Advice welcomed on going with an IFA (non-resident)

todd89

Hi there 

I am hoping to get a bit of advice on my decision to go with an IFA. I am based in the Middle East and they operate in Switzerland but based in Dubai, I believe. I’ve checked them out on LinkedIn and they seems legit. I’ve filled out a risk profile questionnaire. They charge 0.5% and the platform is Novia Global which I believe charges 0.3% plus a custodian fee of 0.04%. I was once with Vanguard in the UK when resident and held a LifeStrategy index fund and the platform charge was 0.15%. I’m a complete novice and am very skeptical due to being hoodwinked by a company in the UAE (Devere Group) by committing to a ‘lock in’ type structure which I soon realised was a bad idea (charges were 3% plus and I couldn’t exit without sacrificing the whole investment). 

Anyway… as a complete novice, I’m still hesitant on this. The IFA is currently drawing up a suitability report. I am not sure if this means I now have to commit (?). Would mirroring the bogleheads strategy of three funds such as VTSAX + VTIAX (40% each) and the bond VBTLX (20%) via Interactive Brokers (read it is suitable for KSA residents) be a better choice? I am 34 yo. Alternatively, the ETF equivalents of VTI + VXUS and BND is also recommended on many forums. I would rebalance these myself every year but I’m not sure if the added bonus of learning a bit from the IFA is worth the extra 0.5% and the higher platform fee with Novia (advisor led). 

Thank you in advance and I appreciate any insights. 

PS. I almost want to ‘set and forget’ and not have to actively time the market and all that… I am not passionate about investing and will never ever analyse the market. 

JohnWinder

Might these assist: 'Just to clarify, SimplyFI.org is based in the United Arab Emirates, not in Bahrain. 

While we don't mind the Guide being shared for free without email exchange, that's not for someone in Bahrain to decide as they're not entitled to give that permission. 

We're a free community of over 33 000 members today https://www.facebook.com/groups/simplyfi, mostly expats living in the Middle East.

It's managed a group of volunteers, helping people take control of their finance and learn to invest Bogleheads-style.'

https://www.bogleheads.org/forum/viewtopic.php?f=20&t=319524 

I’m not sure if the added bonus of learning a bit from the IFA is worth the extra 0.5% 

Does you hairdresser teach anyone how to cut hair?

dunstonh

Anyway… as a complete novice, I’m still hesitant on this. The IFA is currently drawing up a suitability report. 

Its worth noting that the term IFA in the UK can mean something different with other countries.  So, do not assume that the high UK standards will exist elsewhere.  Indeed, each time the UK qualification standards went up, it was very common for those who failed the new exams to move into expat advice around the Middle East, as qualifications and standards were about 10-30 years behind the UK.

todd89

Now that they are writing a suitability report, am
I still able to back out? 

dunstonh

todd89 said:

Now that they are writing a suitability report, am
I still able to back out? 

You will need to check your terms of business.    In the UK, IFAs are fee based only.  So, you would sign a fee agreement and at that point fees become payable.  Outside of the UK, commission is still allowed in many countries and they earn on the product sale and not a fee.  Typically, in commission countries, pulling out does not incur a fee.

todd89

Thanks. Fee as in a fixed fee or an ongoing percentage fee? 

Any advice on the recommended fund allocations? 

dunstonh

todd89 said:

Thanks. Fee as in a fixed fee or an ongoing percentage fee? 

Any advice on the recommended fund allocations? 

Ongoing is irrelevant as nothing is in place yet.  It will be initial fee or initial commission.