Starting out in Investments. Paying an Independent Financial Advisor?

NeilCr

grumble_100 said:

kidmugsy said:

- active investing is probably a bad idea; it tends to be costly and, averaged over the population of active investors, it will return less than passive investing.

This is the thing that surprises me the most in all that I have read. I have read it in a few places. I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

It’s not, necessarily, all about the returns
Since coming into an inheritance I’ve used two IFAs over the last thirteen years.

I changed adviser because of moving house. No other reason.  I have had solid returns which more than meet my needs.

When I started I had no knowledge or experience so having someone then was a bonus. And I am a nervy person who
might well react wrongly if the market falls etc. My current IFA is very good at calming my fears and giving reassurance. Others may get better returns DIYing - I am happier leaving it to someone else who I trust

But that’s me. DIY works well for others and there is no one size fits all. What I would say is try not to listen to those who say definitely do/do not use an IFA. There’s a lot of good advice on here - in general the more balanced replies are the ones I would look at

bostonerimus

grumble_100 said:

kidmugsy said:

- active investing is probably a bad idea; it tends to be costly and, averaged over the population of active investors, it will return less than passive investing.

This is the thing that surprises me the most in all that I have read. I have read it in a few places. I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

One average I think the retail investor should keep fees as low as possible and have a portfolio that is designed to reproduce the performance of broad equity and bond indexes. There will always be active funds that outperform those indexes, but there will also be funds that lag the indexes. 

dunstonh

grumble_100 said:

kidmugsy said:

- active investing is probably a bad idea; it tends to be costly and, averaged over the population of active investors, it will return less than passive investing.

This is the thing that surprises me the most in all that I have read. I have read it in a few places. I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

It can do but it may not do. Also, IFAs will use passives as well as actives.   The primary purpose of an IFA is suitability.  

Thrugelmir

grumble_100 said:

kidmugsy said:

- active investing is probably a bad idea; it tends to be costly and, averaged over the population of active investors, it will return less than passive investing.

This is the thing that surprises me the most in all that I have read. I have read it in a few places. I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 

grumble_100

barnstar2077 said:

Does some of your pension transfer to your wife should you die first? If so, and as you say your wifes provisions are not as robust as your own, could it would be worth looking at how much she would still recieve if you didn't take such a large lump sum? 

If I die before my wife she would be entitled to half my annual pension, regardless of if/how much I commute. So on current figures she would get £18243 pa

grumble_100

Thrugelmir said:

Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 

Not at all, that's why I think I was attracted to the Vanguard Lifestrategy funds/Target retirement funds

Thrugelmir

grumble_100 said:

Thrugelmir said:

Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 

Not at all, that's why I think I was attracted to the Vanguard Lifestrategy funds/Target retirement funds

Then you'll be paying for investment management. The fees being cheaper due to the scale of the assets under management. Along with the limited range of products on offer. 

kidmugsy

I would turn to an IFA if I thought I needed tax advice or advice on, say, insurance policies.  I expect I'd do so if I were the trustee of a discretionary trust.  (I was a trustee when I was younger: we didn't hire an IFA because another trustee was an investment manager by trade.)  

But if you feel you'd like help for a couple of years until your confidence has built up, why not?  The point of having money is to save you from anxiety.  If an IFA can help with that he may well be worth his fee.

bostonerimus

grumble_100 said:

Thrugelmir said:

Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 

Not at all, that's why I think I was attracted to the Vanguard Lifestrategy funds/Target retirement funds

Very sensible. You will pay a little more than if you constructed your own portfolio from index trackers, but it will only cost you 0.22% in ongoing charges which I think is ok as you get automatic rebalancing and a broadly diversified portfolio. You would only own Vanguard funds inside the VLS umbrella, but that's ample diversity. Having more choice than necessary is often a hinderance rather than an asset. There are probably even less expensive suitable multi-asset funds out there so do your research, but don't get your head turned by all the shinny actively managed focussed funds out there.

Albermarle

 I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

Not everybody is after 'better returns' whether they use an IFA or not .

For example someone who is retired , is often looking for stability and some protection against market drops, rather than big growth .