Finding decent IFA without word of mouth?

dunstonh

1. Firm profile - whilst a one man band might be good I prefer a firm with a few IFA's supported by a back office. So I'd like to know numbers of registered employees, particular number of IFA's (this later point I've found on the FCA's register https://register.fca.org.uk/s/search?) and how long the advisors have been with the company

Most IFA firms have 1-5 advisers.   The FCA register is ok but it has limitations.  For example, it doesn't show full history of the adviser.  The start dates for long serving advisers will be the date the register was created.   Also, if a firm changed its legal structure (e,g, from partnership to limited company or it merged with another company) then the dates restart fresh on the register.    

Edit added:  The FCA has changed the codes for permissions several times.    So, take an adviser who became authorised in 1994.   Their earliest date will be 1st Dec 2001 as that was when the register started.

When I started, my firm used a network for compliance but then later we switched to directly authorised.  That changed the dates again even though it was the same company.      Then we went from partnership to limited company. That changed the dates again.    

And finally, in 2019, the FCA replaced all the CF codes with new ones. So, everyone shows an authorised date from 2019.

2. Funds under management - If I'm going to move a large sum to a firm then I'd like to know what scale they are. I wouldn't move my bank account to new bank with 2 customers and £500 of accounts, so why would I consider a firm where my investments are a large proportion of their funds. I can't find a way to find this out 

Most IFA firms are at or just above capacity.   So, this really is unlikely to be an issue.

3. Client base - if they have a significant FUM, where does my investment fit? Are there a couple multi-million pound clients and a handful of smaller clients and where do I fit in that mix (ie big fish in a small pond, small fish in a big pond, or the only fish in the pond). Again I can't find a way to find this out 

You can often tell by their charging structure. If the firm doesn't operate caps on charges or has a decent higher value tier, then it probably means they are either greedy or don't have clients at that level.

Most IFA firms tend to have all types.  IFAs tend to focus more on middle wealth upwards.   Some firms have a minimum of £100k.  Some will have a minimum of £250k.   Location can affect things as well. 

4. What do their clients think of them and have there been any complaints? This is the "truspilot" review or similar (and I'm well aware of the limitations of client feedback). Again I can't find anything along these lines. And as for finding complaint information - that should be easy, but it's not

Most IFA firms won't appear on Trustpilot.  In very much the same way your local butcher wouldn't.   Most IFAs have never had a complaint go to the FOS.   Complaints data is published, but there is a minimum threshold to appear on it, and the only ones you see on there are the national salesforces and the odd well-known bad apple.

5. As an addition to 4 above, what is their inflows/outflows and if there are outflows why (is it customer satisfaction that's causing people to stay or dissatisfaction that's causing them to leave)

Even if you had the data, which you won't get, it wouldn't be useful without context.   For example, MiFIDII introduced the requirement of "at least annually" for reviews.    That saw many IFA firms end servicing for small value clients.    The FCA's consumer duty requirements and thematic reviews have been ever-increasing the audit trail requirements, and documentation to a point firms have been increasing their minimum investment values and ending services.

The old saying of 80% of your income comes from 20% of your clients applies.   Periodically, firms will often cull the bottom to allow more at the top, especially where the firm is at capacity, as many are.

So I empathize with the original poster and am suffering the same dilemma. If anyone has pointers as to where or how I can get the above information please let me (and many, many others) know

You are over thinking it.  IFAs have tiny complaints volumes.   Indeed, quality is rarely the problem. Cost is probably the biggest issue.     Again, that is linked to how busy IFAs are.    

eskbanker

PGammage said:

2. Funds under management - If I'm going to move a large sum to a firm then I'd like to know what scale they are. I wouldn't move my bank account to new bank with 2 customers and £500 of accounts, so why would I consider a firm where my investments are a large proportion of their funds. I can't find a way to find this out

I don't think the bank analogy works, given the number of layers between an IFA and where the financial assets actually reside, so am unconvinced that 'funds under management' as such is a meaningful metric for evaluating advisors, as opposed to, say, business turnover/revenue/profit?

LHW99

Not sure how many (if any?) firms of IFA's are actually limited companies, but if they are, Companies House will have annual accounts details.

dunstonh

LHW99 said:

Not sure how many (if any?) firms of IFA's are actually limited companies, but if they are, Companies House will have annual accounts details.

However, accounts themselves are not necessarily reliable in isolation.   For example, where there is a holding company structure (which is quite common) or where the advisers for a company are self employed but attached to the advising company (again very common).  Often the trading company is money in money out and companies house doesn't show the full accounts and turnover will be missing.   You could have a firm turning over £1m with assets of £50,000 and a different firm turning over £250k with assets of £55,000 and you wouldn't be able to tell from companies house.

As the context is not available you could read all sorts of incorrect interpretations into the limited information provided.

The FCA requires a 6 monthly return on the financial state of companies.  Companies also have to provide the PI insurance details to the FCA.    So, there isn't a need for the individuals to investigate the financial state of IFAs.   Plus, IFAs, unlike FAs, do not retail their own product.    Worst case scenario if an IFA fails is that you need to find a new IFA.    The products/investments etc are not with the IFA firm.

GeoffTF

dunstonh said:

Worst case scenario if an IFA fails is that you need to find a new IFA.    The products/investments etc are not with the IFA firm.

I got the impression that most IFA firms charge a large fee for onboarding, even if they are going to sit on the same investments. That does not look like a good worst case scenario.

dunstonh

GeoffTF said:

dunstonh said:

Worst case scenario if an IFA fails is that you need to find a new IFA.    The products/investments etc are not with the IFA firm.

I got the impression that most IFA firms charge a large fee for onboarding, even if they are going to sit on the same investments. That does not look like a good worst case scenario.

Most or some?   If it's a continuation of a plan that needs little or no tweaking but just investment adjustments, I often won't charge or only a small amount.  Especially if the client inputs their date into our portal themselves.     It really boils down to the amount of work at the outset and the size of the investment value.   

Of course, others may be greedy or somewhere in between, but I consider it based on the workload.

boingy

The problem with word of mouth recommendations for IFAs is that they are almost certainly being made by people who don't understand what they are investing in. So how can they know that the IFA is any good?

When we moved into our current house a neighbour recommended a boiler service guy on the basis that he was really friendly and also "cute". Having him install a replacement boiler for us turned out to be a bad decision. He no longer has anything to do with heating and boilers (nothing sinister - he just realised he wasn't very good and switched career).

The point is, friends, neighbours and colleagues are not always best placed to recommend people.

dunstonh

The problem with word of mouth recommendations for IFAs is that they are almost certainly being made by people who don't understand what they are investing in. So how can they know that the IFA is any good?

Someone posted on our community Facebook just tonight asking for an adviser. Most of the responses are for the SJP sales rep.

wjr4

dunstonh said:

The problem with word of mouth recommendations for IFAs is that they are almost certainly being made by people who don't understand what they are investing in. So how can they know that the IFA is any good?

Someone posted on our community Facebook just tonight asking for an adviser. Most of the responses are for the SJP sales rep.

That’s the same with my local one, infuriating! 

Linton

boingy said:

The problem with word of mouth recommendations for IFAs is that they are almost certainly being made by people who don't understand what they are investing in. So how can they know that the IFA is any good?

When we moved into our current house a neighbour recommended a boiler service guy on the basis that he was really friendly and also "cute". Having him install a replacement boiler for us turned out to be a bad decision. He no longer has anything to do with heating and boilers (nothing sinister - he just realised he wasn't very good and switched career).

The point is, friends, neighbours and colleagues are not always best placed to recommend people.

Define what makes an an IFA "Good".

In the absence of reliable recommendations in my view the best approach is to fix up 30 minute meetings with a few  local ones where you can explain your circumstances and why you want an IFA and they can explain how they can help you and the charges.  If there's a match, choose the one who you feel most comfortable with.

It really is much the same as any other personal service, eg therapist, gym instructor etc  Having done your due diligence you can reasonably assume that unless you have specialist needs the basic knowledge and skills are there so it's the interpersonal relationship that matters most.