Views on advisors

BananaRepublic

barnstar2077 said:

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. 

You really do need to see the hygienist before each dental check up, they remove calculus, which is a hard deposit beneath which bacteria grow. You can’t remove that at home by yourself. 

BananaRepublic

barnstar2077 said:

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. 

With the US market you are better off with a tracker.  There are some markets where active funds are a better choice. And there are markets and sectors where trackers do not exist. So if you want exposure to those areas, a tracker is not an option. 

You could argue that a selection of trackers, including a world index, maybe with a US index tracker thrown in for more US exposure, is the best option. To be honest I have not done the research, so I am guessing. I have almost always gone for actively managed funds, apart from my US pot, and I think their risk is exaggerated. Some might be closet trackers, but so long as there is no matching tracker fund, I’m okay with that. The likes of Woodford don’t exactly sell actively managed funds. 

Alexland

The dentist is giving a nudge in the right direction and overall even if they have self interest the cost over the years is reasonably covering their costs and they are meeting my objective of having healthy teeth. An IFA can provide a similar service to those that need it. Sure the market isn't perfect but overall its useful to some people in some situations.

barnstar2077

Alexland said:

The dentist is giving a nudge in the right direction and overall even if they have self interest the cost over the years is reasonably covering their costs and they are meeting my objective of having healthy teeth. An IFA can provide a similar service to those that need it. Sure the market isn't perfect but overall its useful to some people in some situations.

I'm not knocking anyone for using an hygienist.  The dentist comment was just an analogy.

fred246

TOTALLY incomparable. IFAs have got no practical skills whatsoever. They just charge £1000s for filling forms in. A dentist could easily be an IFA in less than a month of reading. That's what's so silly about IFA fees. Totally out of proportion to skills involved.

barnstar2077

lol.  I give up, clearly we need to talk more about dentists.  Dentists wear gloves so you can't see their lizard hands.  Fact.

Should I start a new thread, or shall we had add a few more pages on here?

csgohan4

I agree IFA have a role, their not for everyone but like dentists are useful

In some ways they keep your risk appetite in check and help you  try and avoid bad picks or stock trading

I use one myself for non investment purposes

Alexland

barnstar2077 said:

lol.  I give up, clearly we need to talk more about dentists.  

Yes much more interesting than all the IFA bashing. Do you think there are forums where people debate if it's worth paying a dentist or just doing it yourself if you have a mirror and some of the know-how? The tools can be bought cheaply on ebay so why spend thousands over a lifetime on dentists?

fred246

I don't think you can buy local anaesthetic cartridges online. Not legally anyway.

BananaRepublic

Alexland said:

barnstar2077 said:

lol.  I give up, clearly we need to talk more about dentists.  

Yes much more interesting than all the IFA bashing. Do you think there are forums where people debate if it's worth paying a dentist or just doing it yourself if you have a mirror and some of the know-how? The tools can be bought cheaply on ebay so why spend thousands over a lifetime on dentists?

It’s a bad comparison. Dentists train for at least six years, and perform procedures that could maim or kill if carried out ineptly.

I tried to find out the minimum qualifications required to practise as an IFA, and the internet (which never lies  ...) suggests a DipFA is needed, which requires seven months part time study, or nine months full time study, according to different sources. Other sources suggest six to twelve months full time study to gain qualifications, so let’s assume a year maximum. And don’t forget that a lot of the IFA qualifications will relate to the legal obligations on the profession, and other aspects that do not apply for DIY investing. 

However, if someone does not feel confident to DIY, there is nothing to stop them studying the IFA courses. I wonder if anyone on these forums has done this? After all a 1% fee on a £1,000,000 pot is £10,000 which is much higher than the DipFA fees quoted online.