Choosing an IFA?

hedger

I have read a lot of articles on here recently and a common thread is the lack of service being provided by some IFA's. I have a lot of money invested (over £200K) through St James's Place but have been told I could be limiting my growth because of their limited funds (Im 2 years in with poor growth imo). I am now going to ask an IFA for an independant view on my "portfolio". what are the important questions I should be asking them?

dunstonh

I have a lot of money invested (over £200K) through St James's Place but have been told I could be limiting my growth because of their limited funds (Im 2 years in with poor growth imo).

2 years of poor growth is more down to market conditions than anything else but SJP cannot give you the same diverse and structure portfolios that an investment specialist IFA can give you.

I am now going to ask an IFA for an independant view on my "portfolio". what are the important questions I should be asking them?

Currently, the term IFA is a catchall for loads of different types of adviser. Some will be very highly skilled and others will be acting like sales reps but using products from the whole of market. This is being looked at by the FSA and current proposals should see things improve (higher mandatory qualifications for IFAs being a key change). However, at the moment you do need to take some care that the person you are speaking to is capable of dealing with your investments.

It is easy for any adviser to criticise another adviser's portfolio. The is a general saying in financial services that the last adviser you see will be the one that gets the business not the best. This is because the last one has the potential to pour scorn on all the others whether it is fair or not.

So, you need to be aware that any criticisms should be backed with factual data and logic. For example, saying that the poor growth is down to SJP only and had you gone independent from the start you would have got better would be wrong. Analysing the existing portfolio and explaining why it has had poor growth in your eyes would be better. Checking that against your risk profile and explaining what investment strategy the IFA would use would also be important. If the adviser comes out with a wide spread of funds and details a structure then that would be positive. If they come out with one or two default managed funds then steer clear.

Structure of the investment tax wrappers should be discussed. ISAs are top each time and ideally the fixed interest funds should be in those as they are more tax efficient in ISAs than equity funds. Discounting of investment bond (or oeics if other way round) should be logical and factual. i.e. why is this tax wrapper being chosen over the other rather than just saying they recommend this tax wrapper.

Some of the stuff may be boring and some you may not follow but you should be able to get a grasp of the quality of the research and documentation. If the review is quick and no supporting data is supplied then question it.

If they take over the portfolio, then finding out the charges will be important. Trail (the natural ongoing commission) should be no more than 0.5%. Greedy ones will try for more and your portfolio doesnt need more. Ideally get a fee agreed (which can be percentage based but no more than 1% as that would be greedy. Typical average is 1.8% initial but your portfolio should allow for less).

Annalisa_2

I agree with the previous advice posted. Since we are all out to make money and get business that is the first motivation behind the IFA. If you are able to, or have the time, you can speak with more than one advisor so that you might be able to find a few alternatives routes to handle your investment whether is be pulling back or sticking it out a few more years. You should make sure to ask for the incentives or where their answers are resulting from. The economy right now is obviously slowing however there are no signs of this being permanent it could just be normal business cycle and could rebound.

hedger

Thanks guys. I think I will have an initial consultation with a recommended company (unbiased.co.uk). The big question is whether to stick or twist

[Deleted User]

You could also consider the following:

http://www.thisismoney.co.uk/help-and-advice/advice-banks/article.html?in_advicepage_id=167&in_article_id=416101&in_page_id=90