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

MisterT

Since I started this thread I've had occasion to ask my IFA some questions about the impact of my wife possibly having to take early retirement and how best we could manage the impact to our finances. Despite me having read up as much as I could he came up with some interesting options I hadn't considered, which of course is his job.

So perhaps for us that 0.35% a year isn't a bad thing at all. As a few have commented it's exactly this type of problem that really has nothing to do with managing the portfolio (which more or less manages itself) that we are really paying the ongoing charge for. We have help for financial issues on tap when we need it, within reason I suppose - I'm sure if I was getting in touch every week he might have something else to say about it.

Diplodicus

dunstonh said:

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

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.    

Unlike IFAs - vociferous in promoting their interest here -the FCA apparently has no voice on this board, and seems to be treated as a convenient bad-guy and punching bag. The FCA  would be surprised to learn that it is responsible for the consolidation of the market. Convenient for its stretched resources maybe but it just doesn't have that magic wand to conjure such a sea-change.

In place of the conspiracy theory, a far more prosaic, plausible reason for the consolidation of the market. IFAs are selling out and cashing in because their assets (principally docile clients habituated to paying for ongoing advice) are highly valuable, saleable commodities.

https://www.retiringifa.co.uk/

IFAs are painted as the good half of the industry. But they always have that longstop, that option of selling on their business.

Edit: If you go to the foot of the homepage of retiringifa.co.uk and search your local area under "Search IFA Sellers", you can get an idea of just how many IFAs are looking to cash out, and for how much.

[Deleted User]

In place of the conspiracy theory, a far more prosaic, plausible reason for the consolidation of the market. IFAs are selling out and cashing in 

Not sure the two processes are mutually exclusive.  Can certainly see new regulations and constraints on kick-backs from the funds forcing advisors out of business.  Corner store owners also sell up but does not automatically translate to consolidation. 

I do like it how some IFAs commoditize their clients.  Very cool to be paid for advice by clients while you are sleeping but to then sell these clients?  Priceless.

[Deleted User]

MisterT said:

Since I started this thread I've had occasion to ask my IFA some questions about the impact of my wife possibly having to take early retirement and how best we could manage the impact to our finances. Despite me having read up as much as I could he came up with some interesting options I hadn't considered, which of course is his job.

So perhaps for us that 0.35% a year isn't a bad thing at all. As a few have commented it's exactly this type of problem that really has nothing to do with managing the portfolio (which more or less manages itself) that we are really paying the ongoing charge for. We have help for financial issues on tap when we need it, within reason I suppose - I'm sure if I was getting in touch every week he might have something else to say about it.

This raises a few questions:

1. How often does your wife retire? 

2. Do you think the advisor would have rejected you had he not been paid an annual fee growing well above RPI?
3. 0.35% does not sound like a lot.  Yet its the same money getting taxed again and again and again for decades.  Do you know the cumulative compounded cost after lets say 20 years?
4. People buy houses way more often than they retire.  Do you have a real estate agent on a retainer? Do you pay him a proportion of your current house valuation? 

Ibrahim5

It really is shocking. It all stems from the commission days. Once they had sold a product that generated a trail of commission. That trail could then be bought and sold by advisers. Every few years I would get a letter from a new IFA telling me that they were my new advisers. Could be anywhere in the country. They always offered to help with anything that could get them more commission. They wouldn't review the product that generated the commission without charging again. The people that are willing to pay silly money for reviews are now seen as a very profitable commodity to be bought and sold by the spivs. "Here's a portfolio of rich people paying silly money for reviews. Bids welcome". It stinks. A while ago dunstonh said it was acceptable for an IFA to sell their business to an FA. So the customer gets an FA which he always tells us is such an awful thing to happen. That's fine as long as the retiring IFA gets a load of cash for his 'business'.

Thrugelmir

Ibrahim5 said:

 £200 for a review is plenty.

Probanly doesn't even cover the cost of running an office for an hour. 

DT2001

Ibrahim5 said:

It really is shocking. It all stems from the commission days. Once they had sold a product that generated a trail of commission. That trail could then be bought and sold by advisers. Every few years I would get a letter from a new IFA telling me that they were my new advisers. Could be anywhere in the country. They always offered to help with anything that could get them more commission. They wouldn't review the product that generated the commission without charging again. The people that are willing to pay silly money for reviews are now seen as a very profitable commodity to be bought and sold by the spivs. "Here's a portfolio of rich people paying silly money for reviews. Bids welcome". It stinks. A while ago dunstonh said it was acceptable for an IFA to sell their business to an FA. So the customer gets an FA which he always tells us is such an awful thing to happen. That's fine as long as the retiring IFA gets a load of cash for his 'business'.

If an IFA is retiring what is he meant to do with his business?
My mother and MIL were both ‘moved’ but had reasonable notice so could find a different firm if they wanted.
If you spent years building a business which has goodwill in it would you just give that away.

JohnWinder

Selling the trust your clients have in you? Well, you might just give the business away. It would avoid profiting from the misery of your old clients who turned out to be shafted by the fellow you sold them to.

DT2001

Deleted_User said:

MisterT said:

Since I started this thread I've had occasion to ask my IFA some questions about the impact of my wife possibly having to take early retirement and how best we could manage the impact to our finances. Despite me having read up as much as I could he came up with some interesting options I hadn't considered, which of course is his job.

So perhaps for us that 0.35% a year isn't a bad thing at all. As a few have commented it's exactly this type of problem that really has nothing to do with managing the portfolio (which more or less manages itself) that we are really paying the ongoing charge for. We have help for financial issues on tap when we need it, within reason I suppose - I'm sure if I was getting in touch every week he might have something else to say about it.

This raises a few questions:

1. How often does your wife retire? 

2. Do you think the advisor would have rejected you had he not been paid an annual fee growing well above RPI?
3. 0.35% does not sound like a lot.  Yet its the same money getting taxed again and again and again for decades.  Do you know the cumulative compounded cost after lets say 20 years?
4. People buy houses way more often than they retire.  Do you have a real estate agent on a retainer? Do you pay him a proportion of your current house valuation? 

Playing devils advocate
1. MisterT’s wife was only looking at an impact of possibly retiring
2. how does it grow above RPI or are you suggesting the portfolio is rising well!
3. If, and I know some will say a big if, the IFA made a good investment decision on day 1 the returns would compound over time
4. IFA’s might advise on retiring, investing, IHT, decumulation, your children’s investments, ISA’s etc so it is not a fair comparison. If you’ve sold a property in France and had to pay 6% to the immobilier plus TVA you might think 0.35% a bargain!

MisterT

Deleted_User said:

MisterT said:

Since I started this thread I've had occasion to ask my IFA some questions about the impact of my wife possibly having to take early retirement and how best we could manage the impact to our finances. Despite me having read up as much as I could he came up with some interesting options I hadn't considered, which of course is his job.

So perhaps for us that 0.35% a year isn't a bad thing at all. As a few have commented it's exactly this type of problem that really has nothing to do with managing the portfolio (which more or less manages itself) that we are really paying the ongoing charge for. We have help for financial issues on tap when we need it, within reason I suppose - I'm sure if I was getting in touch every week he might have something else to say about it.

This raises a few questions:

1. How often does your wife retire? 

2. Do you think the advisor would have rejected you had he not been paid an annual fee growing well above RPI?
3. 0.35% does not sound like a lot.  Yet its the same money getting taxed again and again and again for decades.  Do you know the cumulative compounded cost after lets say 20 years?
4. People buy houses way more often than they retire.  Do you have a real estate agent on a retainer? Do you pay him a proportion of your current house valuation? 

Due to unexpected circumstances she may have to retire early hence the need for advice from the IFA, If I had dispensed with his services I'd have had to go elsewhere and as I mentioned it turned out to be pretty useful.
We are both definitely retiring in a couple of years at which point I will be looking for more advice and he will be there to provide it, once we have our post retirement up and running I doubt I'll keep paying the 0.35% as hopefully my requirements will be much simpler and I can go it alone.
Afaik 0.35% is a pretty good rate for an ongoing charge, I got him down from 05% initially and as the plan was only set up in early 2020 we're not going to be paying it for that long, I started this thread as I had my doubts about even paying that once the plan was up and running.
Don't get me started on estate agents and how much they charge......