IFA charges?

bowlhead99 wrote: »

While it does not sound like a very good return at all, it is nonsense to say that it is a bad return purely because your return on high risk investments did over 15% in a year and his/hers didn't.

No, the return was pants on the 5 year timescale, but do feel free to make a stupid comment.

bowlhead99 wrote: »

I am speculating of course, but presumably the IFA asked the OP - who was putting a large chunk of cash into investment funds (perhaps for the first time, given they are on the forum talking from what sounds like a position of inexperience) - how he felt about different levels of potential risk and volatility. The OP very likely said he did not want a high equities portfolio and was more about capital preservation. For example he is talking about returns on his savings, and cash ISAs.

So, while the return is poor, and the fees may have been quite high relative to the rate of return - comparing to what you got in your equities-heavy and international-heavy portfolio, is silly.


Yes. They are rotters and you should take the advice from Bananarepublic and put all the proceeds into a fund that invests the existing £23k and your new money into global equities with a loss potential of 50% in any given year. That's a great idea, and not at all stupid for a cautious investor.

That advice from BananaRepublic is personalised and tailored to your goals and needs, and if it turns out to be inappropriate you can complain to the Ombudsman and get a pay out from him or his professional indemnity insurance, as he is a regulated professional and has some sort of duty of care towards you and your wellbeing.

Oh wait, no he isn't. So disregard that last paragraph, it is just sarcasm-riddled banter.

Good enough if you know what you are doing and want to screen funds simplistically, based on what returns and volatility they had in the last three years - ignoring the decade and a half before that which included two massive market crashes.

Certainly good enough if all you want to do is click on a fund name and get a pretty chart of what a nice return it made over the last five year "bull market" during global economic conditions which are unlikely to prevail over the next five years.

Beware advice from well meaning people who have a lot more money and capacity for loss than you do combined with more experience. What is fine for them is not necessarily fine for you.

FWIW, I have one of my pensions through Youinvest too and their service is absolutely fine if you want to DIY. And the above comments are not to imply that your IFA is fantastic, or great value for money. But the sad fact is that to invest only £20k it's unlikely to be worth many people's time to provide you advice if you're only willing to pay a small advice fee, because providing regulated investment advice is an expensive business.

So you are not going to get low advice fees, because they don't exist in the world of tailored personal advice. At a few hundred quid for an advised solution, the advisor is not getting rich. Unfortunately to you, with a small pot of money, it will seem quite pricy.

You could do a decent amount of research and then buy a multi-asset fund meeting your risk preferences, from a fund supermarket, on a DIY basis. Or maybe try robo-advice which is not properly tailored to your circumstances but can be reasonably low cost and can help to pick a pigeon-hole of what risk level you want to sit in.

I don't think that rambling, sarcastic, scornful rant deserves much in the way of comment, it certainly was not constructive. It highlights why you need to be careful when dealing with 'online experts' such as yourself.

BananaRepublic wrote: »

bowlhead99 wrote: »

While it does not sound like a very good return at all, it is nonsense to say that it is a bad return purely because your return on high risk investments did over 15% in a year and his/hers didn't.

No, the return was pants on the 5 year timescale, but do feel free to make a stupid comment.

There is nothing stupid about an observation that one person's return over a five year timescale (what the OP got on their low risk investments) may be beaten by another person's return over one year (what you got) when they have different objectives and are willing to take different risks.

I don't think that rambling, sarcastic, scornful rant deserves much in the way of comment, it certainly was not constructive. It highlights why you need to be careful when dealing with 'online experts' such as yourself.

If we take out what has offended you we could distill it as:

- there are a massive variety of risk levels out there and different people have different objectives; funds suitable for one person might not be suitable for another. Person A's return that was designed to produce a return with low volatility should not be compared with Person B's return which was set up for different objectives. Comparing returns of cash or gilts with return of international equities in a bull market does not allow you to conclude that cash or gilts was inappropriate just because the returns are lower. They are supposed to be lower in a bull market and you did not know five years ago it was going to be a bull market.

- It is ridiculous to castigate a firm of advisors as 'rotters' after they spent time with you assessing your risk and concluded you should not be in a fund that would suffer wild swings and be set up for high returns, and recommended something very cautious instead. Your returns on what you invested depend on what it was invested in, and whether their fees were taken from the amount you invested rather than being paid separately, but they are not bad guys for charging you a fee nor for recommending funds with low return prospects just because with hindsight you'd have got more from a funds with high return prospects. The ones with greater prospects have greater risk on a sliding scale.

- If someone (or you yourself), has assessed one of your objectives to be a low risk of loss it would be exceedingly unwise to listen to an anonymous stranger on the internet who gloats that your return is pathetic over five years compared to his return in one year and suggests a fund invested in global equities offering greater than 50% loss potential over a year or two. The stranger behind the screen name says that would be a good fund compared to the rotten advice you have had. But he's not a regulated professional and has no duty of care towards you and you have no comeback when the fund loses the 50% which it will do at some point.

- Although you can do simplistic screening off the tools available at Morningstar/Youinvest, you do need to know what you are doing to get good results and you should make sure your research is not geared to finding the funds in a 'league table' that have done well in a relatively short period where many funds outperformed their long term norms.

- Although you may feel that you object to paying fees for managing or advising on your hard-earned savings, it is a fact of life that you must pay if you do not want to do it yourself. Investing small amounts of money (compared to how much some people have) means that the advice will be costly per pound invested. A fee of a few hundred pounds that is large to you (in the context of the amount you are investing) is not large to the independent financial advisor (in the context of the work he has to do to create and run a business which is in a position do provide the advice, and then go ahead and meet with you and actually provide the advice).

- If you do not want to continue to pay fees for personalised advice, options include doing a decent amount of your own research to understand differences in risk profiles of individual multi-asset funds which might be suitable for your needs and could be bought via a fund supermarket. Or using one of the newer 'robo advice' offerings which charge on a percentage basis for putting you into the portfolio that their software says is suitable for the pigeon-hole into which you fit on their risk/reward scale.


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BananaRepublic may say that the above points which were all generally being made in the previous post are "certainly not constructive" but perhaps that is because he is a little sensitive to criticism or sarcasm and therefore unwilling to understand how the points which contradict his own might be helpful to others