Why is the cost of advice so high?

wjr4

Ibrahim5 said:

An IFA has no practical skills. An IFAs 'treatment' would be filling a few forms in.

At this point, your posts are just embarrassing. 

Ibrahim5

Training to be an orthopaedic surgeon would be about 8 times the length of time it takes to become an IFA. It's a complex practical job. You couldn't do your own orthopaedic surgery but you can easily do your own financial planning. Setting up a pension or transferring a pension is just paperwork. I didn't really think I was being controversial.

cfw1994

Thrugelmir said:

Ibrahim5 said:

Well I do my own and I just fill a few forms in online or on paper. Hip replacement is a practical skill. The more I think about it the more incomparable it becomes.

You've no practical advice for someone else though. 

I agree with your sentiment....those posts are slightly bizarre.
However, frankly no-one that isn't a regulated IFA can offer any advice on here.....all any non-IFAs can do is offer 'guidance' - hints and tips, in many cases based on experience, thankfully!
Even IFAs are highly unlikely to offer 'advice' on a forum, I suspect.

BritishInvestor

Ibrahim5 said:

 but you can easily do your own financial planning. 

Odd then that lots of financial planners have their own financial planner.

https://behaviorgap.com/how-to-deal-with-investing-blind-spots/

Ibrahim5 said:

 Setting up a pension or transferring a pension is just paperwork. 

But this has nothing to do with financial planning.

trevjl

Not taking one side or the other, but, one thing struck me reading this thread.

A chap at work (now retired 6 months) had an IFA look at his pensions around this time last year, I believe at 1%.

We are both in the same deferred DB scheme, and subsequent DC scheme, both with similar "pots"

The difference being that he had another 5 various pensions from previous historic employment. I on the other hand have none at all (bit younger and longer at current company), yet 1% was what was wanted regardless, for what appeared to me to be much less work.

Yes I understand some things remain the same if one or 10 pensions, but it has to be less work to work through 5 different pensions and company than 1.

dunstonh

Yes I understand some things remain the same if one or 10 pensions, but it has to be less work to work through 5 different pensions and company than 1.

The more pensions there are, the greater the work as it scheme needs to have the work carried out on it.   i.e. obtaining the info from 5 schemes, analysing 5 schemes and writing the report covering 5 schemes.

The percentage method is an easy method to understand.  It is not perfect but it sits in nicely between covering the increased risk and increased work that exists with larger amounts compared to smaller amounts and the consumer knowing exactly what their bill is going to be.  Many firms have an hourly rate or once did and gave up on it because most consumers don't want an open ended bill that they don't know the amount.   

Many adviser firms have a cap and collar or tapering on their charge to ensure the percentage does not get silly.  Some greedy firms do not.

MK62

trevjl said:

Not taking one side or the other, but, one thing struck me reading this thread.

A chap at work (now retired 6 months) had an IFA look at his pensions around this time last year, I believe at 1%.

We are both in the same deferred DB scheme, and subsequent DC scheme, both with similar "pots"

The difference being that he had another 5 various pensions from previous historic employment. I on the other hand have none at all (bit younger and longer at current company), yet 1% was what was wanted regardless, for what appeared to me to be much less work.

Yes I understand some things remain the same if one or 10 pensions, but it has to be less work to work through 5 different pensions and company than 1.

Less work yes, but you might well be primarily paying for the IFA's potential liability in case in the future it's decided he/she gave bad advice, especially on the DB pension.......perhaps even good advice if not given forcefully enough. There have been some reports on here of IFAs being held liable for clients acting against their advice (not sure how that works though TBH)

BritishInvestor

trevjl said:

Not taking one side or the other, but, one thing struck me reading this thread.

A chap at work (now retired 6 months) had an IFA look at his pensions around this time last year, I believe at 1%.

We are both in the same deferred DB scheme, and subsequent DC scheme, both with similar "pots"

The difference being that he had another 5 various pensions from previous historic employment. I on the other hand have none at all (bit younger and longer at current company), yet 1% was what was wanted regardless, for what appeared to me to be much less work.

Yes I understand some things remain the same if one or 10 pensions, but it has to be less work to work through 5 different pensions and company than 1.

Sounds like the "traditional" advice model, where the focus is on the money, rather than the person. 

A financial planning/advice charging model tends to be structured as below.

https://meaningfulmoney.tv/work-with-pete/
https://redcirclefp.co.uk/why-choose-us/our-fees/

Malthusian

trevjl said:

The difference being that he had another 5 various pensions from previous historic employment. I on the other hand have none at all (bit younger and longer at current company), yet 1% was what was wanted regardless, for what appeared to me to be much less work.

There is no good reason why one client with half as much money as another client should pay twice as much to get the same value from a financial service.

That is why ad valorem fees are used near-universally for funds under management or administration, including by the FCA.

Conversations along the lines of "Why is the cost of advice so high" tend to focus on the supply side (what are the advisers' costs) when the important thing is the demand side (what is the value of the advice to the client). Partly this is because they tend to devolve into an argument between people who think that financial advice has value and people who think that the value of financial advice is nil.

Ibrahim5

I would be a lot poorer if I used an IFA so the value of advice would be negative.