Financial Advisors

1echidna

I have come to the conclusion after some amount of study that I don't understand stock or commodity markets and may not understand them better with more study.

I have limited faith in financial advisors except, to a degree, one (tied to Nationwide) who advised investment of only a fraction (12%) in his products of the funds I had available last year. The cash accounts have proved to be good havens for most of my money this past year.

Am I foolish to stick with the Nationwide advisor and his Legal & General Funds and perhaps a bit of dabbling elsewhere off my own bat?

johng_uk

When you seek financial advice you should go to an INDEPENDANT Financial Advvisor (IFA). Anyone who is tied to a company is obviously operating from a limited market - They have to sell their companies products. The loser in this situation is you as there are many more products on the market.

I'm not qualified enough to discuss specific funds, but you are correct with regards to the cash accounts. If you are interested in financial advice, why not ring around a few IFA's and see which one you feel comfortable with? I did the same recently and it was worth the small amount of time and effort.

1echidna

Thanks John I fear though it is not about who I feel comfortable with it is about whose advice I will feel satisfied with when I have a chance to see how my investments have done in five or more years time. I guess I have been unfortunate enough to hear some horror stories about people who have lost money through IFA's but I agree logic dictates one's chances should be better than through a tied financial advisor.

Lokolo

Nothings guarenteed with the stock market, ever. Thats what you need to realise. If you aren't prepared to take risk, should you even be investing?

Although there is some risk of people losing out at the end of the year, do you know their situations? Did they want to go high risk? How much did they put in?

A tip: "Don't gamble what you can't afford to lose". Its someone's signature on these boards, and its true, investing is a gamble, so unless you're prepared to lose it, don't bother.

dunstonh

I guess I have been unfortunate enough to hear some horror stories about people who have lost money through IFA's

Nothing wrong with that. it doenst make it a horror story either. IFAs are investment advisers and most investments can go down as well as up.

Some people invest and then panic when they see the slightlest loss. Investments do not go up in a straight line. They zig zag and sometimes zag down below your initial investment. That is totally normal but some people, despite how often you say it will happen, panic when it does happen.

I have limited faith in financial advisors except, to a degree, one (tied to Nationwide) who advised investment of only a fraction (12%) in his products of the funds I had available last year.

Tied insurance agent with a handful of products is not a way to get investment advice. Indeed, the FSA has proposed that tied insurance agents will not be able to use the "financial adviser" title from 2009. Its still under consultation but it gives an indication of thoughts of the differences in real financial advisers and insurance agents.

Am I foolish to stick with the Nationwide advisor and his Legal & General Funds and perhaps a bit of dabbling elsewhere off my own bat?

Yes, you are foolish to continue with the L&G rep. L&G dont have many decent funds and instead of having access to around 2000 unit trust funds (unit trusts being the typical invesmtent vehicle, although life and pension funds are available as well), you have access to about 15 funds. Tied agents are also not allowed to recommend fund switches, rebalancing and have very limited scope in portfolio planning.

1echidna

I realise that nothing is guaranteed with the stock market or indeed with banks and building societies if some threads on this board are to be believed. I, like everyone else, am just trying to minimise my risk and maximise my reward, if indeed there is to be any reward.

The horror stories I have heard about are money lost over a number of years on hot tips concerning Unit Trusts with good past histories. At least my man from the Nationwide was not greedy even though I was willing to invest more, and I feel might be reliable on when to sell. I got caught out some years ago on the outstanding past performance of a fund for a Family Assurance Policy and no longer have faith in chosing funds in this way. I thought with the Nationwide I might get something solid, if not outstanding.

1echidna

Sorry the above was a reply to Lokolo, I will consider what dunstonh has said

Lokolo

1echidna wrote: »

Sorry the above was a reply to Lokolo, I will consider what dunstonh has said

dunstonh will give you good advice don't worry

1echidna

dunstonh wrote: »

"Nothing wrong with that. it doenst make it a horror story either. IFAs are investment advisers and most investments can go down as well as up."

I think it is a horror story when someone loses most of their life savings.

"Some people invest and then panic when they see the slightlest loss. Investments do not go up in a straight line. They zig zag and sometimes zag down below your initial investment. That is totally normal but some people, despite how often you say it will happen, panic when it does happen."

The zig zag nature of the value of investments is perhaps a good reason for drip feeding over a number of years? Is this something that IFA's normally advise?



"Tied insurance agent with a handful of products is not a way to get investment advice. Indeed, the FSA has proposed that tied insurance agents will not be able to use the "financial adviser" title from 2009. Its still under consultation but it gives an indication of thoughts of the differences in real financial advisers and insurance agents."

Actually he does call himself a "senior financial consultant" my mistake.



"Yes, you are foolish to continue with the L&G rep. L&G dont have many decent funds and instead of having access to around 2000 unit trust funds (unit trusts being the typical invesmtent vehicle, although life and pension funds are available as well), you have access to about 15 funds. Tied agents are also not allowed to recommend fund switches, rebalancing and have very limited scope in portfolio planning."

OK but does the average IFA know his way around these 2000 unit trusts? I think basically I am convinced enough to explore the IFA option a bit more than I did last year. But I feel that I will limit the tranch of money I put in this year to about 17.5% of my assets. Thanks.

Apologies for mixup with quote. dunstonh words with quote marks, mine without in box

dunstonh

I think it is a horror story when someone loses most of their life savings.

Its their own fault then if they put themselves in that position and they probably didnt use an adviser. If they did, an adviser would never be able to justify a recommendation like that and the FOS would almost certainly rule in favour of the consumer. There is a general view at the FOS that most inexperienced investors are cautious and advisers have to justify the risk levels. Especially as you move up the risk scale. A near 100% very high risk investment is something you wouldnt get away with.

There is really only one way someone could have lost most of their life savings in the last decade and that is if they invested 100% into tech funds. Most of these tend to be people that did it themselves without proper advice. Often based on tips from the media or unnamed IFAs or stockbrokers. In other words, they heard it was a good place to be and rather than put 1 or 2% of their portfolio into it they decided to go gung ho and put far too much into it.

The zig zag nature of the value of investments is perhaps a good reason for drip feeding over a number of years? Is this something that IFA's normally advise?

Phasing like that can work against you and anyone that phased their investments in the last 6 years would have lost money. Balancing the portfolio to match risk profile from the start is a more sensible way.

Actually he does call himself a "senior financial consultant" my mistake.

I'm afraid that the title "senior" (or manager) is thrown around too much at banks and building societies. Most IFAs start their careers as tied agents. I was no different. When I started as a tied agent my title included senior after 6 months of doing the job. Only reason was because I sold a certain level of business. Not because of qualifications or experience. That is generally the norm where salesforces will reward staff on their sales ability by throwing out titles and bonuses based on business written.

No offence to your Nationwide insurance agent but any half decent IFA would run circles around him. Insurance agents just dont have the products, remit and usually experience and knowledge required to handle anything other than smaller investments. Also part of the FSA proposals from 2009 is that IFAs will require higher qualifications than your insurance agents and most IFAs are on their way to meeting that already. There are some exceptions with some burying their head in the sand or those that intend to retire before the deadline or move back into the insurance agent or mortgage adviser only roles. However, in general, the only thing the Nationwide insurance agent can match or beat the IFA on potentially is personality.

OK but does the average IFA know his way around these 2000 unit trusts?

Yes. In fact, if you take all the life, pension, unit trusts, oeics, sicavs then you are looking at tens of thousands. Most are duplications are variations of a theme. You can also eliminate a lot of funds very easily.

However, IFAs also use software because data changes daily. plus, the software outputs the data which is used on your file to support your advice as well as to present to the client.

But I feel that I will limit the tranch of money I put in this year to about 17.5% of my assets. Thanks.

I would also expect the IFA to try and switch your nationwide arranged L&G business as well. That would be an absolute doddle to justify.

1echidna

Thanks once again dunstonh. I must admit that the case of the person losing most of his money was almost thirty years ago (you will say before current regulation) but who knows what nasties the markets may throw up in the future. As regards the question of phasing money into equity investments, I am very glad that I didn't put more in a year ago. Besides there is a very real possibility that I may have a call on 100k (out of 250k) if we move house in a year or so which is a distinct possibility. As regards an IFA probably running rings around my Nationwide bloke I just hope he/she doesn't run rings around me. Forgive me for my cynicism.