How do you find a trustworthy IFA?

Albermarle

Funnily, from just those insights I actually feel more comfortable going with a SIPP with Fidelity and selecting medium risk.

In your original post you mentioned JISA's . Junior SIPP .  Out of interest Fidelity is often recommended for these as they have no charges for Junior accounts , although there still will be a charge for the investments you choose. 

[Deleted User]

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.

BCE, LTE, etc are not particularly complex, information is readily available on the internet and, crucially, irrelevant to the OP at this time.   Remember, he is starting a pension.  If someone needs help to deal with these issues, a one off advice would make sense. 

Beckham, etc… Wealthy people can benefit from specialist investment  advice.  The cut off when it might become beneficial, as given by a guy who provides the service is $50M USD (sorry, forgot his name...)  It won’t be an IFA.   They have special issues relating to inheritance, preservation and continuity. A lot of his work involves chatting to family members. Actual investments are often based on standard vanilla ETFs.   Once you are into $50M range, you can pay someone to give you personal attention to reflect your personal needs.  The other complication is that people who get to 50M are often involved in business and don’t really invest for “early retirement”.  They often have a passion for what they do; thats why they are wealthy. Its a completely different scenario and answers become very personalized. 

When you have less than that and are trying to pick investments without spending serious effort on stock picking, you will always end up with IKEA-like off-the shelf products.  Thats already put together by professionals with top notch education and experience. The only question is whether you need an intermediary.  For routine tasks I personally see no benefit.  You should educate yourself on on investment fundamentals anyway because IFAs provide advice. Their interests are not aligned with yours (not their fault). You need to understand enough to evaluate advice and make decisions. 

lisyloo

I still don’t agree with you - but happy to present different points of view.
a lot of what you’ve said about e.g. “ikea like” is not obvious to most people without doing quite a lot of research.
its quite possible for people to mess up if they don’t understand enough.

it would be an interesting exercise to compare my portfolio with your “ikea like” stuff which you think is easy peasy to get right without making mistakes (or even understanding what you are looking at).

out of interest what would you expect an “ikea like” portfolio to return annually for a risk level 7?

yes you do need to “vet” your ifas advice at least up until you trust them, but I don’t need to understand the ins and outs of all the funds. I need to understand the whole set up but not the details of every fund.

if they tell me to switch something and I trust them then I don’t need to do very much at all (once you’ve got to the point you trust them).

Thrugelmir

boomboomboom said:

TLDR; I am in the top 1% of earners 

Then presumably you use the services of experts , consultants and professionals in your daily work and life.  What's different to evaluating whether you can work with a particular IFA , just another person. With another skill set. At a point one needs to make a decision. Unlike employing a builder you've the choice of changing should matters not turn out as you expect.  While there's much written on the topic it's not the Wild West out there. Use the initial free consultations to learn and consider your options. 

zagfles

Thrugelmir said:

boomboomboom said:

TLDR; I am in the top 1% of earners 

Then presumably you use the services of experts , consultants and professionals in your daily work and life.  What's different to evaluating whether you can work with a particular IFA , just another person. With another skill set. At a point one needs to make a decision. Unlike employing a builder you've the choice of changing should matters not turn out as you expect.  While there's much written on the topic it's not the Wild West out there. Use the initial free consultations to learn and consider your options. 

As do most people, it just depends how many layers you want to take it to. Do you employ an architect to employ a project manager to employ a builder? Or do you just employ the builder?

Same with investments. Do you buy individual shares/bonds etc? Or do you buy managed funds? Or do you buy multi asset funds? Or do you employ an IFA to select which funds to use? Or do you employ someone to select which IFA to use?

Thrugelmir

zagfles said:

Thrugelmir said:

boomboomboom said:

TLDR; I am in the top 1% of earners 

Then presumably you use the services of experts , consultants and professionals in your daily work and life.  What's different to evaluating whether you can work with a particular IFA , just another person. With another skill set. At a point one needs to make a decision. Unlike employing a builder you've the choice of changing should matters not turn out as you expect.  While there's much written on the topic it's not the Wild West out there. Use the initial free consultations to learn and consider your options. 

As do most people,

In their daily work life I doubt it. A very different circle of competencey.  Over time you soon learn to work people out very quickly. 

zagfles

Thrugelmir said:

zagfles said:

Thrugelmir said:

boomboomboom said:

TLDR; I am in the top 1% of earners 

Then presumably you use the services of experts , consultants and professionals in your daily work and life.  What's different to evaluating whether you can work with a particular IFA , just another person. With another skill set. At a point one needs to make a decision. Unlike employing a builder you've the choice of changing should matters not turn out as you expect.  While there's much written on the topic it's not the Wild West out there. Use the initial free consultations to learn and consider your options. 

As do most people,

In their daily work life I doubt it. A very different circle of competencey.  Over time you soon learn to work people out very quickly. 

Indeed, like who can give you coherent and useful answers, advice and opinion, and who gives vague unhelpful answers which they think makes them look like an expert on a higher plane.

[Deleted User]

lisyloo said:

I still don’t agree with you - but happy to present different points of view.
a lot of what you’ve said about e.g. “ikea like” is not obvious to most people without doing quite a lot of research.
its quite possible for people to mess up if they don’t understand enough.

it would be an interesting exercise to compare my portfolio with your “ikea like” stuff which you think is easy peasy to get right without making mistakes (or even understanding what you are looking at).

out of interest what would you expect an “ikea like” portfolio to return annually for a risk level 7?

yes you do need to “vet” your ifas advice at least up until you trust them, but I don’t need to understand the ins and outs of all the funds. I need to understand the whole set up but not the details of every fund.

if they tell me to switch something and I trust them then I don’t need to do very much at all (once you’ve got to the point you trust them).

I don’t expect any particular annual return.  Have you tried comparing what experts are predicting for the next 12 month and what actually happens?  Predicting is a mugs game. Anyone who says “I am going to get you X% return” is bullshitting.  

My actual 20 year annualized return is around 9% (money-weighted).  Used to be 100% stocks. Now its 70/30. Investing used to be difficult. And expensive. No IKEAs then. Now you can buy the world for a few p and all information is always at your fingertips. 

Your key decision is asset allocation. Once that is done, control costs, pick a well diversified portfolio, avoid most recent celebrities, illiquid investments and it matters not  which particular brand of a fund you select. 

In general, you can alway take FTSE All Share and subtract costs. Thats a good benchmark for equities. If you start slicing and dicing, you are reducing diversification and increasing risks.  Yes, you can beat the index. I did a lot of the time when I was picking stocks. It was luck. But it was higher return for taking on more risk. 

You are not happy with FTSE All world and a cheap ETF?  You want a professional to pick your active investments?  Sure. Pick the best. With proven long term track record.  Like BRK.  IFAs don’t have to be financial experts. Like they don’t have to graduate a university course. The course they have to complete has a lot of material about selling.

The game of retirement savings isn’t about chasing highest returns.  You win this game by not losing. You lose by getting burnt when you chase. 

And I think that you do need to understand ins and outs of the funds that you spend hundreds of thousands or millions of hard earned pounds.  Thats your family’s future financial security. Pretty important to me.  We’ve seen a lot of threads lately along the lines “the fund my advisor bought me  isn’t doing what I expected, should I change?”  Triggered by volatility. That shouldn’t be happening. Do your research before you spend everything you got. 

Thrugelmir

Deleted_User said:

lisyloo said:

I still don’t agree with you - but happy to present different points of view.
a lot of what you’ve said about e.g. “ikea like” is not obvious to most people without doing quite a lot of research.
its quite possible for people to mess up if they don’t understand enough.

it would be an interesting exercise to compare my portfolio with your “ikea like” stuff which you think is easy peasy to get right without making mistakes (or even understanding what you are looking at).

out of interest what would you expect an “ikea like” portfolio to return annually for a risk level 7?

yes you do need to “vet” your ifas advice at least up until you trust them, but I don’t need to understand the ins and outs of all the funds. I need to understand the whole set up but not the details of every fund.

if they tell me to switch something and I trust them then I don’t need to do very much at all (once you’ve got to the point you trust them).

In general, you can alway take FTSE All Share and subtract costs. Thats a good benchmark for equities.

Never one I've seen recommended to use. Disparity between the largest and smallest stocks by capitalisation is to wide. 

lisyloo

I don’t have any axe to grind over what other people choose to do, but just a few observations I’ve made over my lifetime

. some people will have genuine difficulty understanding the books, it’s best to just accept them as they are
. When people are dis-inclined to do things they don’t like they can put them off indefinitely
. doing nothing is often the worst thing you can do
. Life’s too short to spend doing things you don’t like doing and probably won’t do well