 said:

BananaRepublic said:

AlanP_2 said:

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

I had to sort out numerous bodge jobs done by professional trades including an electrician. You shouldn’t try and scare people, there are good and poor professionals and good and poor DIY enthusiasts. 

I am not trying to scare people.........

Yes you are. 

The difference with a repair to a motor vehicle is that consumer protection laws mean you will be reimbursed if the repair fails to hold after a length of time. You don't get a promise that 'the repair may last forever, but there again it might not last till you get home.'
Financial advice comes with a flip, 'you may lose everything, if you do, well then tough'

There's no moral or financial hazard for the advisor, only the client..._

Missed the point - follow the replies back up to the one I responded to - nothing to do with motor vehicles. 

AlanP_2

NottinghamKnight said:

AlanP_2 said:

BananaRepublic said:

AlanP_2 said:

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

I had to sort out numerous bodge jobs done by professional trades including an electrician. You shouldn’t try and scare people, there are good and poor professionals and good and poor DIY enthusiasts. 

I am not trying to scare people, if you work back through the post I was responding to you will arrive at a post that effectively says " we don't get many posts on here about how bad someone's DIY investing has turned out for them and they now want to find an IFA".

Why would anyone looking for an IFA come on here and tell us, aren't they more likely to go to a site / use google and look for an IFA?

Whether the IFA will do a better or worse job is not relevant to where you would go looking for an IFA.

The difficulty is that many of those looking for an ifa, and those that need one are a fairly small group of the population, will struggle to find one and then don't have the ability whether to determine whether who they have found is a good choice, which is why SJP is such a profitable and large company. I say the numbers are small as those that really 'need' an ifa are generally those who have recently come into substantial sums by inheritance, business sale etc; if you are younger then you have the time to learn how to DIY and minor mistakes on smaller sums are going to be less damaging. IFAs are reducing in number and there are no performance tables, so if someone can find someone who is prepared to interact with them, and they like and are happy with, then the forum can act as a sounding board to determine whether the advise looks sensible and also whether the proposed charges are in line with what might be expected.

So are you saying you would expect DIY investors who have made a mess of things to come on here and ask for an IFA they can turn to whichj was the essence of what I replied to originally?

BananaRepublic

DiggerUK said:

AlanP_2 said:

BananaRepublic said:

AlanP_2 said:

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

I had to sort out numerous bodge jobs done by professional trades including an electrician. You shouldn’t try and scare people, there are good and poor professionals and good and poor DIY enthusiasts. 

I am not trying to scare people.........

Yes you are. 

The difference with a repair to a motor vehicle is that consumer protection laws mean you will be reimbursed if the repair fails to hold after a length of time. You don't get a promise that 'the repair may last forever, but there again it might not last till you get home.'
Financial advice comes with a flip, 'you may lose everything, if you do, well then tough'

There's no moral or financial hazard for the advisor, only the client..._

I don't think that is fair. However, as you indicted earlier, the history of the financial services industry is littered with sharp practices, such as hidden fees, and churning (the selling and buying of stocks to generate fees for the advisor). Even recently there have been appalling examples of someone losing substantial amounts of money from bad financial advice, with the advisor pocketing a nice wodge (to be fair this was not advice from an IFA). In my own case I discovered after many years that I had been paying a not insignificant yearly fee to a finanical advisor. This had been set up in the days when hidden commission was allowed.

Fortunately an IFA is no longer allowed to charge hidden fees. They must charge an upfront fee that is transparent. Hence there is no longer a motivation to recommend a fund on the basis that it gives a higher commission to the IFA.

As I said earlier, all an IFA does is create a portfolio and/or investment strategy based on the client's risk profile, income, wealth and requirements. My understanding is that they use a software application to select the funds given inputs from the client. This ensures an appropriate diversification across markets, and sectors. The likelihood of the investments going 'pop' is tiny. So to say 'you may lose everything, if you do, well then tough' is highly misleading. If someone does lose everything, then either they asked for a very high risk investment, or the IFA was incompetent and/or acting fraudulently.

Anyway, I have a question for the IFA's on this forum. If an IFA does recommend investments that are completely unsuitable, and the client subsequently loses a substantial amount of money (e.g. the client has a low risk profile, his monies are 100% in Chinese funds, and the Chinese markets shrink to nothing), what comeback does the client have?