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

Aminatidi

dunstonh said:

Vanguard is not a platform available to advisers.  Vanguard have a heavily restricted advice (almost guidance level) service but its not comparable to full advice.   Aviva offer a whole of market platform that is better than their DIY offering.   Barclays don't appear to have a platform available.   Lloyds with their Schroder tie in is not a platform but robo-guidence.  SJP do not offer a platform.  They use the old fashioned way of products.

How come Vanguard have sections on their website specifically for advisers and all those "adviser alpha" studies and a section specifically called "adviser support"?

I assumed you could speak to advisers who were partnered with Vanguard in some way beyond simply suggesting their funds.

Not the case?

coyrls

I would think many IFAs use Vanguard funds in their portfolios but they do not use the Vanguard platform to hold the funds.

Aminatidi

coyrls said:

I would think many IFAs use Vanguard funds in their portfolios but they do not use the Vanguard platform to hold the funds.

That makes sense I was just a bit surprised given all the adviser support they seem to offer that you can't invest directly on their platform via an adviser.

https://www.vanguard.co.uk/professional/adviser-support

Albermarle

I think you have to remember that Vanguard funds have been around a lot longer than the UK Vanguard Investor platform, which is firmly targeted at the retail/individual investor.

dunstonh

How come Vanguard have sections on their website specifically for advisers and all those "adviser alpha" studies and a section specifically called "adviser support"?

Because they make their funds available to IFAs.  They don't make their platform available.

That makes sense I was just a bit surprised given all the adviser support they seem to offer that you can't invest directly on their platform via an adviser.

Most IFAs will prefer to use a whole of market platforms as no one fund house has the best funds in all areas.  

datadezign

Linton said:

datadezign said:

Thank you everyone again for your advise.

Based on some comments made, is it not then relevant to see how the various platform funds manager have performed over a period of time? I have come across a performance league table provided by Yodelar that shows 1-5 star fund performance over a 5 year period. Amongst the various platforms suggested by FA & IFA’s are Vanguard, Aviva, Barclays, Lloyds-Schroder and SJP. The performance shown reflects particularly what some have said on this forum, with SPJ very low ranking and as said with very high fees. Vanguard that has been suggested by a IFA is ranked very high with good performance. I have also had one IFA suggest Jupiter, but there performance has not been good. Is the Yodelar table considered reliable, and if so, are the performance and ranking positions a worthwhile part of my decision making, or is a 5 year period not a sufficient time period to judge?

A few of you have suggested that the IFA is key, however I question why some IFA’s may suggest using a platform / fund manager that is not performing well?

1) Platform's do not perform well/badly.  They provide a service and charge for that service.  Peformance comes from the funds you invest in.

If I am using an IFA who uses a specific platform, who puts the portfolio together, is it the IFA or does he pick an ‘off the shelf’ portfolio from a platform, or is it a combination? I am trying to understand how and what questions I should ask the IFA to compare the knowledge and expertise between several IFA’s. That way I can make a more informed decision as to which one may be more suitable for our needs.

2) Comparing funds from different providers is not that meaningful unless the funds are investing in the same things.  Funds with a similar title can be very different.  Similarly different fund managers have different ranges of funds.

Sorry still trying to understand the basic ‘NUT & BOLTS’ - My understanding:-

IFA’s help understand an investors needs, and either on their own, or combined with another advisor and, or a platform compile a portfolio that suits our needs?

Platforms are (Retail) a Supermarket to sell funds and also offer various portfolio all having a different fund mix? But they do not actually manage the fund, is that correct?

Fund Managers - who deals with them, is it the IFA that deals direct with them, the platform or both?

3) Comparing performance over short periods (<10 years?) is not that meaningful.  For example since 2009 until recently tech has performed very well.  However in the past 6 monthsr or so tech has dropped significantly and the best performing funds have been those that invest in more boring and safer companies.  This effect was extremely evident in trhe period 2000-2005 when high tech funds  crashed whereas safe dividend paying ones carried on regardless.  Relative performance over one time period is not a good predictor of relative performance over a different one.

4)  Performance should not be a major criterion when choosing funds as higher performance can imply higher risk.  Any IFA that promotes his services on performance should be avoided (not that I have heard of any that do).  What is important is that the funds chosen are appropriate for your needs - most peoiple dont want to increase the chance of not meeting their objectives  to get excess return.   Also the funds need to be appropriate for you - if your red-hot high return fund crashes would you sell it in a panic and so guarantee a loss?

Investing in appropriate rather than highest performing investments is one of the main reasons for choosing an IFA in the first place.

Thank you Linton further questions I would be very grateful for answers to, next to your comments above 

dunstonh

If I am using an IFA who uses a specific platform, who puts the portfolio together, is it the IFA or does he pick an ‘off the shelf’ portfolio from a platform, or is it a combination? I am trying to understand how and what questions I should ask the IFA to compare the knowledge and expertise between several IFA’s. That way I can make a more informed decision as to which one may be more suitable for our needs.

IFAs shouldn't be using a specific platform. They should choose from the marketplace.  FAs use specific platforms (or products in the case of some of the ones you listed).

The IFA picks the investment funds.  Or they outsource it to a DFM.  The latter is more expensive usually and often best avoided unless you have specific needs (such as ESG investing).

Sorry still trying to understand the basic ‘NUT & BOLTS’ - My understanding:-

IFA’s help understand an investors needs, and either on their own, or combined with another advisor and, or a platform compile a portfolio that suits our needs?

Platforms are (Retail) a Supermarket to sell funds and also offer various portfolio all having a different fund mix? But they do not actually manage the fund, is that correct?

Fund Managers - who deals with them, is it the IFA that deals direct with them, the platform or both?

Platforms are no longer fund supermarkets.  That is how most started. However, a small number still operate that model.  They are administrators of the decisions you or your adviser makes with the investments, tax wrappers and transactions.  i.e. if the decision is to buy x% in ABC fund, then the platform carries that out.  The platform sends the statements out and gives you a front end to view your values.

IFAs can recommend investments, platforms and providers from across the marketplace.  IFA is a term used for firm and for an adviser type.   e.g. an IFA firm may have mortgage advisers and insurance advisers working for it who are not IFAs.    Whereas an IFA adviser is an individual who has no restrictions on how they can advise and can select from providers/platforms/investments that offer their products to the whole of market.

Every fund has a fund manager.  Some funds have a team with a figurehead.  Some funds have a manager that has a wider control. Some have a fund manager in responsibility but in reality it is computer driven.    IFAs or platforms rarely have any communication with the fund manager directly.   Although some do.  Nowadays, the research and due diligence companies have the communication with the fund mangers and they sell their data to IFAs.

datadezign

dunstonh said:

If I am using an IFA who uses a specific platform, who puts the portfolio together, is it the IFA or does he pick an ‘off the shelf’ portfolio from a platform, or is it a combination? I am trying to understand how and what questions I should ask the IFA to compare the knowledge and expertise between several IFA’s. That way I can make a more informed decision as to which one may be more suitable for our needs.

IFAs shouldn't be using a specific platform. They should choose from the marketplace.  FAs use specific platforms (or products in the case of some of the ones you listed).

For clarity please on the above and below paragraph - should the IFA be compiling the portfolio for us, and select which funds are most suitable, such as a combination of equities and bonds to sit within that portfolio? Would the IFA then split the funds from that portfolio to invest using two or more platforms, or does the IFA deal direct with a fund management team and not a platform?


The IFA picks the investment funds.  Or they outsource it to a DFM.  The latter is more expensive usually and often best avoided unless you have specific needs (such as ESG investing).

Sorry still trying to understand the basic ‘NUT & BOLTS’ - My understanding:-

IFA’s help understand an investors needs, and either on their own, or combined with another advisor and, or a platform compile a portfolio that suits our needs?

Platforms are (Retail) a Supermarket to sell funds and also offer various portfolio all having a different fund mix? But they do not actually manage the fund, is that correct?

Fund Managers - who deals with them, is it the IFA that deals direct with them, the platform or both?

Platforms are no longer fund supermarkets.  That is how most started. However, a small number still operate that model.  They are administrators of the decisions you or your adviser makes with the investments, tax wrappers and transactions.  i.e. if the decision is to buy x% in ABC fund, then the platform carries that out.  The platform sends the statements out and gives you a front end to view your values.

IFAs can recommend investments, platforms and providers from across the marketplace.  IFA is a term used for firm and for an adviser type.   e.g. an IFA firm may have mortgage advisers and insurance advisers working for it who are not IFAs.    Whereas an IFA adviser is an individual who has no restrictions on how they can advise and can select from providers/platforms/investments that offer their products to the whole of market.

Every fund has a fund manager.  Some funds have a team with a figurehead.  Some funds have a manager that has a wider control. Some have a fund manager in responsibility but in reality it is computer driven.    IFAs or platforms rarely have any communication with the fund manager directly.   Although some do.  Nowadays, the research and due diligence companies have the communication with the fund mangers and they sell their data to IFAs.

Thank you I have added another question next to yours above, if you could kindly comment on. The whole mechanics for a layman is very confusing. Sorry!

datadezign

Sorry my reply in bold to your comments 

IFAs shouldn't be using a specific platform. They should choose from the marketplace.  FAs use specific platforms (or products in the case of some of the ones you listed).

For clarity please on the above and below paragraph - should the IFA be compiling the portfolio for us, and select which funds are most suitable, such as a combination of equities and bonds to sit within that portfolio? Would the IFA then split the funds from that portfolio to invest using two or more platforms, or does the IFA deal direct with a fund management team and not a platform?


The IFA picks the investment funds.  Or they outsource it to a DFM.  The latter is more expensive usually and often best avoided unless you have specific needs (such as ESG investing).

dunstonh

 should the IFA be compiling the portfolio for us, and select which funds are most suitable, such as a combination of equities and bonds to sit within that portfolio? 

Both is the simple answer but not a helpful one.

IFAs that work on an advisory basis will build a portfolio based on the research, due diligence and actuarial data that they buy in.  The IFA picks the platforms and funds to fit the recommended strategy.
IFAs that work with a discretionary fund manager (DFM) outsource investment selection to the DFM.   The DFM picks the funds, and the IFA picks the platform.  The IFA would select the DFM portfolio on the platform and any changes made by the DFM automatically get applied to the portfolio without the IFA doing a thing.

DFMs add a layer of cost.   Firms that work this way often add "wealth management" to their name or tagline, but that is not a 100% rule.  You also generally find that FAs most commonly use this model but there are IFAs that work this way and it is dubious to whether they should still be referring to themselves as IFAs and not FAs.     The reason is that most that work this way only use one investment platform and put everyone on the same DFM.  So, it is questionable whether they are really IFAs.  Indeed, many firms that have had FCA visits were told to drop their IFA status to FA and compliance companies also generally issue warning to firms to do that if they operate that model.

DFMs have their place but I consider it is a niche option.  That said, some IFAs reduce their charges if a DFM is used to reflect the lower level of work required by the IFA.  That is reasonable as the use of a DFM reduces the workload of an IFA.   So, why should you the cost of the DFM.     However, most advisers that use a DFM do not discount the adviser charge and the consumer ends up paying for that extra cost.

Would the IFA then split the funds from that portfolio to invest using two or more platforms, or does the IFA deal direct with a fund management team and not a platform?

There is rarely any reason to use multiple platforms nowadays.  Most platforms lower their charges, the more you have on them.  Most platforms are whole of market.    And when you are using multiple wrappers, you really want the functionality to move funds between them without needing to pay the money back to the investor and then get the investor to pay it back to the other platform.

IFAs deal with platforms directly and have contact points with the fund houses.