How doy you pick an Independant Financial Advisors

janken

I have now met with a few IFA's most give "Free advice" but i am worried that they are pushing certain products. I have now gone to a large company who are charging me for their advice and claim full independance from the products they are recommending. I feel i am getting good advice but have still the niggling feeling that they may be pushing products that give them the best commission.

Advice greatfully recieved.

Am sure there must be other threads on this subject

janken

What no IFA's wanting a say???

dunstonh

What no IFA's wanting a say???

Its Friday which means half will be on the golf course and half will be too busy catching up with work. There are only two active IFAs in this section at the moment and I'm not on the golf course

I have now met with a few IFA's most give "Free advice" but i am worried that they are pushing certain products. I have now gone to a large company who are charging me for their advice and claim full independance from the products they are recommending.

Are you mixing up IFA and FA? All IFAs are independent. Its the I in IFA. So, the last bit in your sentence applies to all IFAs not just that one in particular. Its when you see an FA or sales rep that you are tied to a particular company.

I feel i am getting good advice but have still the niggling feeling that they may be pushing products that give them the best commission

Pay by fee then if you have any concerns or agree a fixed commission level (the latter is increasingly common). That way you remove any perception for bias.

[Deleted User]

It's a good question.

I would have great difficulty in trusting an IFA.

I've used my bank's financial advisors in the past with the clear knowledge that they are pushing their own products. I feel that I know where I stand. And at some times in life it's worth it for the convenience.

My BIG concern with an Independant Financial Advisor is that I think it's likely that anyone that goes into that line of work would be a much bigger risk taker than me. So over and above the concern that they might be pushing products that give them the best commission I'd worry that they wouldn't fully take account of my desire to play it safe. Reading articles etc from such people I think perhaps they don't even understand the concept of not wanting to take risks. :rotfl:

My Dad's one and only visit to an Independent Financial Advisor resulted in him being talked into changing the habits of a lifetime and investing a large retirement lump sum in *safe* stocks and shares. He was very nervous about it at the time, but came to the conclusion there's no point paying someone for advice and then not taking it. That was shortly before the big crash in the 80's and he lost most of his money overnight. So I guess that's put me off a lot.

My feeling is that it's best to try and figure it out for yourself (using resources such as this). If you still decide you want professional help you're at least in a position to know whether the advice you are being given is sound. You know what questions to ask. If you really are clueless then I think you're taking a big gamble trusting someone else and are probably best staying clear of investments.

dunstonh

I would have great difficulty in trusting an IFA.

....My Dad's one and only visit to an Independent Financial Advisor resulted in him being talked into changing the habits of a lifetime and investing a large retirement lump sum in *safe* stocks and shares. He was very nervous about it at the time, but came to the conclusion there's no point paying someone for advice and then not taking it. That was shortly before the big crash in the 80's and he lost most of his money overnight. So I guess that's put me off a lot.

Yet you have never used an IFA and the comments in your other thread describe a stockbroker or hybrid adviser (as it was before 1988 polarisation rules). You do not describe an IFA.

I've used my bank's financial advisors in the past with the clear knowledge that they are pushing their own products. I feel that I know where I stand. And at some times in life it's worth it for the convenience.

You used a banks sales rep who has about 10-15 products, sales targets and sales managers and has a remit from their employer which reduces where they can and cannot give advice. Convenience is irrelevant as you still have to discuss the issues with both.

I think you will find from last years FOS stats that Abbey had more complaints against it then all the country's IFAs put together. IFAs account for the majority of transactions but only 4% of complaints. Things are not perfect by any means and the proposed rule changes coming this October will resolve a lot of those issues by making it clear that bank advisers are sales reps and not financial advisers and increasing the qualifcation standards of IFAs as well as further moving towards fees. However, using an IFA is just common sense compared to using a bank adviser.

My BIG concern with an Independant Financial Advisor is that I think it's likely that anyone that goes into that line of work would be a much bigger risk taker than me.

What sort of risk do you mean?

So over and above the concern that they might be pushing products that give them the best commission I'd worry that they wouldn't fully take account of my desire to play it safe.

So instead you went to a bank where you are guaranteed to buy products that pay the maximum commission and have lower terms. FSA research shows that the majority of IFAs will discount on transactions. All have to offer fee based terms. In your case you would have saved about £2000 had you used a fee based IFA compared to the commission that was paid to Abbey.

Your posts on this thread and you own appear to show a bias against a profession you have never used yourself or had any experience of. The fact you preferred to use a bank for advice shows your lack of knowledge on these issues and a willingness to pay more to get less.

Just remember that you can make far more mistakes going DIY and many do. However, you wont have anyone to blame other than yourself. DIY options are great for those that know what they are doing but can be dangerous for those that do not.

Lokolo

dunstonh wrote: »

Its Friday which means half will be on the golf course and half will be too busy catching up with work. There are only two active IFAs in this section at the moment and I'm not on the golf course

Then why are you on here? Get back to work! *whip*

[Deleted User]

I don't have a bias against any single profession. Just a reluctance to put blind faith in anyone when large sums of money are at stake. In any profession you have honest and dishonest people; competent and incompetent. A qualification of job title won't tell you which category any individual falls into.

Despite your insistance to the contrary, the Abbey's Financial Advisor was VERY convenient for me at the time, and he was given clear instructions not to put my capital at risk, or even to risk the possiblity of me not earning interest on the money. The family was in crisis and we simply didn't have time or inclination to worry about money. We just wanted to make sure it was earning interest rather than sitting under the mattress and we left it in the hands of the people we'd banked with for years! Really there wasn't an awful lot of trust placed in him. Just a remit to manage the money as best they can with the products available to them and taking account of my wishes for no risk (either with capital or interest). And you yourself acknowledged that he did exactly what he was asked to do - that he did nothing wrong.

So to put your mind at rest - I wouldn't put blind faith in ANY advisor or any professional. Especially where large sums of money are at stake. And I don't consider the Abbey's Financial Advisor to be more trustworthy or capbable than an independent financial advisor. Just more useful and convenient in certain circumstances (such as ours at the time). This is an important thing for any good Financial Advisor to understand and respect...what a customers priorities and needs are at any given time. They might not be what you want them to be!

[Edit - actually, I do tend to think that you're guaranteed a certain basic level of competence and honesty if you go with a big bank for this very basic stuff. It might not be high, but I assume that I'm protected from real crooks by sticking with a bank]

DIY options are great for those that know what they are doing but can be dangerous for those that do not.

Absolutely. But it's also dangerous to put blind faith in other people if you don't know the first thing about it. I'm sure there are plenty of very competent, trustworthy financial advisors out there but if you're clueless you have no way of knowing whether you've got a good-un or a duffer (or an honest or dishonest one).

Which is why I think this was a good thread. How does the uninformed layperson separate the wheat from the chaff when it comes to gettting good financial advice *that is appropriate to their current needs*?

And at what point does it make sense to get professional help? For example, is there any point if you don't want to dabble in investments?

janken

I hoped to get a small discussion started and scarter seems to have similar concerns to myself. I am quite experianced in investing by myself,through banks and with FA/IFA's

I have just done some research on local IFA's and am happy to find none of their websites display companies or products the recommend. This is very different to a few years ago when it seemed that being linked to a big financial institution was seen as some sort of endorsement.

I am very happy with my IFA who charges an hourly rate (can be very high up to £250 per hour) If i take their advice they then make very clear what commission will be paid and deduct it from the bill.

I wanted to see how others picked an IFA as it has taken me 20 years to find somone i am comfortable with.

mr_rush

However, you wont have anyone to blame other than yourself

So if I get an IFA to pick shares or funds based on my risk profile and they do not perform as expected, who do I have to blame?

I have spoken to several IFA's including Killick & Co who have offices in all the poshest London boroughs. I was shown around their office in Grosvenor Square. I have also seen 3 or 4 other IFAs. None filled me with any confidence. All offered a fee or commission option.

I can honestly say that they were mainly interested in selling life insurance together with income protection rather then discussing my actual investment needs. Despite explaining several times that as someone with no dependants or (at that time) no mortgage, income protection was not high on my list of priorities, they would not let this drop.

When I was getting my mortgage I saw another IFA to find a good mortgage deal. He found one from Abbey that he thought was the best available. I found a better one through Direct Line - lower interest rate, lower fees - the chap just tried to brush my deal under the carpet and then tried to sell me life insurance.

So, in summary after having dealt with several IFA's my conclusion is that few are worth using. I think I can do a better job with my investments with some research. Basically, I would want an IFA with a first class degree from a top 5 UK university who also has post-graduate qualifications and a good level of experience. I'm yet to come across one.

Lokolo

Thats because they don't want to see you. They want to see people who will actually be interested in the products they offer.

1echidna

I feel I should contribute my half penny worth. I too am not a great fan of financial advisers independent or not. I have had pretty curves drawn for me by a couple of the ups and down cycles of the stock market with the implication that they could help me buy at the low points and sell at the high. It does seem however that in practice the financial advisor, independent or not, will in practice usually recommend investing the great majority of funds available immediately in a rather gung ho fashion, talking about five year performance, no guarantee, just feel confident things will be alright. I have heard too many disaster stories over the years and don't tell me things are better now just because the financial advisor has a few more letters after his name. I want some more clarity of vision from a financial advisor than I have myself. It seems from the correspondence on this board that many thought share values were good a couple of months ago even with storm clouds gathering. How many people were advised by financial advisors to wait a few months before investing and even then do it cautiously? Not many I wager.