Which Platform? .... and which BOOK for beginner? PLEASE

datadezign

I will be investing in this field for the very first time. I have been in business all my life until recent retirement, and fully understand the risks. The gains derived from the investment will be my main income. So far we have had several meetings with both FA's and IFA's, and direct with Barclays, and the JV between Lloyds and Schroders. Various platforms have been suggested, such as Vanguard, Aviva, SJP amongst others and to invest in a medium risk portfolio, created with a mix of investments and tax efficient wrappers, such as ISA's Bonds and Unit Trusts etc. The fess suggested vary considerably, with some stating a IFA fee and Platform fee inclusive of any other trading fees, and no entry or exit fees. Some however have given FA / IFA's fees, platform fees, and a very broad possible range of fund managers fees 0.5 to 1.5%, which does not give us any certainty as to what the overall charges may be and how to compare with others that suggest the same. Perhaps this is a way as not to offer a fixed quote or is it impossible to know what each individual fund managers will charge? Surely once FA / IFA have put together a portfolio, wouldn’t all costs be known, including the fund managers fees? Any Advice please on fees, and if a concrete quote can be asked for? Also opinions on the banks, and various platforms that have been suggested to me?

At some point, either early on, or after say the first few years, I wish to consider using another smaller pot, and one that I would not have to rely on for income, to invest directly as a separate entity. Before I do this realise I need to study and gain as much knowledge as possible before attempting to do this. My question here is, which books would be the best to read as a complete beginner, and at the point I do this should I use a platform or deal direct with stockbrokers?

thank you.

eskbanker

If you search the forum for books about investing, you'll find quite a few threads asking the same question, such as

https://forums.moneysavingexpert.com/discussion/6195587/book-on-investing

Platform selection is a part of planning investment, but is very much secondary to identifying your objectives, risk tolerance, etc, assembling an investment strategy, and then choosing products that fit all that, before finally picking a platform, which probably adds the least value to the whole activity.

In terms of fees, fund manager fees will naturally vary widely according to which managers, and which funds, you ultimately go with, so that'll be why you've been quoted a range rather than a single figure (which, as you say, should be visible after portfolio selection), but if you've been talking to IFAs who haven't explained that, then they don't sound suitable!

Linton

1) As a new investor you should be investing in funds, not individual shares.  So you wont need a stockbroker, or if you do most platforms will do the job.

2) You should use a platform, not deal with the individual providers. Most providers are not interested in small investments and should be regarded as manufacturers/wholesalers.  Retail is through the platforms though some providers may also provide a platform as a separate offering.

3) You need to distinguish what advice you are paying for:
 - if you are using an IFA you are paying for advice on your broad financial situation (eg tax , Inheritance planning etc) and what investments across the full spectrum of what is available are appropriate in those circumstances.
 - if you are using an FA such as SJP the focus is likely to be which of the limited number of products they sell could be appropriate for you.  Thery cannot advise on other products.

4) An IFA cannot tell you the costs until they have analysed your situation to determine what your investment needs are and what investments (if any) are appropriate.  In the extreme case an IFA could say that the most appropriate place for your money is a fixed term bank acccount in which case there would be no explicit ongoing fees at all, though the hidden fees are probably higher than the explicit ones for funds.

5) If you are using an IFA/FA then they will probably fix the platform.  The FA has one to sell and the IFA will not want all his clients on different plaforms because of the admin hassle.  In general the IFA platforms will have different facilities to the ones available to the end user such as the ability of the IFA to manage your investments (if that is what you want) whilst you retain ownership and can view the current status.

6) One book often recommended in the past is Smarter Investing by Tim Hale though it is rather out of date now as much has changed in recent years, particularly as regards pensions.   There is a lot of good and bad information on the net - as always you need to recognise the authors often have a point of view to sell.

dunstonh

 Surely once FA / IFA have put together a portfolio, wouldn’t all costs be known, including the fund managers fees? 

Yes in percentage terms but no in monetary terms because investments go down and up every day.  You don't know what the figure values will be.

Different risk profiles and timescale will incur different charges.  So, until things like that are known you would expect a ballpark figure rather than the hard and firm figure.

Also opinions on the banks, and various platforms that have been suggested to me?

Dump the banks. Dump the FAs.   The choice should IFA or DIY.

datadezign

Thank you everyone for all of your replies. They mostly reiterate what I had already considered. 

QUOTE: Dump the banks. Dump the FAs.   The choice should IFA or DIY.

is that everyone’s experience? One FA with SJP has a very knowledgeable background and experience in the markets prior to the tie with SJP. So If the advice given is good and comparable with advice received from a IFA, would there be any particular issue with using them and SJP compared to any other platform?

kuratowski

datadezign said:

So If the advice given is good and comparable with advice received from a IFA, would there be any particular issue with using them and SJP compared to any other platform?

Yes, even accepting the premise, the cost with SJP will be much higher, and you will be tied in with high exit fees.  In practice, the advice won't be comparable either, because SJP will only sell you their own funds, whereas an IFA will look across the whole market.

etienneg

datadezign said:

Thank you everyone for all of your replies. They mostly reiterate what I had already considered. 

QUOTE: Dump the banks. Dump the FAs.   The choice should IFA or DIY.

is that everyone’s experience? One FA with SJP has a very knowledgeable background and experience in the markets prior to the tie with SJP. So If the advice given is good and comparable with advice received from a IFA, would there be any particular issue with using them and SJP compared to any other platform?

Let's say you know a car salesman who has a very knowledgeable background and experience in the field of cars through having worked for various main dealers and who is currently employed by (let's say) Mercedes. You ask him (or her!) which car would be best for you, and explain that you want a small, inexpensive runabout as you don't travel very far these days. What make of car will he sell you? Ford, Vauxhall, Nissan, Hyundai, Toyota .....? Of course, you wouldn't expect a recommendation of anything other than a Mercedes, would you?

This is exactly comparable with a FA, who will only ever recommend from amongst the investments his (or her) employer has to offer. Now do you think using an FA (as opposed to an IFA) is a good idea?

adindas

datadezign said:

Thank you everyone for all of your replies. They mostly reiterate what I had already considered. 

QUOTE: Dump the banks. Dump the FAs.   The choice should IFA or DIY.

is that everyone’s experience? One FA with SJP has a very knowledgeable background and experience in the markets prior to the tie with SJP. So If the advice given is good and comparable with advice received from a IFA, would there be any particular issue with using them and SJP compared to any other platform?

I personally do DIY as I want to learn while keep investing as well as trading. Even learning from mistake.

The flaw here  with your statement

"One FA with SJP has a very knowledgeable background and experience in the markets prior to the tie with SJP"

To access someone knowledge you will need to have similar level or better knowledge than the one you assess. From your post you said you are a beginner and do it for the first time than this is the thing you can not asses yourself.

IFA is regulated so at least they will need to show to meet the minimum level of standard and/or knowledge needed in the industry to get registered as an IFA.

Also do not forget there are a lot of self proclaiming financial gurus, but there is no evidence they are making money from their own investment. You see a lot of them of YouTube.

If you want to believe / learn in my opinion the best one are the people like multi billionaires. But again they are not offering financial advice. But you could learn their views some of their knowledge from various financial channels

datadezign

The analogy is good. So if for instance a IFA compiles a portfolio and uses a platform such as Vanguard or Aviva for the portfolio, and the FA tied to SJP puts a portfolio together to suit our needs, the difference is that SPJ will have an affiliation with selected fund managers and the funds they use?

AlanP_2

datadezign said:

The analogy is good. So if for instance a IFA compiles a portfolio and uses a platform such as Vanguard or Aviva for the portfolio, and the FA tied to SJP puts a portfolio together to suit our needs, the difference is that SPJ will have an affiliation with selected fund managers and the funds they use?

Worse, SJP only SELL their own products to you and charge you high fees for (their) pleasure.

Linton

datadezign said:

Thank you everyone for all of your replies. They mostly reiterate what I had already considered. 

QUOTE: Dump the banks. Dump the FAs.   The choice should IFA or DIY.

is that everyone’s experience? One FA with SJP has a very knowledgeable background and experience in the markets prior to the tie with SJP. So If the advice given is good and comparable with advice received from a IFA, would there be any particular issue with using them and SJP compared to any other platform?

The advice cannot be comparable.  An IFA will advise what you should do to achieve your objectives based on a detailed review of your circumstances. and the most suitable investments for the purpose. If their advice is inappropriate you can claim compensation for resultant losses

An FA can only explain what their products do and give broad general information.  They cannot say what you should do in your situation,  you should find they are very careful to avoid being seen to do this.   So ultimately the choice of investment is yours.


If you look up SJP on the FCA Register:
https://register.fca.org.uk/s/firm?id=001b000000MfGHgAAN , you will find a list of things they are allowed to do.  Under "what can this firm do in the UK" /Investments one item that is not included is "advising".

Now look up an IFA. https://register.fca.org.uk/s/firm?id=001b000000MfLoOAAV chosern at random.  Under "what can this firm do in the UK" /Investments you will see an explicit reference to "advising".