Why is the cost of advice so high?

LV_426

Thrugelmir said:

LV_426 said:

Albermarle said:

LV_426 said:

BritishInvestor said:

LV_426 said:

I think I have a promising way forward here. Had a conversation this morning with an IFA recommended by a friend. I was left with a good feeling about him, and have arranged further discussion.
Maybe my mistake was going to IFAs who were part of a practice. Probably costs are higher and they need to charge bigger fees.

A one-man band or just someone that isn't part of a national group?

One man band. Sounds like he has enough regular clients to bring in a solid income. And of course being self employed is a huge advantage (for me anyway, in terms of fees).

I would have thought that a small group of IFA's ( 3 or 4 ) sharing an office and some admin/IT costs would actually be more cost efficient than a one man band ?
Also they can cover for each other in case of illness, holidays etc

I guess it depends. Say you have 100 clients, paying £750/year for ongoing support. Guaranteed £75k/year income. Plus new clients requiring financial planning and advice, for which you can charge more.
As a single self-employed person, your overheads are very minimal.

Sounds so simple. Where I can buy such a business off the shelf? 

Thanks for the constructive comment.
What's up mate? Have I done something to upset you?
Just wondering what the motivation is for the snarky comments.

Malthusian

LV_426 said:

Well my first question is, I have 6 DC pension plans. What's the best thing to do with them?

a) Do nothing, leave them as is
b) Transfer them all into one of the existing funds
c) Combination of a) and b)
d) Transfer some or all of them to an entirely new fund/platform

Any advisor I've approached wants to go through an initial meet and greet, then asks for information about my current assets and income/expenditure. So we're immediately into a planning/analysis exercise. Obviously with costs involved.

No professional advisor wants to answer my specific question. They all want to draw me into an ongoing relationship. Absolutely nobody I've talked to will do a one off piece of work as you suggest.

If you say to a doctor "I have a lump on my neck. What should I do about it?" and refuse to let him examine you because you don't want to pay for an examination, what would you expect the outcome to be?

Plenty of advisers will do transactional advice (although it's a niche) but very few will willingly do bad advice. "What should I do with my 6 pension plans" "Well, what are your retirement goals, how do these pensions fit into them" "Not telling" "No probs, in that case I'll recommend you do something made-up at random" is bad advice.

Transactional advice is a rare niche because financial plans should be reviewed regularly, annually at minimum. If you're happy you don't need advice in the future then what's the need for it now?

LV_426

Malthusian said:

LV_426 said:

Well my first question is, I have 6 DC pension plans. What's the best thing to do with them?

a) Do nothing, leave them as is
b) Transfer them all into one of the existing funds
c) Combination of a) and b)
d) Transfer some or all of them to an entirely new fund/platform

Any advisor I've approached wants to go through an initial meet and greet, then asks for information about my current assets and income/expenditure. So we're immediately into a planning/analysis exercise. Obviously with costs involved.

No professional advisor wants to answer my specific question. They all want to draw me into an ongoing relationship. Absolutely nobody I've talked to will do a one off piece of work as you suggest.

If you say to a doctor "I have a lump on my neck. What should I do about it?" and refuse to let him examine you because you don't want to pay for an examination, what would you expect the outcome to be?

Plenty of advisers will do transactional advice (although it's a niche) but very few will willingly do bad advice. "What should I do with my 6 pension plans" "Well, what are your retirement goals, how do these pensions fit into them" "Not telling" "No probs, in that case I'll recommend you do something made-up at random" is bad advice.

Transactional advice is a rare niche because financial plans should be reviewed regularly, annually at minimum. If you're happy you don't need advice in the future then what's the need for it now?

Because I think there's a need for some advice on how to collect everything together in the right way. Once it's organised correctly it should be easier to manage.
To be honest though, I'm still not sure if I do need advice. As I said I'm learning things all the time. But it's the old problem - I don't know what I don't know.

eskbanker

To me the issue is that you've jumped to a set of solutions without defining the problem, i.e. it isn't practical to identify which (if any) of your four options is "best" because there are no evaluation criteria specified.  Some would consider 'best' to be cheapest, others might prefer lowest risk, others higher returns (while prepared to accept higher risk), others lowest maintenance/admin, etc, etc, and as above, without sight of what your end game is, it's impossible to devise the optimal route to get there, so that's why there needs to be some analysis and planning, whether that's carried out by yourself or someone else....

bostonerimus

The cost of investor advice is high because boats don't come cheap.

Seriously, advisors will charge as much as they can. In some cases the advise is well worth it, but most people need simple, basic advice and if more people realize they can DIY and companies like Vanguard make it relatively easy and inexpensive to invest then the cost should come down...or become very specialized and expensive.

dunstonh

I have just had a meeting this morning and it went like so many have before.    

start of meeting client to me:  "I want to do "this" and just need to know which provider to use.  Can you do that that?"
middle of meeting: me saying "why have you chosen that method and not "this method" etc.   Response, I didnt know about that.
end of meeting:   what we are doing is nothing like what the person thought they wanted to do at the start.

Seriously, advisors will charge as much as they can. In some cases the advise is well worth it, but most people need simple, basic advice and if more people realize they can DIY and companies like Vanguard make it relatively easy and inexpensive to invest then the cost should come down...or become very specialized and expensive.

DIY is only as good as the knowledge and ability of the person doing the DIY.     
Vanguards ongoing adviser charge is 0.50% and only uses vanguards own funds and it isn't a full advice service.   It is restricted.      The most common IFA charge for ongoing is also 0.50%.  So, how is a restricted ongoing advice service tied to one provider charging the same amount as a full advice ongoing service which is whole of market any better?

Albermarle

I have just had a meeting this morning and it went like so many have before.    
start of meeting client to me:  "I want to do "this" and just need to know which provider to use.  Can you do that that?"
middle of meeting: me saying "why have you chosen that method and not "this method" etc.   Response, I didnt know about that.end of meeting:   what we are doing is nothing like what the person thought they wanted to do at the start.

Something similar happens with some threads on this forum .

Thrugelmir

bostonerimus said:

The cost of investor advice is high because boats don't come cheap.

Seriously, advisors will charge as much as they can. In some cases the advise is well worth it, but most people need simple, basic advice and if more people realize they can DIY and companies like Vanguard make it relatively easy and inexpensive to invest then the cost should come down...or become very specialized and expensive.

Vanguards offer an active professional range as well. Leopards do change their spots. Finally shedding the illusion that they remain feverent John Bogle disciples.  There's no moat around their business model. Adapt or die one might say. Technology is rapidly changing the investment world. 

Thrugelmir

LV_426 said:

Thrugelmir said:

LV_426 said:

Albermarle said:

LV_426 said:

BritishInvestor said:

LV_426 said:

I think I have a promising way forward here. Had a conversation this morning with an IFA recommended by a friend. I was left with a good feeling about him, and have arranged further discussion.
Maybe my mistake was going to IFAs who were part of a practice. Probably costs are higher and they need to charge bigger fees.

A one-man band or just someone that isn't part of a national group?

One man band. Sounds like he has enough regular clients to bring in a solid income. And of course being self employed is a huge advantage (for me anyway, in terms of fees).

I would have thought that a small group of IFA's ( 3 or 4 ) sharing an office and some admin/IT costs would actually be more cost efficient than a one man band ?
Also they can cover for each other in case of illness, holidays etc

I guess it depends. Say you have 100 clients, paying £750/year for ongoing support. Guaranteed £75k/year income. Plus new clients requiring financial planning and advice, for which you can charge more.
As a single self-employed person, your overheads are very minimal.

Sounds so simple. Where I can buy such a business off the shelf? 

Thanks for the constructive comment.
What's up mate? Have I done something to upset you?
Just wondering what the motivation is for the snarky comments.

Such a business would not materilise overnight. Somebody would have worked very hard over a long period of time to achieve that goal. As we a nation we are very quick to bash people for what they've achieved through their own endeavours. Looking at what they have now through a perspective of envy. Rather considering the expense and personal sacrifice put in. 

LV_426

Thrugelmir said:

LV_426 said:

Thrugelmir said:

LV_426 said:

Albermarle said:

LV_426 said:

BritishInvestor said:

LV_426 said:

I think I have a promising way forward here. Had a conversation this morning with an IFA recommended by a friend. I was left with a good feeling about him, and have arranged further discussion.
Maybe my mistake was going to IFAs who were part of a practice. Probably costs are higher and they need to charge bigger fees.

A one-man band or just someone that isn't part of a national group?

One man band. Sounds like he has enough regular clients to bring in a solid income. And of course being self employed is a huge advantage (for me anyway, in terms of fees).

I would have thought that a small group of IFA's ( 3 or 4 ) sharing an office and some admin/IT costs would actually be more cost efficient than a one man band ?
Also they can cover for each other in case of illness, holidays etc

I guess it depends. Say you have 100 clients, paying £750/year for ongoing support. Guaranteed £75k/year income. Plus new clients requiring financial planning and advice, for which you can charge more.
As a single self-employed person, your overheads are very minimal.

Sounds so simple. Where I can buy such a business off the shelf? 

Thanks for the constructive comment.
What's up mate? Have I done something to upset you?
Just wondering what the motivation is for the snarky comments.

Such a business would not materilise overnight. Somebody would have worked very hard over a long period of time to achieve that goal. As we a nation we are very quick to bash people for what they've achieved through their own endeavours. Looking at what they have now through a perspective of envy. Rather considering the expense and personal sacrifice put in. 

You seem to have made some really strange conclusions here.
To start with, I'm not knocking anyone's business. I fully recognise that a professional financial advisor has probably spent years building up a business, and has put in much hard work to achieve that.

I don't really know why you've taken exception to what I've said here, and feel the need to defend the honour of the entire financial adviser industry. This is a money saving expert forum right? The aim of most people here is to make the most of their money, and that includes not paying over the odds for goods or services.
So during even my limited exposure to financial advisers, I've already established that the fees vary enormously. Generally the people I've spoken to have quoted very high numbers, hence the reason I started this thread.

So in summary, get down off your high horse, I'm not knocking anyone, and if you've got any useful advice, you're welcome to contribute. Otherwise stop this petulant nonsense.