Do I really need a Financial Advisor on an ongoing basis?

Diplodicus

DT2001 said:

Diplodicus said:

DT2001 said:

Diplodicus said:

Linton said:

 

There you are:

https://www.fca.org.uk/publication/transcripts/inside-fca-podcast-transcript-debbie-gupta-interview-consumer-investment-strategy.pdf

There is no place in that document where the FCA spokesperson states that the FCA  wants fewer and bigger firms to offer financial advice. Is there?

But - if that were the FCA intention - why does it mean the client should pay for ongoing financial advice?

Linton’s quote does state the FCA want fewer firms so it is easier to regulate. 

Put the FCA quote in quotation marks below.

So that they realise what you claim they're stating.

“I think the market that we regulate is dominated by lots and lots of small firms. So it makes it really difficult for people like you and I to navigate.“

This is from the FCA podcast which Linton more fully quoted. It is as stated.

What do you think it means?

Do you agree that there is nothing stopping people from using ongoing advice from IFAs?

It means what the FCA say. 

IFAs can take on people on an ongoing basis - jackpot! - there would be nothing to hinder their union.

Ibrahim5

Say you have a £1M pension pot dunstonh would tell you that it costs 0.5% for an annual review which is £5K. An IFA can't charge for parts so the bill is all labour. So does it take 2 hours at £2.5K an hour or 100 hours at £50 an hour? I have seen him asked this before and he won't reply. If someone asks for an opinion on their portfolio on this forum he can reply in a few minutes. A quick review is OK if the fees are reasonable. The people that pay these silly fees need to start reducing them. Agree to reviews but at reasonable fees. £200 for a review is plenty.

Diplodicus

Ibrahim5 said:

Say you have a £1M pension pot dunstonh would tell you that it costs 0.5% for an annual review which is £5K. An IFA can't charge for parts so the bill is all labour. So does it take 2 hours at £2.5K an hour or 100 hours at £50 an hour? I have seen him asked this before and he won't reply. If someone asks for an opinion on their portfolio on this forum he can reply in a few minutes. A quick review is OK if the fees are reasonable. The people that pay these silly fees need to start reducing them. Agree to reviews but at reasonable fees. £200 for a review is plenty.

Well yes. There is a  thread on another forum originating with a potential client querying a £5k fee. 

dunstonh intervened to normalise the fee @ half that.

But the originator of the thread found the service for £500!

Exemplary!

But there cannot be a "reasonable" nor "average" charge for a service that is unquantifiable.

DT2001

Diplodicus said:

Ibrahim5 said:

Say you have a £1M pension pot dunstonh would tell you that it costs 0.5% for an annual review which is £5K. An IFA can't charge for parts so the bill is all labour. So does it take 2 hours at £2.5K an hour or 100 hours at £50 an hour? I have seen him asked this before and he won't reply. If someone asks for an opinion on their portfolio on this forum he can reply in a few minutes. A quick review is OK if the fees are reasonable. The people that pay these silly fees need to start reducing them. Agree to reviews but at reasonable fees. £200 for a review is plenty.

Well yes. There is a  thread on another forum originating with a potential client querying a £5k fee. 

dunstonh intervened to normalise the fee @ half that.

But the originator of the thread found the service for £500!

Exemplary!

But there cannot be a "reasonable" nor "average" charge for a service that is unquantifiable.

Why is it unquantifiable?

DT2001

Ibrahim5 said:

Say you have a £1M pension pot dunstonh would tell you that it costs 0.5% for an annual review which is £5K. An IFA can't charge for parts so the bill is all labour. So does it take 2 hours at £2.5K an hour or 100 hours at £50 an hour? I have seen him asked this before and he won't reply. If someone asks for an opinion on their portfolio on this forum he can reply in a few minutes. A quick review is OK if the fees are reasonable. The people that pay these silly fees need to start reducing them. Agree to reviews but at reasonable fees. £200 for a review is plenty.

How do you get to your figure of £200?

Diplodicus

I'm thinking of all the ephemeral stuff like "peace of mind," "hand holding" - all the stuff listed on this thread to justify ongoing advice  - hard to tell if it works or not. You can't really measure it. 

On the subject of there being fewer financial advisers, it has happened in many walks of life. There used to be an office for motor insurance in most villages. They weren't regulated out of existence, they were superseded by online comparison sites. Similarly,
the rationalisation of the financial advice business isn't because the FCA waved a magic wand, it is driven by hard headed commercial avarice. A "sticker" who pays for ongoing financial advice is a valuable, saleable commodity.  

[Deleted User]

There are issues and situations when specialist financial advice is absolutely essential.  

No longer the case for ongoing investment advice for bog standard retirement investments.  Even for handholding we now have robo-advisors.  

Also, more regulation tends to cause more problems, just of a slightly different nature than it solves.  Certainly regulations are needed but not an answer to every question.

dunstonh

No longer the case for ongoing investment advice for bog standard retirement investments.  Even for handholding we now have robo-advisors. 

If you dont agree with using advisers for ongoing servicing then you shouldn't agree with using a robo. Many of whom cost the same or even more than many advisers giving a full advice service.   Robos don't give the same sort of advice either.  Indeed, most dont give any advice beyond a flow chart to picking investment risk (and flow chart risk profiling is highly unreliable).

the rationalisation of the financial advice business isn't because the FCA waved a magic wand, it is driven by hard headed commercial avarice. A "sticker" who pays for ongoing financial advice is a valuable, saleable commodity.  

I'm afraid you are wrong.   If you look at significant regulation events up to 2013, each resulted in a significant drop in numbers following it.    Stakeholder pension was probably the most damaging for the home service companies and caused the single biggest drop.

Home service companies were expensive and their products were not great but they did a fantastic job at getting people to put money aside each month and it was notable that pension provision by individuals fell away significantly after the home service companies shut down.

[Deleted User]

If you dont agree with using advisers for ongoing servicing then you shouldn't agree with using a robo. Many of whom cost the same or even more than many advisers giving a full advice service.   Robos don't give the same sort of advice either.  Indeed, most dont give any advice beyond a flow chart to picking investment risk (and flow chart risk profiling is highly unreliable).

Some robos charge quite a bit less. They do tactical asset allocation for you rather than advice. Which is the service physical advisors offer too.  And not sure advisors are any good at evaluating risks.  I wouldn’t use robo advisors. 

Not the point though. The point is that younger people needing hand holding go to robos. 

DT2001

Diplodicus said:

I'm thinking of all the ephemeral stuff like "peace of mind," "hand holding" - all the stuff listed on this thread to justify ongoing advice  - hard to tell if it works or not. You can't really measure it. 

On the subject of there being fewer financial advisers, it has happened in many walks of life. There used to be an office for motor insurance in most villages. They weren't regulated out of existence, they were superseded by online comparison sites. Similarly,
the rationalisation of the financial advice business isn't because the FCA waved a magic wand, it is driven by hard headed commercial avarice. A "sticker" who pays for ongoing financial advice is a valuable, saleable commodity.  

If you cannot measure it how can you say £5k for a £1m portfolio is too much?
What are the costs relating to that portfolio - professional indemnity insurance etc
Does the client speak to his advisor once a year or once a month?
Is the portfolio reviewed quarterly without necessarily contacting the client?

When my mother downsized she saw an IFA and put funds into a bond. It has performed solidly, better than being in a bank/building society however she wouldn’t have been happy without his ‘hand holding’. In addition it meant there wasn’t any friction between her children as the advice was independent. IMO that is a win win and the costs at 0.5% acceptable.

I know two IFA’s who’ve retired early because of the increased regulation. Both were working on their own and couldn’t find anyone other than medium sized firms able to take on their business.
If the FCA can regulate better with fewer firms in existence that surely is better for all of us as hopefully insurance indemnity costs will reduce with the overall level of advice rising?

Competition tends also to drive costs to the client down.