Relationship With Your IFA

Scrudgy

My fear of getting a duff IFA is stronger than the fear of going DIY. So I DIY.

I had two attempts at working with an IFA, first one worked for a big firm, he had been in the finance industry for one year only, the year before he was a professional sports person so I knew exactly how much experience he had. He said he felt sure he could help me for an upfront fee of £5,000. He also said the firm’s standard billing rate for ad-hoc work was £200 per hour. My view was that for £5,000 I would like to know what I would get for that fee, but that information was not forthcoming, and for £200 per hour I really thought I would get someone with more than one years on the job knowledge.

The second guy I tried had many years industry experience and said I needed 80% of the pot in VLS60 and 2 satellite funds of 10% each in the likes of SMT or Fundsmith or similar, but that he would do all the complex cash flow modelling, risk analysis and portfolio monitoring behind the scenes to see if my portfolio needing tweaking every year for only a small percentage of the pot. It was at this point that I decided to DIY. Still, I bet most people have no clue what a VLS60 is and they probably think wow this guys knows his stuff. The couple who put me onto this guy said they were delighted with him, and that they were very happy with their investments, however, they only knew what he told them every review time. Maybe if I had been forthcoming that I had a little knowledge he would have upped his game, however I had learned enough already that he wasn’t for me.

Ibrahim5

Scrudgy said:

My fear of getting a duff IFA is stronger than the fear of going DIY. So I DIY.

I had two attempts at working with an IFA, first one worked for a big firm, he had been in the finance industry for one year only, the year before he was a professional sports person so I knew exactly how much experience he had. He said he felt sure he could help me for an upfront fee of £5,000. He also said the firm’s standard billing rate for ad-hoc work was £200 per hour. My view was that for £5,000 I would like to know what I would get for that fee, but that information was not forthcoming, and for £200 per hour I really thought I would get someone with more than one years on the job knowledge.

The second guy I tried had many years industry experience and said I needed 80% of the pot in VLS60 and 2 satellite funds of 10% each in the likes of SMT or Fundsmith or similar, but that he would do all the complex cash flow modelling, risk analysis and portfolio monitoring behind the scenes to see if my portfolio needing tweaking every year for only a small percentage of the pot. It was at this point that I decided to DIY. Still, I bet most people have no clue what a VLS60 is and they probably think wow this guys knows his stuff. The couple who put me onto this guy said they were delighted with him, and that they were very happy with their investments, however, they only knew what he told them every review time. Maybe if I had been forthcoming that I had a little knowledge he would have upped his game, however I had learned enough already that he wasn’t for me.

Yes I think most IFAs know that 3 funds doesn't look complicated enough. You need a few more for the customer to say "he's such a clever man. He puts the money in all these complicated funds. I could never do that myself".

Thrugelmir

Deleted_User said:

Yep.  What cfw said.  Time in the market and maximizing contributions are more important than the choice of specific investment vehicles. 

If there was only one market to invest in. Life would be extremely simple. Unfortunately there's not.  

Ibrahim5

Thrugelmir said:

Deleted_User said:

Yep.  What cfw said.  Time in the market and maximizing contributions are more important than the choice of specific investment vehicles. 

If there was only one market to invest in. Life would be extremely simple. Unfortunately there's not.  

The world is one big market if you want it to be.

[Deleted User]

Scrudgy said:

The second guy I tried had many years industry experience and said I needed 80% of the pot in VLS60 and 2 satellite funds of 10% each in the likes of SMT or Fundsmith or similar, but that he would do all the complex cash flow modelling, risk analysis and portfolio monitoring behind the scenes to see if my portfolio needing tweaking every year for only a small percentage of the pot. It was at this point that I decided to DIY.

Nothings particularly wrong with VLS60 and satellites but surely one does not need complex ongoing modelling and to pay “a small percentage”? 

cfw1994

Thrugelmir said:

Deleted_User said:

Yep.  What cfw said.  Time in the market and maximizing contributions are more important than the choice of specific investment vehicles. 

If there was only one market to invest in. Life would be extremely simple. Unfortunately there's not.  

Maybe re-read the last paragraph I wrote.  

Apologies for saying this, but you do often appear to bring a negative mood to fiscal discussions!  

I prefer to look on the bright side: we are all but passing through, might as well enjoy the ride, even with financial ups or downs that none of us can accurately predict.

Bianchiintenso

Scrudgy said:

My fear of getting a duff IFA is stronger than the fear of going DIY. So I DIY. 

The second guy I tried had many years industry experience and said I needed 80% of the pot in VLS60 and 2 satellite funds of 10% each in the likes of SMT or Fundsmith or similar, .

That is very similar to the SIPP I set up for my wife. I’m kicking myself now! Can I retrospectively charge her £5k and a percentage of fund for checking it regularly?

Ibrahim5

No you don't have access to the research that the IFA has to pay for. So you wouldn't be able to look after the investments as well as an IFA who has access to the research.

GSP

cfw1994 said:

“How the markets are day to day” is not how one ought to invest, I would suggest 🤪

Certainly spreading the eggs about is wise, which is why funds exist - spread the risk.

For those who believe in deep knowledge of markets by their FA/IFA, I’d strongly suggest you take about 35 minutes to watch a short series of videos by Lars Kroijer here.

When someone invests in a Vanguard LS80 (other similar ‘multi-asset’ funds exist, some mentioned in here, for example)  it is spread across a wide chunk of the worlds markets.  You can see here how it uses other index funds, each in turn which will contain stock in many companies.  There are plenty of baskets for the eggs there! 


If you do chose to use an IFA, & it will make sense for some, it ought to be about much broader financial/lifestyle guidance, & (IMHO) absolutely not about their investing skills 😉

Thanks very much for this.

I have 13 investments, basically 70% equities, 30% bonds & gilts. With Lars video, do you believe my fund could consist of just two investments, one 70% world equity index tracker for equities, the other 30% for bonds?

Seems like a discussion for a new thread? 😃
How many investments do people have? Are they following the Lars ideology? 

dunstonh

I have 13 investments, basically 70% equities, 30% bonds & gilts. With Lars video, do you believe my fund could consist of just two investments, one 70% world equity index tracker for equities, the other 30% for bonds?

If you were based in the US, you would be daft to have anything other than passive and a split between equities and bond and a single US bond tracker would be fine.    In the UK, with currency fluctuations and a more global outlook and a market where managed funds exist that do offer value for increased potential returns in a number of areas, mean you should not rely on US data.

How many investments do people have? Are they following the Lars ideology? 

15 funds make up my portfolios. Although with risk levels and time weightings, only 10 are in use at any one time.  And no, I do not follow the ideology.      

Investing is about opinion and there are many different opinions.  Methodologies will vary and there is no one best methodology.  In some periods, a methodology may work better than another or worse in the next period.   In different countries, they may work differently because of internal taxation, market access and cost.  A lot of these methods are also variations of a theme and when you look at each, that can become quite clear.   Nobody knows what methodology is going to be best in any given period.    The key above all else is to have a structure and process that is viable.  Rather than random selections.    The actual methodology you choose to follow is less important.