Using an IFA

butterfly72

Hi,
I was wondering how much money one should be earning/willing to invest before seeing an IFA. We could really do with some advice on how to prepare for the future and invest but not sure if an IFA would bother wanting to see us as we don't earn loads or have a huge lump sum to invest. We would only be wanting to drip feed into investments as we are also saving for a house deposit. I'm just confused by all the investment options and want some advice. The OH is a high rate tax payer and he'd like to find ways to pay less tax/maximise tax free options etc! - could an IFA help with this?

Also I have S&S ISAs already, 2 with HL, and am looking to invest in further funds, within the ISA. Would I be expected to 'transfer' my funds to the IFA or could they advise me on suitable funds and I could go away and action the investment myself?

And finally, how do you know you are getting a decent IFA.. I know of unbiased. Is this any good?

thanks.

dunstonh

The OH is a high rate tax payer and he'd like to find ways to pay less tax/maximise tax free options etc! - could an IFA help with this?

Potentially. Although typically tax savings comes with investing.

Also I have S&S ISAs already, 2 with HL, and am looking to invest in further funds, within the ISA. Would I be expected to 'transfer' my funds to the IFA or could they advise me on suitable funds and I could go away and action the investment myself?

If you dont use an IFA to place the transaction then the fee becomes chargeable for VAT. If the IFA places the transaction then no VAT is chargeable. So, the small savings you make by using HL could be easily wiped out by the VAT difference.

And finally, how do you know you are getting a decent IFA.. I know of unbiased. Is this any good?

unbiased is the main uk database with 99% coverage and no requirement for IFAs to buy their listing (although some pay for an enhanced entry which you can easily spot - dont let the paid for entries influence your decision).

A database only tells you the adviser is FSA authorised. It doesnt indicate quality. Its easy to get carried away with negatives when you view this site often as most postings are generally about things that go wrong. However, whilst there are bad apples in every profession it is worth noting that IFAs account for the lowest percentage of complaints with the FOS than any other distribution channel. The FSA's proposols for 2009 have the IFA advice category being largely unchanged from now (mainly an increased in qualifications being needed). However, the FSA is taking the tied agents and multi-tied firms apart and stopping them from giving advice from next year and make them clearly label themselves as sales agents. Mainly as tied salesforces are where most of the damage has been done over the years.

So, statistically you are not likely to see a bad one. Given what you want, you are not likely to see one with much in the higher of specialist qualifications. Not that you really need to with what you are after. I think your biggest problem is that you want to do part DIY and until next year the FSA dont allow that (guided sales are one of the proposals for 2009 but they will have lower regulatory protection. virtually no ability to complain and no FOS protection as you would be self certifying the advice as correct). So, under current rules the IFA would have to give you advice or no advice, not inbetween.

butterfly72

Thanks for the advice.

dunstonh wrote: »

If you dont use an IFA to place the transaction then the fee becomes chargeable for VAT. If the IFA places the transaction then no VAT is chargeable. So, the small savings you make by using HL could be easily wiped out by the VAT difference.

Ok so if I was to action future funds throught the IFA I'd have to 'transfer' the ISAs to the IFA or could they do the transaction.. still through HL into my existing account? Or do IFAs have their own wrapper product, like for example the Vantage ISA?

dunstonh

Ok so if I was to action future funds throught the IFA I'd have to 'transfer' the ISAs to the IFA or could they do the transaction.. still through HL into my existing account?

HL are an IFA and its their own product which they do not make available to IFAs. The IFA needs to place the transaction to avoid VAT and that cannot be done with HL.

Or do IFAs have their own wrapper product, like for example the Vantage ISA?

IFAs have access to all the whole of market ones. Cofunds is the biggest but there is also Fidelity and Selestia/Skandia as well as a few others.

One of the other things proposed to change is that providers will no longer be responsible for setting the level of remuneration that advisers get. It will be factory gate priced so all IFAs have a level playing field and can decide what charges they wish to add. This should allow things to become more competitive but I dont expect any proposal on that to take effect until at least 2010. It does look like its coming though.

NestonVoice

If you can ask around friends / colleagues because most good IFA's are happy to help you with a 'starting' transaction for the small fee / commission because you might stay with them in the long term, and/or recommend them to others.

Avoid those who quote huge hourly or minimum fees and again, a 'good' IFA will have an initial conversation / fact find meeting wth you for free just so you can each learn about the other, and both get a good idea of where you want to go.

E.G. The chap my wife used was happy to do a regular monthly ISA for the small commission it generated, and has been 'rewarded' with more work including more lucrative investments, life assurance and mortgages and recommendations to others.

John.