IFA to DIY - Thank you forumites

Cobbler_tone

Someone clearly got badly stung by an IFA 

BritishInvestor

cfw1994 said:

 As someone else put it, going DIY will likely reduce the amount you “need” to make on investments by not paying an IFA/FA.

https://www.bayes.citystgeorges.ac.uk/__data/assets/pdf_file/0003/69933/Do-UK-retail-investors-buy-at-the-top-and-sell-at-the-bottom.pdf

Do advisers really charge >1.2% a year 

"The UK data that we use here suggest that on average the investment timing decisions of retail investors with regard to equity mutual funds has cost them performance of just under 1.2% per year over the eighteen year period of our study"

Freecall

This is hardly surprising.  If you draw conclusions from the mean of two samples then the source data has to be derived using a comparable sampling methodology.

In the UK financial advice is a regulated industry which means that all of the really bad stuff has been filtered out.  The sample of self-investors though will probably include every possible type of decision making including all the ridiculous stuff.

Maybe this could be relevant if you are looking to justify being trained in finance (or indeed any situation) but doesn't really progress this conversation.

DT2001

BritishInvestor said:

cfw1994 said:

 As someone else put it, going DIY will likely reduce the amount you “need” to make on investments by not paying an IFA/FA.

https://www.bayes.citystgeorges.ac.uk/__data/assets/pdf_file/0003/69933/Do-UK-retail-investors-buy-at-the-top-and-sell-at-the-bottom.pdf

Do advisers really charge >1.2% a year 

"The UK data that we use here suggest that on average the investment timing decisions of retail investors with regard to equity mutual funds has cost them performance of just under 1.2% per year over the eighteen year period of our study"

There are active and passive investors. If you stick to Warren Buffet’s advice - invest passively and long term and don’t try to time the market you will get an average performance at a lower cost.

Undoubtedly retail investors who are active will on average underperform as they compete against institutional investors with vast research resources.

So we should tweak CFW’s statement to read DIY can reduce 

IFAs are of benefit to those who do not have the knowledge or time to research investment strategy and those that are inveterate dabblers (who are probably least likely to use an IFA).

Cobbler_tone

I remember ‘back in the day’ you’d rarely get a deal as good as a mortgage advisor could. This would have been pre comparison sites and before a lot of people understood mortgages so well. Might still exist but life has certainly moved on since then and would imagine the majority of people sort their own.
Not a direct comparison with IFA’s as a lot more complicated with the products out there, understanding of tax, risk and numerous options. Getting a good ‘un you trust is probably the biggest challenge, a bit like a mechanic! 

michaels

BritishInvestor said:

cfw1994 said:

 As someone else put it, going DIY will likely reduce the amount you “need” to make on investments by not paying an IFA/FA.

https://www.bayes.citystgeorges.ac.uk/__data/assets/pdf_file/0003/69933/Do-UK-retail-investors-buy-at-the-top-and-sell-at-the-bottom.pdf

Do advisers really charge >1.2% a year 

"The UK data that we use here suggest that on average the investment timing decisions of retail investors with regard to equity mutual funds has cost them performance of just under 1.2% per year over the eighteen year period of our study"

I wonder what the average fee paid over that period was for those with an fa or IFA was compared to those without?