Bad pension advice on funds?

whiteflag_3

Dh im surprised your in two minds about my comments, as reading your last post i think you more or less agree with what Ive said. The ones that dont know what they are doing i.e the vast majority, should stop "stock picking" and use risk graded/ managed funds instead.

EdInvestor

dunstonh wrote: »

So at worst case scenario they are no better than novice. I know a number of IFAs that dont have a clue about investing.

This is one reason why IMHO it is worth making the time to learn at least the basics of how to DIY.At worst your knowledge well help you spot an incompetent IFA before he can do too much damage.

However, there are also IFAs that have studied further who have a much greater understanding of investments and have defined strategies and are able to make decent investment recommendations.

What a pity these IFAs don't make it easy for people to find them.And why don't they?

A lot of IFAs havent had to worry about investments and allocations etc. Historically there was only one option in their eyes and it was with profits. For decades it did the job..

Quite agree - not only IFAs but also investors were lulled into a false sense of security.Just look at how long it has taken people to wake up to the problems with their endowments.

Most people are still totally confused about wrappers and what's inside them and have no idea they need to understand basic investment if they want to have a successful pension. That's another reason I support SIPPs, which basically force people to grasp this fundamental point.

purch

I always told him I was cautious. But he put me down as 'medium risk' on my intial review which is where I got the medium bit from.

when I have a risk profile thats medium

The problem is you don't have a Risk profile that is 'medium'

That is an invention of this idiot IFA who is misadvising you !!!!

You are Cautious investor......that is clear both from what you initially told the moron IFA, and from what you have posted on this thread.

The IFA is only an adviser...he cannot force you to do anything.

Take control of the situation.

Tell him to show you a fund spread that matches YOUR attitude to risk, not one to stoke HIS ego.

Then YOU make the decision.

dunstonh

whiteflag wrote: »

Dh im surprised your in two minds about my comments, as reading your last post i think you more or less agree with what Ive said. The ones that dont know what they are doing i.e the vast majority, should stop "stock picking" and use risk graded/ managed funds instead.

Perhaps my wording wasn't really the best. I do agree with you. I said I was in two minds but then went to basically agree with you . Personally, I tend to either use high yield or sector allocation. However, within that we still have to pick funds. In some areas there are some obvious dead cert managed funds, in others a tracker is best and in some you have to make a judgement call. However, i dont really call that stock picking as you are only really tweaking the important bit. That is the sector allocation.

I would rather a low knowledge IFA just use the balanced managed fund rather than try and do something they are not capable of doing. However, i do think that breed are on their last legs. You must know a number of IFAs as well who will not survive the RDR changes as they just wont be able to pass the exams.

What a pity these IFAs don't make it easy for people to find them.And why don't they?

Perhaps because we are busy enough as it is. Good IFAs get referrals from others without having to advertise. I would rather spend my budget on quality software and research tools and not on pointless advertising.

Quite agree - not only IFAs but also investors were lulled into a false sense of security.Just look at how long it has taken people to wake up to the problems with their endowments.

The problems with endowments are overstated. The problems that caused most with profits funds to fall down have actually made most people financially better off despite that. Had the old economic cycles carried on then the endowments would have still paid the surpluses but we would be worse off. Also, most people forget that their monthly payments on endowment mortgages were usually £10-£15 pm cheaper than repayment. Over 25 years that is often more than the shortfall. So, things are not as bad as made out.

Most people are still totally confused about wrappers and what's inside them and have no idea they need to understand basic investment if they want to have a successful pension. That's another reason I support SIPPs, which basically force people to grasp this fundamental point.

If people are confused over a handful of wrappers which are basically quite easy to understand if you research then how are they meant to understand SIPPs which allow tens of thousands of investment options. You say it forces people to grasp that point but that doesn't happen.

I reckon in the coming few years you are going to see loads of people complaining (or whinging as many have gone DIY and cannot complain) that they have lost a lot of money on their SIPP.

Over the last 5 years (excluding the recent decline) many people moved their money out of personal pensions (often in the default fund and not in any of the other funds available). They did this after a decline and benefited from 5 years of growth. Many of these people attribute the gains to the fact they changed the pension and not the fact they changed the funds. Many of those still will be in for a big shock as they realise the consequences of going 100% into equity funds and fashion investing. Its very easy to get carried away after a sustained period of growth and move up the risk profile without realising and providers like HL make that even easier to do.

EdInvestor

dunstonh wrote: »

Perhaps because we are busy enough as it is. Good IFAs get referrals from others without having to advertise. I would rather spend my budget on quality software and research tools and not on pointless advertising.[/quote


In that case, when so many IFAs are so poor at investing and good ones can't be bothered to advertise their existence, (and banks and salesforces are beyond the pale) how can you justify criticism of people doing it themselves.What reliable choice do they have?

If people are confused over a handful of wrappers which are basically quite easy to understand if you research then how are they meant to understand SIPPs which allow tens of thousands of investment options. You say it forces people to grasp that point but that doesn't happen.

In my experience it does. Sensible discussions ensue about asset allocation, choice of funds, who has the highest charges for what tyope of investments, which has the best interest rate etc - see the thread on the "Best SIPP".

dunstonh

In that case, when so many IFAs are so poor at investing

No-one said that so many are poor.

how can you justify criticism of people doing it themselves.What reliable choice do they have?

A poor quality IFA is likely to be no worse than a typical consumer. However, with the IFA there is comeback whereas DIY there isnt. Most IFAs will do an perfectly good job. The better ones will do an excellent job.

In my experience it does. Sensible discussions ensue about asset allocation, choice of funds, who has the highest charges for what tyope of investments, which has the best interest rate etc - see the thread on the "Best SIPP".

In my experience it doesnt. I have taken on my portfolios over the years from people that thought they would give it a go and then realised they couldnt do it or tried it and made a pigs ear of it. The sensible ones realise it. The less sensible ones cash everything in and say they will never invest again and become highly vocal.

The typical consumer doesnt have a clue about investing.

EdInvestor

dunstonh wrote: »

The typical consumer doesnt have a clue about investing.

The typical consumer seen by an IFA may not have a clue , but then those that do have a clue wouldn't bother to see an IFA, would they?

After all most serious investors will want to invest directly in shares,bonds,gilts, ETFs or investment trusts and IFAs are not authorised to advise on these.

setmefree2

purch wrote: »

The problem is you don't have a Risk profile that is 'medium'

That is an invention of this idiot IFA who is misadvising you !!!!

You are Cautious investor......that is clear both from what you initially told the moron IFA, and from what you have posted on this thread.

The IFA is only an adviser...he cannot force you to do anything.

Take control of the situation.

Tell him to show you a fund spread that matches YOUR attitude to risk, not one to stoke HIS ego.

Then YOU make the decision.

Hi Miserlymartin,

I'm no expert on pensions (by a mile!) so please don't shout at me everyone but I would like to put another view. The op sounds like a cautious investor to me too. I too am a cautious investor and I put half my pension into cash around Easter time and have now put the whole of my pension in cash. I know that everyone will scream in horror on here but I don't see how anyone can make money in the current market (what did Soros say - "a period of mass-destruction of wealth?") .:o I will review the situation again in the Autumn but I might even leave my pension in cash until next year. Do you have the option of cash?

All The Best

SMF2

PS I have a FP pension type that can be moved into different funds everyday (if I like) - costs just £10 for each move

baby_boomer

I suspect that part of the problem with confusion over risk is that risk is perceived as different in pension investment because of the longer time-scale.

So a fund which is medium/high risk for a 5-10 year investment isn't seen as the same for a pension investment over a longer term - especially with regular future contributions.

I appreciate that the OP may be in a different category if he has built up a large fund already.

But Idon't recall dunstonh recommending too many pension investors go for cautious funds a year or so ago.

TH1878

setmefree2 wrote: »

Hi Miserlymartin,

I'm no expert on pensions (by a mile!) so please don't shout at me everyone but I would like to put another view. The op sounds like a cautious investor to me too. I too am a cautious investor and I put half my pension into cash around Easter time and have now put the whole of my pension in cash. I know that everyone will scream in horror on here but I don't see how anyone can make money in the current market (what did Soros say - "a period of mass-destruction of wealth?") .:o I will review the situation again in the Autumn but I might even leave my pension in cash until next year. Do you have the option of cash?

All The Best

SMF2

PS I have a FP pension type that can be moved into different funds everyday (if I like) - costs just £10 for each move

With inflation running so high, that's a potentially dangerous strategy IMO. By all means have some cash exposure but 100% with 35 years to retirement??

Where is your pension with? It's fairly unusual for providers to still charge you for fund switching nowadays.