IFA ongoing fee..Why pay?

Options
1…457910…24

Comments

  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Photogenic First Post Name Dropper First Anniversary
    Options
    NeilCr wrote: »
    Provided me with more than a comfortable lifestyle with little or no stress for me.

    I am not so worried about outperforming the market or comparisons with individual shares (I assume you have both of those in your portfolio) than the above. You don't have to be the best of the best - just get it right for the client. My portfolio has jogged along quite nicely, thank you. My investments provide me with income to enhance my state and occupational pensions. Over that period, on top of that, there has been capital growth (excluding lump sum withdrawals) - and I have more than enough to see me through.

    You - on the other hand - got it wrong because as you say " you weren't engaged". This with one of the most important things in your life - your pension.

    Fair point, I did get it wrong in 2018.
    On the other hand, the process was forced upon me and, if I had followed the advice I bought, I would be getting it wrong for the next twenty five years, potentially.
    That would be far more serious.
  • Jaynishriya
    Jaynishriya Posts: 20 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    Options
    NeilCr wrote: »
    So much long word bollox in your posts

    Of course you can build a bond of trust with your IFA. To an extent you need to. They are advising you on investing your money with a long term view so you have to take that leap. If you can't trust your IFA why are you employing them?

    This thread has become interesting. Seems now to involve self investors defending their position - which is fine (all power to your elbows) but please do respect that some of us take a differing view

    With respect, I think you have misunderstood my point. I fully respect your choice of using an IFA. And I appreciate the need have a bond of trust with your IFA, but I was referring to the distinction between a personal bond (with a pet) and the trust one would place in an IFA to manage a portfolio.

    It is all right when things go well, but to me the problem is that when things go wrong - as some posts in this thread have remarked - investors bear the costs/losses but the IFAs can get away with it. I choose to manage my portfolio, partly because the cost/incentive structure is heavily skewed to benefit them.

    In fact, this is an industry wide problem, which I alluded to in my posts. The OP referred to why an investor would continue to pay an FA/IFA for the ‘privilege’ of providing a service. My argument is that the fees charged for this service are generally too high and do not reflect the underlying costs or the risks/rewards the investors eventually face when things go wrong.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    First Anniversary Name Dropper First Post
    Options
    NeilCr wrote: »
    Provided me with more than a comfortable lifestyle with little or no stress for me.

    I am not so worried about outperforming the market or comparisons with individual shares (I assume you have both of those in your portfolio) than the above. You don't have to be the best of the best - just get it right for the client. My portfolio has jogged along quite nicely, thank you. My investments provide me with income to enhance my state and occupational pensions. Over that period, on top of that, there has been capital growth (excluding lump sum withdrawals) - and I have more than enough to see me through.

    I'm in a very similar situation, but I DIY so don't pay an IFA. I have no stress either.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Name Dropper First Post First Anniversary
    Options
    ZingPowZing wrote: »
    For three reasons I would rather not supply figures:- firstly, I realise that my timing was lucky; secondly, hubris, and Trump interfering again between the China/USA trade deal. Thirdly, you can guess at least two, which are in the top three. Additionally, I shouldn't like the focus of thread shifting too far from the role of advisers.
    But I'm not dogmatic about it:- if bigadaj mounts a credible argument beyond "huge companies go wrong regularly," I'll provide a comparison to the performance this year against his and other readers' funds. Maybe tomorrow.

    So you have the majority of your net wealth in Amazon and apple?

    In terms of shifting the emphasis of this thread from the role of a adviser then the fact you have no diversification seems wholly relevant.

    I'm no defender or advocate for advisers, don't use one and never have. But your stated approach would be very dangerous for someone with low knowledge who looked to diy and took a similar approach, the faangs aren't immune to normal business factors and influences.

    Your last paragraph just highlights an ignorance about the investment process, how did you select your few stocks and what will you be doing in future when they underperform?
  • NeilCr
    NeilCr Posts: 4,430 Forumite
    Name Dropper First Anniversary First Post
    Options
    bostonerimus wrote: »
    I'm in a very similar situation, but I DIY so don't pay an IFA. I have no stress either.

    Sure

    I was just responding to ZingPowZings question

    Different strokes for different folks etc. What we have (and how we get it) works well for us in it's own way and that is the main thing.
  • dmelife
    dmelife Posts: 133 Forumite
    First Post Combo Breaker First Anniversary
    Options
    I think the OP has inadvertently made a great case for seeking financial advice. Their investment strategy is madness and their lack of understanding so very apparent. Good luck with that! :rotfl:
  • Linton
    Linton Posts: 17,172 Forumite
    Name Dropper First Post First Anniversary Hung up my suit!
    Options
    bostonerimus wrote: »
    I'm in a very similar situation, but I DIY so don't pay an IFA. I have no stress either.

    I diy without stress and to be honest mainly because I enjoy doing so. But that is because now we are only dependent on our investments for perhaps 25% of our expenditure, all of it discretionary, some of the discretionary and all essentials being covered by SP, annuities, and a smallish DB pension.

    Were the income requirement from investments to be say 50% or more and include some essentials then the stress could be a significant problem. I certainly would not rule out paying for advice.
  • Albermarle
    Albermarle Posts: 22,158 Forumite
    First Anniversary First Post Name Dropper
    Options
    But that is because now we are only dependent on our investments for perhaps 25% of our expenditure,
    This is a good point in that if you basically have more money than you need , then whether you spend 0.7% a year on an IFA or lose 1% growth DIY because you make errors ., it doesn't actually matter in real terms and you shouldn't get stressed about it .
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Name Dropper First Post First Anniversary Post of the Month
    Options
    Albermarle wrote: »
    This is a good point in that if you basically have more money than you need , then whether you spend 0.7% a year on an IFA or lose 1% growth DIY because you make errors ., it doesn't actually matter in real terms and you shouldn't get stressed about it .

    True. It's not rocket science - a great way to be somewhat immune to failures in strategy is to have more money than you need.

    Some people will get there by good fortune, others by being smart. Some will have got there thinking it was because they were smart, when actually it was good fortune, or at least a combination of the two.

    If having more money than you need is not yet an option yet, it's perhaps best to try to avoid both the cost of IFA fees and the cost of errors - by DIYing and getting everything right (or close to it).

    For some, getting everything right (or close to it) feels like it may be difficult, hence using an IFA may be the lesser of two evils (the annual cost of an IFA can be lower than the cost of getting things wrong).

    For others, getting everything right (or close to it) feels like it may be difficult, but their total amount of money is not enough to make IFA a real option because personalised advice is relatively more costly on relatively small amounts of money. So they have to do some learning, research and planning and try not to get things wrong, because that's the only practical choice they face.

    When those people have done their learning, research and planning and not got things too far wrong (or had good fortune), they may find that at some point later in their life they could afford an IFA - but having had the experience from 'starting small', and developed their enquiring mind by building up their knowledge of the things that will only become relevant at higher values (tax planning etc), they may become confident that they no longer need or want one.

    A subset of those people will have false confidence because their success with lower values was due to good fortune rather than them understanding the topic, and may still benefit from an IFA.
  • arnoldy
    arnoldy Posts: 505 Forumite
    First Post First Anniversary Name Dropper
    Options
    The Financial Services industry largely operates on a 'skimming' basis. Small amounts are siphoned off at frequent intervals - unnoticeable in the short term but devastating in the long term.
    For example, if I had 100k in a UK fund I could be paying 1% OCF + 0.3% non OCF charges, Plus 0.5% IFA = 1.8%.


    Or about £4 in every £10 dividends does not reach you.


    But actually it's the fund charges that are most significant not the FA. That's why Funds and ITs have such astonishing profit margins.


    If you have any semblance of understanding own the underlying investments your self (Cost = basically 0%) for your FTSE All share portfolio.
    Yes for markets you can't access eg. India you have to pay the £s commission for Funds or ITs.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards