How to find a decent financial advisor

stevoh

I reached a bit of a critical mass with my SIPP and S&S ISAs through investing myself, and seeing great returns, mainly from Fundsmith and Lindsell Train.

I decide to seek professional advice and got the recommendation of a wealth manager though a friend. The guy seems decent and as it came as a recommendation I (embarrassingly niavely) sign up to transfer my money to their platform on Abrdn without giving them the scrutiny I perhaps should have done.

I noted recently that my current work pension, on a different platform, for which they took a percentage fee to administer, had been untouched since I signed up with them, almost 2 years ago, and the now inappropriate funds that I had invested in my self were still in place. That pension has been completed hammered during the recent downturn, so I challenged them on this. They’ve held their hands up admitting it was an oversite, and I’m waiting for them to come back to me on compensation.

This prompted me to do some more digging. Anecdotally, when signing up, the guy mentioned that their fund had made a 60% return the year before, but said that was an exception. On further investigation, their managed fund has average approx 3% return over the last 5 years, before the 1% charges are taken off.

Obviously, even during normal times, this is going to lead to a year on year loss after inflation, and I’m paying them for the honour.

I’m just wondering what I can do as an alternative? I feel like the wealth management/ financial advice sector is just run by sales people, deliberately spinning things and throwing up smoke and mirrors. However I’m nervous about self management during this turbulent times,

Is it worth looking for a better advisor? If so, how can I find a decent one? 

JohnWinder

‘TEBI does have an informal network of advisers around the world who share our evidence-based investment philosophy. If you would like to be put in touch with a suitable adviser in your area, drop us a line to tell us, briefly, where you live, what stage of life you’re at, and how much money you’re planning to invest. We’ll use this information to connect you with an adviser who can help you.’  https://www.evidenceinvestor.com/help/#content-help-1 

dunstonh

I decide to seek professional advice and got the recommendation of a wealth manager though a friend. The guy seems decent and as it came as a recommendation I (embarrassingly niavely) sign up to transfer my money to their platform on Abrdn without giving them the scrutiny I perhaps should have done.

Abrdn run two platforms.  Abrdn Wrap and Abrdn Elevate.     Elevate is aimed at IFAs and Wrap is aimed at wealth managers.    

Abrdn is the new name for Standard Life.  Financially strong and they use FNZ software with both which is considered the best third party software available.

Wealth managers though are typically the most expensive distribution channel.

I noted recently that my current work pension, on a different platform, for which they took a percentage fee to administer, had been untouched since I signed up with them, almost 2 years ago, and the now inappropriate funds that I had invested in my self were still in place.

It is unusual for advisers or wealth managers to take a fee against workplace pensions as they are not geared to pay adviser charges under auto-enrolment.  So, are you sure a fee is being taken to administer that?    Plus, workplace pensions rarely give any access to advisers to make changes unless the adviser is appointed to the whole group scheme.  It is commonplace for IFAs to suggest alternative funds that could be used but it would require you to make those changes most of the time.  In my experience, an IFA would not charge for that if they are servicing your wider portfolio.   I wouldn't expect most Wealth managers to either although they do have the reputation of being expensive and its certainly possible.

they've held their hands up admitting it was an oversite, and I’m waiting for them to come back to me on compensation.

I wonder if the original rep over stepped by offering that despite not being able to follow through on it.    If a fee has been charged against that bit, then you would expect a refund as well as corrections.  

This prompted me to do some more digging. Anecdotally, when signing up, the guy mentioned that their fund had made a 60% return the year before, but said that was an exception. On further investigation, their managed fund has average approx 3% return over the last 5 years, before the 1% charges are taken off.

60% seems unrealistic or a silly risk.    I wonder if they went heavy into funds which were tech based.   In 2020, tech stocks went through the roof and did double their money.  However, those gains (like the previous tech stocks boom/bust) began to unwind late 2021 into 2022 bringing them back to the wider US market levels.     This was fine if you were invested prior to 2020 and with annual rebalancing, you could take those extra gains.  If you invested after the growth period though, you would have suffered the less period without the growth period before it.

It is worth noting that after any negative period, the annualised growth rate over a short term period will be lower than the long term average. 

Obviously, even during normal times, this is going to lead to a year on year loss after inflation, and I’m paying them for the honour.

Again, you cannot look at short term periods in isolation.   An economic cycle is around 15 years.    One part of the cycle will have strong returns with low volatility.  Another part of the cycle will have mostly positive returns but at a generally lower level and another part will have higher volatility and multiple loss periods.

In the last five years you have had three significant market falls.     It's been the worst of the three typical periods.

I’m just wondering what I can do as an alternative? I feel like the wealth management/ financial advice sector is just run by sales people, deliberately spinning things and throwing up smoke and mirrors. However I’m nervous about self management during this turbulent times,

Parts of the financial advice sector is provided by salespeople.   These are mainly the Wealth managers and FAs.   The other part is provided by IFAs.    If you use a saleperson then that is what you will get.  You should have used an IFA.   It wouldn't have avoided the short-term losses, but it may have reduced your costs and led to better explanations and understanding on your part.  IFAs are not investment managers (nor are FAs or Wealth Managers).    However, IFAs position the portfolio to be suitable for your risk profile and objectives as well as your level of understanding.

Is it worth looking for a better advisor? If so, how can I find a decent one? 

The choice should always be between DIY and IFA.    FAs and Wealth managers should be avoided.

xylophone

You might try here

https://adviserbook.co.uk/

Tick "confirmed independent" and such other specialisms required when the menu comes up.

Eyeful

Some on this forum would suggest avoiding any adviser that describe themselves as "wealth managers". Their charges are likely to be at the high end, so less of any profits made end up in your pocket.
You own it to your self to understand the difference between a Financial Adviser (FA) and an Independent Financial Advisor (IFA). If you do feel the need to use one, I suggest using an IFA.
 https://www.moneysavingexpert.com/savings/best-financial-advisers/

You could always look into DIY.

The following may be of interest to you.
https://www.kroijer.com/
https://www.hsbc.co.uk/investments/isas/hsbc-global-strategy-portfolios/#balanced
https://www.bogleheads.org/wiki/Video:Bogleheads®_investment_philosophy#Stay_the_course_.28Rule_.2310.29

Beddie

Talk to 2 more IFAs and I think you'll probably still feel the same about them. They have little value to you, in my opinion, as you've done well without them. They will just add a layer of costs.

Just make sure your attitude to risk matches your investments as you get older.