IFA Charges

barnstar2077

fred246 said:

Our window cleaner does a good job but I would be unhappy if he charged 0.5% of our house value for washing them. £4.5K for glancing at a few sheets of paper is excessive. It's what's commonly known as a rip off.

Fred, I don't always agree with what you say, but you do make me laugh on a regular basis! :  )

Alexland

barnstar2077 said:

Fred, I don't always agree with what you say, but you do make me laugh on a regular basis! :  )

Fred doesn't understand that advisors have been going 'above and beyond' recently..
https://www.ftadviser.com/your-industry/2020/12/31/advice-industry-went-above-and-beyond-this-year/
(Light fuse, run...)

BananaRepublic

Alexland said:

barnstar2077 said:

Fred, I don't always agree with what you say, but you do make me laugh on a regular basis! :  )

Fred doesn't understand that advisors have been going 'above and beyond' recently..
https://www.ftadviser.com/your-industry/2020/12/31/advice-industry-went-above-and-beyond-this-year/
(Light fuse, run...)

I think that article is rich (no pun intended) given the suffering of so many people. I have friends who have lost their business (a sports train8ng centre), the local small brewery is struggling to survive, a local ice rink has closed for good, pubs, shops, restaurants and leisure centres are closing. And countless people have died and more will die. What a bunch of smug bell ends. 

barnstar2077

BananaRepublic said:

Alexland said:

barnstar2077 said:

Fred, I don't always agree with what you say, but you do make me laugh on a regular basis! :  )

Fred doesn't understand that advisors have been going 'above and beyond' recently..
https://www.ftadviser.com/your-industry/2020/12/31/advice-industry-went-above-and-beyond-this-year/
(Light fuse, run...)

I think that article is rich (no pun intended) given the suffering of so many people. I have friends who have lost their business (a sports train8ng centre), the local small brewery is struggling to survive, a local ice rink has closed for good, pubs, shops, restaurants and leisure centres are closing. And countless people have died and more will die. What a bunch of smug bell ends. 

I think you are underestimating the effort they have made for a seamless transition to working from home. 

Wildsound

fred246 said:

Our window cleaner does a good job but I would be unhappy if he charged 0.5% of our house value for washing them. £4.5K for glancing at a few sheets of paper is excessive. It's what's commonly known as a rip off.

To elaborate on your window cleaner analogy.
Option 1) I call upon a window cleaner to clean my very dirty windows and he charges me a fixed fee at a good rate (financial review, followed by advice)
Option 2) Window cleaner offers me his bi-weekly service for the same price - ok, but I don't need my windows washing that often!? (ongoing advice on investments)
Option 3) Window cleaner does the above but then breaks into my house on the 3rd visit, steals all my belongings and burns down my house (rogue adviser putting all my money in an unregulated investment/fraud)

I'd say Option 3 is unlikely in both scenarios but it could happen. People like to focus too much on this scenario and assume the worst when in reality, this is very rarely going to happen.
The problem is Option 2 - most window cleaners and advisers want you to take this option. Having your window cleaned every 2 weeks is excessive and probably not necessary. Same goes for most people's financial affairs. Once you have the place cleaned up as in option 1 (and the associated cost to do so), you can probably last a lot longer before coming back to taking option 1 again.

daveharruk

I am pretty sure that some people will have had a good experience from an IFA, perhaps because they have been lucky to have found one of the better ones, or perhaps because they don't have the confidence to believe that they can manage their own finances, however I dropped mine after they decided to put me into a TrustNet rated 2* fund which dropped substantially due to the coronavirus crisis and I've spent the last six months trying to sort out the total mess they have made of the majority of my pensions which they were being paid 0.5% to manage. The US and many other markets recovered quickly yet all the while I was getting gloomy reports from them saying that the markets were still down! Whereas I had already switched my People's Pension fund to the DJ Islamic Titans tracker and that did well following the initial crisis, the so-called financial experts at the advisor's company didn't touch a thing and kept the allocations exactly the same. Now, clearly nobody would have put all their money into the US market following the crash in March, but if you only have a few percent in the things which are trending up, then you are at best treading water. Also, I was not expecting no drop at all - but the point is their role is to limit losses to an acceptable level for the client, something they failed spectacularly to do. After I started managing my own pensions, the performance improved significantly, and because of the opaque nature, limited investment choices and high charges of traditional pension companies I'm moving everything to a SIPP which I will also manage myself (probably using Salty Dog's system). I asked my IFA multiple times how much I needed to put into my pension - the answer was simply "as much as you can afford". Now, I realise there are no hard and fast rules for this, but I know now that it's quite possible to estimate based upon your current income and intended lifestyle. Any competent person would come up with some projections which include all your assets such as other pensions. Clearly, in dynamic systems like the stock market, you need an IFA who is going to be proactive in their suggestions rather than someone who just sits on the sidelines and says effectively "oh well, your account is down by 20% but hey, it might recover in a few years time!". To those who use IFAs I sincerely hope that your experience is nothing like mine, but I would caution anyone who is considering using an IFA to ask lots of questions and if they don't get satisfactory answers don't go anywhere near them; and even if you do, consider that you can likely get just as good or better results than they would, without all the "risk profiling" nonsense which simply doesn't work and leads people into a false sense of security.

dunstonh

, and because of the opaque nature, limited investment choices and high charges of traditional pension companies I'm moving everything to a SIPP which I will also manage myself (probably using Salty Dog's system).

The vast majority of ongoing investment advice cases already use a SIPP.   Who was your provider?
And you mention one of your funds was 2* (that isn't really an issue as Trustnet star ratings are not reliable in isolation).   What about the rest of your funds?     Name that fund so we can have context and how many other funds did you have?

. I asked my IFA multiple times how much I needed to put into my pension - the answer was simply "as much as you can afford". Now, I realise there are no hard and fast rules for this, but I know now that it's quite possible to estimate based upon your current income and intended lifestyle. 

Did you ask your IFA how much you need to contribute to achieve £x p.a. income at age yy?      If you just ask how much you should put in then the answer is as much as you can.  If you ask how much to achieve a defined target then a ballpark figure should be provided.

Clearly, in dynamic systems like the stock market, you need an IFA who is going to be proactive in their suggestions rather than someone who just sits on the sidelines and says effectively "oh well, your account is down by 20% but hey, it might recover in a few years time!"

Portfolios shouldn't need wholesale changes.  Tweaks, adjustments and rebalancing but nothing has happened in the last 12 months that should require a big change.

without all the "risk profiling" nonsense which simply doesn't work and leads people into a false sense of security.

That one is a concern as you say in one bit that you were looking to limit losses.  However, your response to that appears to have increased investment risk.  What are you going to do when that investment drops 40% when you were unhappy about 20% previously?        It's easy to mock risk profiling but your response doesn't really fit with someone talking about limiting losses but then increasing risk to achieve that.

zagfles

BananaRepublic said:

dunstonh said:

How did you find out about the ombudsman decisions going against them? 

The FOS say its something like 85% have never had a complaint go to FOS, let alone rule against them.   So, to have 7 complaints go to the FOS within a year on a small local firm, would raise concern.  Using unregulated investments would be a concern.  I recall one stat from about 5 years ago that indicated that less than 1% used unregulated investments and other weird or unusual things.  Yet that 1% did it an awful lot of it.   

 The FCA should force a pro-active review of any unregulated investment sales over the last 15 years.    It won't but it should.   

I did a search against local IFA’s and very few had complaints, none of which were upheld. 7 complaints would put me off. 

It was 9, and that was just the upheld complaints, there were a few others not upheld. She'd heard about them from a friend who was using them, I guess the moral is to do your own research, don't just rely on friends' recommendations. I've made that mistake with builders...

jimpwarsop

Alexland said:

barnstar2077 said:

Fred, I don't always agree with what you say, but you do make me laugh on a regular basis! :  )

Fred doesn't understand that advisors have been going 'above and beyond' recently..
https://www.ftadviser.com/your-industry/2020/12/31/advice-industry-went-above-and-beyond-this-year/
(Light fuse, run...)

Best laugh I've had this year.....................or last year to be fair.

I once asked an IFA firm what they would charge for a £300k portfolio - 0.5% non negotiable.

They went on to explain all the work they would be doing for £1500.

Okay, I asked what would you do differently if I had £500k ?  Nothing, but that will be another £1000 thankyou please.

fred246

I do a lot of thinking. My latest thought is that employing an IFA is a bit like being married to a gold digger. You have a good relationship with them and you are compatible and will help each other. Everything is great but then they will occasionally show you their true colours and remind you that they are really just there for your money.