Views on advisors

HappyHarry

BananaRepublic said:

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?

As with all financial services complaints, the client would make a complaint to the adviser, and the adviser will follow the complaints procedure. If the client is unhappy with the outcome, then they can raise a case with the FOS.

In the simple example you give, the client would expect the FOS to instruct the adviser to put them back in the position they had been just prior to investing, with 8% per annum simple interest and possibly a good will gesture.

The above assumes, of course, that the adviser is regulated by the FCA.

BananaRepublic

HappyHarry said:

BananaRepublic said:

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?

As with all financial services complaints, the client would make a complaint to the adviser, and the adviser will follow the complaints procedure. If the client is unhappy with the outcome, then they can raise a case with the FOS.

In the simple example you give, the client would expect the FOS to instruct the adviser to put them back in the position they had been just prior to investing, with 8% per annum simple interest and possibly a good will gesture.

The above assumes, of course, that the adviser is regulated by the FCA.

What if the advisor did not have the funds to compensate the client?

And are all IFA's regulated by the FCA?

HappyHarry

BananaRepublic said:

HappyHarry said:

BananaRepublic said:

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?

As with all financial services complaints, the client would make a complaint to the adviser, and the adviser will follow the complaints procedure. If the client is unhappy with the outcome, then they can raise a case with the FOS.

In the simple example you give, the client would expect the FOS to instruct the adviser to put them back in the position they had been just prior to investing, with 8% per annum simple interest and possibly a good will gesture.

The above assumes, of course, that the adviser is regulated by the FCA.

What if the advisor did not have the funds to compensate the client?

And are all IFA's regulated by the FCA?

They must have PI cover for such eventualities. If the adviser business no longer exists, then the compensation claim ends with the FSCS.

Yes, all regulated advisers are regulated by the FCA. A person on facebook claiming to be an adviser and recommending any kind of investment may not be a regulated adviser, so a client (scam victim) may not have the safety net they expect.

All regulated adviser businesses, and their contact details, can be found on the FCA register.

Linton

HappyHarry said:

BananaRepublic said:

HappyHarry said:

BananaRepublic said:

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?

As with all financial services complaints, the client would make a complaint to the adviser, and the adviser will follow the complaints procedure. If the client is unhappy with the outcome, then they can raise a case with the FOS.

In the simple example you give, the client would expect the FOS to instruct the adviser to put them back in the position they had been just prior to investing, with 8% per annum simple interest and possibly a good will gesture.

The above assumes, of course, that the adviser is regulated by the FCA.

What if the advisor did not have the funds to compensate the client?

And are all IFA's regulated by the FCA?

They must have PI cover for such eventualities. If the adviser business no longer exists, then the compensation claim ends with the FSCS.

Yes, all regulated advisers are regulated by the FCA. A person on facebook claiming to be an adviser and recommending any kind of investment may not be a regulated adviser, so a client (scam victim) may not have the safety net they expect.

All regulated adviser businesses, and their contact details, can be found on the FCA register.

Also "IFA" is a protected jobtitle. So it is a legal requirement that anyone calling themselves an IFA must be regulated.

enthusiasticsaver

ChilliBob said:

enthusiasticsaver said:

ChilliBob said:

Hey guys, 
I'm keen to get people's views on financial advisors when it comes to creating a portfolio.. 
1. Did you bother when starting out, or just learnt as you went, carefully
2. Do you continue to use one? If so in what capacity?
3. Assuming you *dont* use someone to do it for you (since they take a % cut) presumably you just pay for advise adhock, much like you might for legal advice?

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. 

Thoughts most welcome, cheers guys. 

 Initially I learnt as I went as I was starting out with a relatively small portfolio and I wanted to learn about investing.  After about 5 years as the portfolio was much larger and my husband had also started to invest we moved to an IFA and have been with him about a year.  He was the second one we had a free meeting with as we were not impressed with the first one. 

As  I understand it IFAs don't do ad hoc advice, at least ours doesn't.  They do a free initial meeting and if you decide to go further they do a recommendation (which you can pay for and not do the ongoing service so that might count as ad hoc). We opted for the ongoing service. 

I don't think it is naive to DIY if you do your research.  We could have carried on doing that but I was starting to get nervous about managing that amount of money (well over £200k) although he did say that I had managed it well over the 5 years I was looking after it.  He actually moved it from medium to cautious though as my husband was less inclined to  take risks.  I have more peace of mind and don't keep checking the value of the portfolio as I did when I was managing it. 

A few things I would say.  If you are going to DIY then you have to do your research and be aware of what your risk appetite is.  If you panic if the markets move downwards by more than a certain percentage and you  are tempted to sell out then you are invested in the wrong thing. Quite a few on here do DIY and some really do not like IFAs.  I just think that you have to remember you get an expert to service and repair your car and do work on your house so why not pay someone to manage your investments?  Yes of course there is a cost but the service we get from ours is not just managing the investments but advising on the best way of  financing  our lifestyle.  For us we get peace of mind but equally if I wasn't happy with him then we would terminate and manage it ourselves again. 

Thanks, this is really interesting to read. I think the charging model is a big part of it for me. For example a friend in a similar situation a few years ago has just whacked most of what he got on a few global index trackers, he seems happy with it and said it costs him about 100 quid a year, but due to sums involved would be about 10k via an ifa if they were to 'manage it'.

Yes, initially I balked at paying someone but I looked at the overall picture when we had our annual review and compared the value of the portfolio then after the charges to what it would have done had we left it in Vanguard LS60 which was where I had it invested prior to using the IFA.  Even after paying charges it had done better with the IFA and the funds he and the committee he uses had chosen.  They review the funds regularly and obviously have more  experience and knowledge than me and we get an overall financial picture each year re investments/liquidity and tax position so  more than just investing. Obviously each IFA works differently though so it could just as easily have gone down. 

enthusiasticsaver

fred246 said:

enthusiasticsaver said:

ChilliBob said:

Hey guys, 
I'm keen to get people's views on financial advisors when it comes to creating a portfolio.. 
1. Did you bother when starting out, or just learnt as you went, carefully
2. Do you continue to use one? If so in what capacity?
3. Assuming you *dont* use someone to do it for you (since they take a % cut) presumably you just pay for advise adhock, much like you might for legal advice?

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. 

Thoughts most welcome, cheers guys. 

As  I understand it IFAs don't do ad hoc advice, at least ours doesn't.  They do a free initial meeting and if you decide to go further they do a recommendation (which you can pay for and not do the ongoing service so that might count as ad hoc). We opted for the ongoing service. 

They always say they will give ad hoc advice but in reality they won't. They throw their toys out of their pram at the very mention of it. They insist on charging thousands of pounds for a review that in reality would only take a few seconds. So you have to pay them year after year for doing very little. They are parasites. They attach themselves to rich people and suck at their resources. Just get rid of the blighters and keep the money for yourself.

The fees ours charge are a percentage of the total portfolio but the service we get takes more than seconds.  We get a full financial review twice a year now due to the value of it and he covers more than just the performance of the portfolio but our overall financial position, advice re tax and how to cashflow our lifestyle.  He reviews the funds quarterly and they look at the overall management of the funds as well as past performance. I have invested it myself in the past and obviously that is cheaper but to be honest I did not really know what I was doing. We are paying for his expertise.  

barnstar2077

enthusiasticsaver said:

ChilliBob said:

enthusiasticsaver said:

ChilliBob said:

Hey guys, 
I'm keen to get people's views on financial advisors when it comes to creating a portfolio.. 
1. Did you bother when starting out, or just learnt as you went, carefully
2. Do you continue to use one? If so in what capacity?
3. Assuming you *dont* use someone to do it for you (since they take a % cut) presumably you just pay for advise adhock, much like you might for legal advice?

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. 

Thoughts most welcome, cheers guys. 

 Initially I learnt as I went as I was starting out with a relatively small portfolio and I wanted to learn about investing.  After about 5 years as the portfolio was much larger and my husband had also started to invest we moved to an IFA and have been with him about a year.  He was the second one we had a free meeting with as we were not impressed with the first one. 

As  I understand it IFAs don't do ad hoc advice, at least ours doesn't.  They do a free initial meeting and if you decide to go further they do a recommendation (which you can pay for and not do the ongoing service so that might count as ad hoc). We opted for the ongoing service. 

I don't think it is naive to DIY if you do your research.  We could have carried on doing that but I was starting to get nervous about managing that amount of money (well over £200k) although he did say that I had managed it well over the 5 years I was looking after it.  He actually moved it from medium to cautious though as my husband was less inclined to  take risks.  I have more peace of mind and don't keep checking the value of the portfolio as I did when I was managing it. 

A few things I would say.  If you are going to DIY then you have to do your research and be aware of what your risk appetite is.  If you panic if the markets move downwards by more than a certain percentage and you  are tempted to sell out then you are invested in the wrong thing. Quite a few on here do DIY and some really do not like IFAs.  I just think that you have to remember you get an expert to service and repair your car and do work on your house so why not pay someone to manage your investments?  Yes of course there is a cost but the service we get from ours is not just managing the investments but advising on the best way of  financing  our lifestyle.  For us we get peace of mind but equally if I wasn't happy with him then we would terminate and manage it ourselves again. 

Thanks, this is really interesting to read. I think the charging model is a big part of it for me. For example a friend in a similar situation a few years ago has just whacked most of what he got on a few global index trackers, he seems happy with it and said it costs him about 100 quid a year, but due to sums involved would be about 10k via an ifa if they were to 'manage it'.

Yes, initially I balked at paying someone but I looked at the overall picture when we had our annual review and compared the value of the portfolio then after the charges to what it would have done had we left it in Vanguard LS60 which was where I had it invested prior to using the IFA.  Even after paying charges it had done better with the IFA and the funds he and the committee he uses had chosen.  They review the funds regularly and obviously have more  experience and knowledge than me and we get an overall financial picture each year re investments/liquidity and tax position so  more than just investing. Obviously each IFA works differently though so it could just as easily have gone down. 

I myself use a VLS fund and have considered using an IFA.  The reason I decided to continue to DIY was because I couldn't see how my return could be improved significantly without increasing risk, which I can do myself.  For example, if you use a 60 40 tracker, then other 60 40 trackers would perform similarly (Assuming they are globally and sector diverse). Obviously there would be some that could be eliminated immediately, but it wouldn't take much effort to identify three or four that would get the job done.  There are three or four that are often discussed on these forums.  So to increase growth wouldn't you have to switch to managed funds?  Which even if they share the 60 40 split, invest globally and cover different sectors are still open to the kind of human error that a simple tracker is not?

Personally I have nothing against IFAs, anymore than I do against plumbers or dentists.  I would definitely use any them if the need arose.  I would never take what they say blindly though.  My dentist likes to tell me that I might consider making an appointment with the hygienist to have my teeth cleaned.  The hygienist uses a room at the dentists, and I don't think my teeth need extra cleaning.  Am I being too cynical, I do not know. 

barnstar2077

I apologise if the above post makes it sound like an IFA is only there to make you more money. I do not believe that to be the case, I was just responding to Enthusiastic Savers comment about improved growth for him / her. 

Alexland

barnstar2077 said:
My dentist likes to tell me that I might consider making an appointment with the hygienist to have my teeth cleaned.  The hygienist uses a room at the dentists, and I don't think my teeth need extra cleaning.  Am I being too cynical, I do not know. 

The hygienist is money well spent especially if you have never had it done before as the first time they pick out all the black grot that you never knew was under the gum line a bit like the stuff that you find in a shower filter. Well worth looking after your teeth.

barnstar2077

Alexland said:

barnstar2077 said:
My dentist likes to tell me that I might consider making an appointment with the hygienist to have my teeth cleaned.  The hygienist uses a room at the dentists, and I don't think my teeth need extra cleaning.  Am I being too cynical, I do not know. 

The hygienist is money well spent especially if you have never had it done before as the first time they pick out all the black grot that you never knew was under the gum line a bit like the stuff that you find in a shower filter. Well worth looking after your teeth.

:  )  I have had it done before.  My point was that when the dentists suggests going I cannot tell if I actually need it or if they will profit in some way from the recommendation.