A 'not fully' independent financial adviser

tickledpink1

I'm trying to find an independent financial adviser regarding starting up a pension. I am 59 and self employed. I had an online meeting with an adviser at Fairstone, who operate across the country. Their website says they are completely independent but he said he was not fully independent. Are they fully independent or not?

Albermarle

If you just want to start a pension from scratch, you can do it yourself in 10 minutes online, for zero cost.
Have a look at the websites of
Nutmeg
Hargreaves Lansdown
Fidelity
Vanguard 
etc etc. 

tickledpink1

I'm not sure that I'm happy managing my own investment portfolio. That's why I'm looking for an independent financial adviser.

apb123

Whilst not giving financial advice, it might be easier to just go with a SIPP and buy a low cost off the peg world tracker fund. I have one with Vanguard but there are many others out there. A financial adviser is not a genius and will just push you in the direction of a SIPP but probably a high cost one. They may be tied to certain funds. The most important thing is LOW COST. 

gm0

Fairstone have their own product.  And charge 0.8% for it.  Declare 15bn AUM.

So in line with wealth management practices - reassuringly expensive. 

They must be doing "enough" redirecting of some stuff to other products to manufacture the marketing claim of independence with a somewhat straight face. And not be caught out.  They are large enough to not want to be caught out by outright deception I would think.

A back office FA/IFA consolidator.  Small businesses finding conditions in the FCA regulated world too hard, or aging out and selling up.

If 0.80% was the whole of the bill - it's not so terrible.  But if it's that for the product and 0.5% for your local agent as "tied" adivsor i.e. 1.3% ongoing and an initial charge at setup - then as usual - wealth management is expensive - for a regulated process of advice, and much the same investments underneath.  The usual way wealth managers handle this at sales is to use the phrase "our charges".  Talking about "our" in the sense of the local advisor (the 0.5%) the small company - product charges excluded naturally.  And then talking - separately about the "product" charges.  "The Fairstone fees are.." (now excluding the advice).   A shell game.  Pea. Cup. Cup Pea.

Benchmark

With actual IFA advice.  0.5% for the advice.  And about 0.3% for platform and funds.  So 0.8% in total would be "par"
Without advice - the whole product and funds thing can be done for 0.3% or a bit less with more effort.

More sophisticated and active investments cost more.  Choose your poison and hope returns net fees are positive over the long haul.

Paying the wealth manager version at 1.3%
Can be 1% of all your returns (let's call those returns a long term average of 5% so it's 20% of all your gross gains - given away to intermediaries taking a drink ahead of you.

Fairstone declare mid 30% margins.  Nice work if you can get it.  They seem to be riding a wave of consolidation of small firms modestly successfully - at 10 acquisitions per year. 

Reaching for positives.  They are not cartoon forum villain - SJP.  Or Quilter.  Or Investec.  
But if it quacks like a duck.

MallyGirl

100% equities at 59 might be a bit volatile.

You can do it yourself with a SIPP and choosing a multi asset fund like the  Vanguard Lifestrategy or HSBC Global Strategy offerings. Set up a regular contribution and let it run.
Whether you are going to put enough business the way of an IFA depends on whether this is your only pension and you are a late starter, or whether you have existing pensions/an investment portfolio/property etc.

Cobbler_tone

This is an area I would really like to understand more on. As my active workplace fund is growing, I rarely go into the background of looking at the 42 funds on offer. I would doubt very much if many employees do.

My 'default' is an L&G PMC 2030-2035 Target date fund 3. It has grown 9.11% since April 2021.

I did ask them once if it made a difference that I wanted to retire in 2027 but they said it didn't.
The thought of moving even future contributions into an alternative fund would be the equivalent of spinning a roulette wheel for me. 

Maybe that is why people just leave them be...or seek out an IFA because they think they are missing a trick. 

tickledpink1

"100% equities at 59 might be a bit volatile." Meaning don't do what?

I'm ok with managing my ISAs and moving them around etc but don't know much about pensions.

I will buy a property over the next few years to live in but I won't have any savings after that. I will get a full state pension and about £80/month from an old LGPS. I live frugally but want to put approx £600/mth into a new pension. Yes, I am a late starter!

jimjames

tickledpink1 said:

"100% equities at 59 might be a bit volatile." Meaning don't do what?

I'm ok with managing my ISAs and moving them around etc but don't know much about pensions.

If you're happy managing ISAs then pension is no different. SIPP wrapper vs ISA wrapper but exactly the same investments inside them so nothing you've not been dealing with already. Pensions seem to alien to some but they are just a wrapper for investments just like ISAs.

dunstonh

Advisers are either Independent or restricted.  There is no in between option.

IFAs are expected to select from the whole of market.   Whole of market is not 100%. For example, IFAs cannot utilise products or investments for restricted firms that sell their own product.   So, its more like 90% of the market.

If the advice firms restricts in any way (i.e. wont allow the use of a certain investment type or provider) then they cannot refer to themselves as independent.     They can filter providers or investments out in their research but they could not, for example, call themselves independent if they only use their own brand platform using their own brand fund(s).

The independent/restricted classification is a little dated.   It was defined in 1988 when you had independents and sales agents.  A binary choice.   Today, you have wealth management firms that have their own product but will select investments from the marketplace centrally and all their advisers will use that product and the pre-built centrally controlled investments.      That isn't really independent but its not tied agent sales rep either.

There has been massive growth in companies in this middle ground where they set up their own platforms/products and investment portfolios and that is what they recommend for everyone.       This has been helped by the directories like unbiased, which is no longer an IFA directory.  Unbiased, like some of the others, has priced out the independent IFAs (small localised firms of 1-5 advisers typically) and targeted the national firms and salesforces who have big marketing pots and will pay to appear on every postcode.

Cobbler_tone

jimjames said:

tickledpink1 said:

"100% equities at 59 might be a bit volatile." Meaning don't do what?

I'm ok with managing my ISAs and moving them around etc but don't know much about pensions.

If you're happy managing ISAs then pension is no different. SIPP wrapper vs ISA wrapper but exactly the same investments inside them so nothing you've not been dealing with already. Pensions seem to alien to some but they are just a wrapper for investments just like ISAs.

So other than platform/management/access fees they are much of a muchness?
The reason why pensions can seem a lot more intimidating is that it is far easier (if you are a bit savvy) to find the best rates for savings and ISAs. When people start talking about having diverse portfolios and investment choices it makes everyone sound as though they are financial whizz kids. 
I'm all over my DB but the future use of the DC pot is something that I am yet to fully get my head around, whilst understanding the basic options and tax implications. I am sure it is no where near as complicated as I fear.