How do you find a trustworthy IFA?

[Deleted User]

If the IFA is bad then you shouldn’t have an IFA.
If you are prepared to invest time in reading a couple of books then you shouldn’t have an IFA.
You should only have one for routine pensions if you are completely ignorant and the IFA is good. How do you ensure the latter? No idea.

diy- personally I think it’s a highly skilled job so to me it’s like going diy on root canal surgery. 

I would agree for DIY.  That would be picking individual stocks. However, what most people do is pick funds or ETFs. That’s not DIY any more than assembling IKEA furniture.  Someone made the product for you.  You just need to assemble. Or you could pay someone else to do it. 

theoretica

There are two bits to the decisions you need to make - and might want advice on.  You are more likely to be happy with advice if you are clear about what you are seeking.

1) How much money to put into what wrappers - how much in an ISA, how much in a pension, how much in easy access accounts. How much in your name and how much in your wife's to take advantage of tax?  Is your balance between saving and spending a good one for you? 

2) Once you have decided on how much should go into a pension or other wrapper, the question of choosing your investments.  Doing it individually will let you put personal preference in (if you do or don't want to invest in a region of the world, or ethically, or renewable energy...) or you can just look at premade portfolios - if you feel that your needs are similar to many other people in seeking the best growth.

Sunnylifeover50plan

lisyloo said:

boomboomboom said:

Thank you Lisyloo, that is really helpful to hear a firsthand experience.

So is 0.5% a percentage of your invested amount?

One of the IFAs I spoke to suggested a flat fee, but it was several thousand (under £10k) and was very non-specific. I am a facts and figures type of person, I know investing is not guarenteed, but I at least wanted some level of success criteria or measures or expectation. Without those I found it impossible to know what that fee was for or if it was worth it.

When I told friends about the offer and their proposal the immediate reaction was I was being scammed I have friends far more wealthy than me with 'estate' worthy of management and they have quite basic investments - which isn't to say they are right of course.

If my assumptions are correct, me investing in a medium risk SIPP would have the same effect as your IFA spreading investments across high and low risk 'things'.

For example my workplace pension is invested by a well known company and I have no idea what they do with the money. So what is the difference between them and Wealthify, albeit from what I can tell Wealthify is more of an automated 'platform' (more lingo I've picked up along the way).

Literally I just don't know where to turn. Like I said, to the point of apathy!

Do you mind if I ask how you found your IFA, was it recommendation or through searches? And did you speak to more than one? And finally ... sorry ... what did you base your decision on.

I'm a nightmare aren't I lol I just feel so frustrated.

lisyloo said:

I’m happy with my IFA. The deal I have is I pay 0.5% but I get advice whenever I want it.

Yes 0.5% is on the whole investment so if you had £100k that would be £5k per year, but don’t forget the IFA might do 1% or 2% better than me as well as helping me plan to avoid income tax, inheritance tax, LTA etc. 

Don't think £5k is right on a value of £100k if it's 0.5% 

To the OP I found mine on unbiased and checked with the FCA whether they were authorised to undertake the activities they offered. 

My IFA charged me an annual fee of £1200 pa for ongoing advice but I was in two funds which charged between 1 and 1.4% pa fees and then an annual SIPP fee of around £650. All I really got was a virtual annual review with the last annual review document riddled with errors.

It's all down to personal experience but I ended up with a SIPP platform which wasn't online and was set-up for paper instructions. For me it felt as if my IFA had made it difficult for me to get involved in an effort to justify his ongoing involvement.

After the last review I decided to move to a SIPP with good online functionality and invested mostly into Vanguard passive funds. I now self serve without the IFA.

lisyloo

sorry my bad on the maths, but yes it’s a fixed % every year

lisyloo

Deleted_User said:

If the IFA is bad then you shouldn’t have an IFA.
If you are prepared to invest time in reading a couple of books then you shouldn’t have an IFA.
You should only have one for routine pensions if you are completely ignorant and the IFA is good. How do you ensure the latter? No idea.

diy- personally I think it’s a highly skilled job so to me it’s like going diy on root canal surgery. 

I would agree for DIY.  That would be picking individual stocks. However, what most people do is pick funds or ETFs. That’s not DIY any more than assembling IKEA furniture.  Someone made the product for you.  You just need to assemble. Or you could pay someone else to do it. 

I don’t agree that I could replace everything my Ifa does with a “couple of books”. Maybe you are referring by to bad or mediocre ones?

I am talking about the holistic advice on BCE, LTA, IHT, CGT, GIA, ISA, MVL, state pension etc and that’s before picking any funds.

I certainly don’t consider myself completely ignorant but I don’t enjoy it so it no different to someone who doesn’t like car washing or doesn’t like ironing paying someone else to do it. 

I also think there an argument for the skill level as above, but I’m talking from a perspective of someone who receives a great deal more help than can be gotten from “a couple of books”.

I am aware there are many here with a desire towards diy which is fine. It doesn’t mean other people are thick or ignorant.

ask yourself what do the rich and successful do?
do they diy or do they pay an “expert” who is much better than a “couple of books”.
id hazard a. Guess that people
like the royals employ the best in their field.

what do you think The beckhams or Andrew Lloyd Weber do?
read a couple of books or pay an expert?

It doesn’t mean they have more money than sense or are thick, they just understand the value of  skill set and it’s a shrewd decision for them.

QrizB

lisyloo said:

ask yourself what do the rich and successful do?

do they diy or do they pay an “expert” who is much better than a “couple of books”.

OP states they are in the top 1% of earners, so over £160k pa. Even an average IFA has a reasonable chance of saving the OP more money than their fees.

Albermarle

QrizB said:

lisyloo said:

ask yourself what do the rich and successful do?

do they diy or do they pay an “expert” who is much better than a “couple of books”.

OP states they are in the top 1% of earners, so over £160k pa. Even an average IFA has a reasonable chance of saving the OP more money than their fees.

Yes, the more complicated your financial affairs and/or the more you earn/own , the more good tax planning for now and in future for your family can most likely be more important than the actual investment strategy .

zagfles

lisyloo said:

boomboomboom said:

Thank you Lisyloo, that is really helpful to hear a firsthand experience.

So is 0.5% a percentage of your invested amount?

One of the IFAs I spoke to suggested a flat fee, but it was several thousand (under £10k) and was very non-specific. I am a facts and figures type of person, I know investing is not guarenteed, but I at least wanted some level of success criteria or measures or expectation. Without those I found it impossible to know what that fee was for or if it was worth it.

When I told friends about the offer and their proposal the immediate reaction was I was being scammed I have friends far more wealthy than me with 'estate' worthy of management and they have quite basic investments - which isn't to say they are right of course.

If my assumptions are correct, me investing in a medium risk SIPP would have the same effect as your IFA spreading investments across high and low risk 'things'.

For example my workplace pension is invested by a well known company and I have no idea what they do with the money. So what is the difference between them and Wealthify, albeit from what I can tell Wealthify is more of an automated 'platform' (more lingo I've picked up along the way).

Literally I just don't know where to turn. Like I said, to the point of apathy!

Do you mind if I ask how you found your IFA, was it recommendation or through searches? And did you speak to more than one? And finally ... sorry ... what did you base your decision on.

I'm a nightmare aren't I lol I just feel so frustrated.

lisyloo said:

I’m happy with my IFA. The deal I have is I pay 0.5% but I get advice whenever I want it.

Yes 0.5% is on the whole investment so if you had £100k that would be £5k per year, but don’t forget the IFA might do 1% or 2% better than me as well as helping me plan to avoid income tax, inheritance tax, LTA etc. 

the people saying they are crooks don’t really understand the service the Ifa is offering.

no you putting yours in a medium risk account is not the same as my diversified portfolio. 

Have you considered currencies, geographies or asset classes. 

I have some In america for example. That means when the £ is doing badly against the dollar I get more £s for my investments denominated in $s.
mine is probably less volatile than yours which means it goes down less.

that is just one example of an aspect that someone doing diy might overlook.

I also get “institutional rates” on the funds which basically means my IfA gets a bulk discount. 

I’ve generally gotten my IFAs from work schemes and stick with them if they are any good.
its not a guarantee but if your employer is using them then that’s another level of due diligence.

Just a couple of points - anyone can get "clean" (often called I) fund classes these days, in the old days most funds included "trail commission" which was intended to pay the IFA, if you went direct to the fund provider they just kept it, but platforms like HL etc would refund it. But now after the "retail distribution review" which was intended to separate fund and advice charges to make charges more transparent, ordinary investors can get "clean" fund classes which don't include trail commission. Some big ones like HL even have "superclean" classes where they've negotiated discounts on "clean" fund classes.

Easy these days to get multi-asset funds which are geographically diverse.

Also I don't think anyone here tends to refer to IFAs as crooks, not even Fred/Ibrahim whatever he's called now, just some think they are expensive and/or unnecessary. An alternative option between an IFA and "DIY" is using a robo adviser, see https://www.thetimes.co.uk/money-mentor/article/robo-adviser/

dunstonh

• WHICH IFA? I am finding it hard to get help from an IFA that isn't always after making me spend big to help manage my 'wealth'. I realise unbiased and other IFA search services exist, but I just can't seem to find an IFA that is straight forward and honest.

Unbiased is not a good directory for IFAs ever since it moved to a lead generation model and included FAs.  For our area, none of the independent IFAs are listed.  Just the salesforces, wealth management companies and a couple of network based advisers.

• RISK!! Everything I read pension-related talks about the fact that we could lose our investment - I get this, it's a disclaimer. But does it literally mean I could lose the lot? I realise the answer to that is probably yes, but how do you reconcile that worry of having zero at the end of 20 years of saving?

Potentially yes but probably no.     Risk is not on/off.  Every option and investment has risk.   However, it is a sliding scale.

• SIPP PROVIDERS: I've been looking at Wealthify, Fidelity, Legal & General and HSBC (via Fidelity again) for SIPPs. But it seems an incredibly small marketplace, and everything seems automated - I just have to select my risk level and boom. Will these companies go bust? I have read plenty of the special protection SIPPs/pensions get, but nothing can protect against a bad trade from what I have read.

If you intend to use an IFA then let the IFA pick the platform.  Some you have mentioned are not SIPP providers and are very limited in their options.

The net result of all of this is that I end up doing nothing! I am prepared to pay for an IFA of course, but is it just me that believes they are inherently dishonest? Perhaps I have hangups from growing up in the 80s!

IFAs didn't exist until 1988.  Are you sure you are not mixing them up with FAs or insurance agents?

I just find the basis on which to select an IFA totally arbitrary, it's quite frustrating.

No different to any trade.    IFAs have only a couple of thousand complaints at the FOS each year despite handling the majority of transactions in their respective areas.  Most of which are rejected.   It is considered one of the more reliable methods.  FAs/sales forces on the other hand....    Nobody can claim perfection but statistically, the issues with IFAs are not about the quality of advice but the cost (and therefore value for money).  Some are expensive (really expensive).  Others are very good value.  

zagfles

lisyloo said:

Deleted_User said:

If the IFA is bad then you shouldn’t have an IFA.
If you are prepared to invest time in reading a couple of books then you shouldn’t have an IFA.
You should only have one for routine pensions if you are completely ignorant and the IFA is good. How do you ensure the latter? No idea.

diy- personally I think it’s a highly skilled job so to me it’s like going diy on root canal surgery. 

I would agree for DIY.  That would be picking individual stocks. However, what most people do is pick funds or ETFs. That’s not DIY any more than assembling IKEA furniture.  Someone made the product for you.  You just need to assemble. Or you could pay someone else to do it. 

I don’t agree that I could replace everything my Ifa does with a “couple of books”. Maybe you are referring by to bad or mediocre ones?

I am talking about the holistic advice on BCE, LTA, IHT, CGT, GIA, ISA, MVL, state pension etc and that’s before picking any funds.

I certainly don’t consider myself completely ignorant but I don’t enjoy it so it no different to someone who doesn’t like car washing or doesn’t like ironing paying someone else to do it. 

I also think there an argument for the skill level as above, but I’m talking from a perspective of someone who receives a great deal more help than can be gotten from “a couple of books”.

I am aware there are many here with a desire towards diy which is fine. It doesn’t mean other people are thick or ignorant.

ask yourself what do the rich and successful do?
do they diy or do they pay an “expert” who is much better than a “couple of books”.
id hazard a. Guess that people
like the royals employ the best in their field.

what do you think The beckhams or Andrew Lloyd Weber do?
read a couple of books or pay an expert?

It doesn’t mean they have more money than sense or are thick, they just understand the value of  skill set and it’s a shrewd decision for them.

The more money you have/earn the more cost effective virtually every service you pay for becomes. For instance they probably have chauffers, cleaners, cooks, gardeners  etc. If most people 0.5% to an IFA they could probably negotiate 0.1%