[EvilDrPorkChop]

Have to agree with JD6 here, if you sit down and spend a bit of time you can do as good as job as a IFA yourself. My parents and grand parents both used IFA (Different ones I might add) and in the long run it cost them money. In terms of tax allowances and understanding all that, our accountant does that for us.

My father always has a valid saying, if you've got more money than the IFA then who's the one doing something right?

We also do some work for someone who is in the industry, he was saying have you got this insurance that insurance etc. I think he spends more money in policies than actually using the money to do something good with.

[JustChris]

Also it always crossed my mind. Is the 'Independant' but always a lie? They get paid commission based on the products they sell.

This is product A pays more commission than product B by some margin...there will be a strong recommendation for Product A!

[JD6]

Originally Posted by JustChris

Also it always crossed my mind. Is the 'Independant' but always a lie? They get paid commission based on the products they sell.

This is product A pays more commission than product B by some margin...there will be a strong recommendation for Product A!

There is clearly a strong incentive to push clients towards products which generate the most commission, although to be fair, there is more transparency than before.

The typical IFA I have met will push you to insure against all risks which could affect your wealth, as EvilDrPorkChop suggests. While some of that insurance might be necessary and appropriate, insuring against all risks is also a pretty effective way of destroying your wealth!

Rather like those who hold too much cash being at less risk from a sudden wealth destroying event, so they may sleep better, but actually face the near certainty of destroying their own wealth as inflation erodes its value. I remain exposed to significant market risk, as I have for the last 20 years. If the markets dropped 75%, it would have a material impact on my lifestyle, but that's a risk I am happy to live with.

[Scoobyd]

Originally Posted by JustChris

Also it always crossed my mind. Is the 'Independant' but always a lie? They get paid commission based on the products they sell.

This is product A pays more commission than product B by some margin...there will be a strong recommendation for Product A!

This is another misunderstanding. No true financial planner should ever 'sell' anything. It's not about products. It's about goals, aspirations and how you can best meet them. They'll give advice and draw up a financial plan which you'll either decide to implement or you won't. You should be paying a fee for the advice, not a commission for products.

When it comes to investment and pension advice there's been no commission on this since 2012. It's purely fee based only.

Advisers and mortgage brokers will still get paid a commission or procuration fee for arranging mortgages and protection.

Being independent isn't a lie. Restricted firms claiming to be is. As an IFA you have access to the whole of the market and advise your clients on the most suitable products as such. In your example a strong justification would have to be made for why product A over product B. It's a highly regulated business now. It pays more commission isn't going to cut it!

A lot of what you say is true of many advisers back in the 80's and 90's etc. It's a very different, much more highly qualified, regulated and professional business now. I guess until someone has personally had a positive experience themselves they may forever remain cynical.

[JustChris]

Originally Posted by Scoobyd

This is another misunderstanding. No true financial planner should ever 'sell' anything. It's not about products. It's about goals, aspirations and how you can best meet them. They'll give advice and draw up a financial plan which you'll either decide to implement or you won't. You should be paying a fee for the advice, not a commission for products.

When it comes to investment and pension advice there's been no commission on this since 2012. It's purely fee based only.

Advisers and mortgage brokers will still get paid a commission or procuration fee for arranging mortgages and protection.

Being independent isn't a lie. Restricted firms claiming to be is. As an IFA you have access to the whole of the market and advise your clients on the most suitable products as such. In your example a strong justification would have to be made for why product A over product B. It's a highly regulated business now. It pays more commission isn't going to cut it!

A lot of what you say is true of many advisers back in the 80's and 90's etc. It's a very different, much more highly qualified, regulated and professional business now. I guess until someone has personally had a positive experience themselves they may forever remain cynical.

Sorry if not clear. I'd certainly not be paying commission, was referring to the commission received from an IFA from say Barclays mortgage being higher than say Halifax mortgage.

I'd love to believe they will give the best, honest, totally impartial advice. However is Barclays commission was double, they would find a feature it was better at and push this. I know there is transparency in terms declaration of being paid 'a fee' but the cynical side of me can't believe that for someone sled employed who makes their money form financial product commission .... the highest commission products will be front and foremost.

[Scoobyd]

Originally Posted by EvilDrPorkChop

Have to agree with JD6 here, if you sit down and spend a bit of time you can do as good as job as a IFA yourself. My parents and grand parents both used IFA (Different ones I might add) and in the long run it cost them money. In terms of tax allowances and understanding all that, our accountant does that for us.

My father always has a valid saying, if you've got more money than the IFA then who's the one doing something right?

We also do some work for someone who is in the industry, he was saying have you got this insurance that insurance etc. I think he spends more money in policies than actually using the money to do something good with.

Strange logic. If you sit down and spend a bit of time you might be able to build your own extension or loft conversion. Or would you still pay a builder for their expertise? You could probably service and repair your own car. Or do you still take it to the dealership?

Besides, with all due respect good luck with doing as good a job with your financial planning as a highly qualified chartered financial planner who's been doing the job daily for 20-30 years and keeps up to date with ever changing regulation and legislation.

How exactly did using an IFA cost your parents and grandparents money? Unfortunately they must have used pretty terrible examples of one.

I work closely with a lot of accountants. Whilst they may be up to speed on the tax side many will openly admit they aren't as knowledgeable on the pensions, investments etc side. It's not their job. Same as doing a clients tax return isn't mine. I receive referrals from several accountants I know for this very reason. Different areas of expertise.

I don't get your father's saying? Would he rather deal with someone who was unsuccessful at what they do than successful? I have clients with less money than me and many with vastly more! Maybe if you've got less money than the IFA you could really use the help of one...

[Scoobyd]

Originally Posted by JustChris

Sorry if not clear. I'd certainly not be paying commission, was referring to the commission received from an IFA from say Barclays mortgage being higher than say Halifax mortgage.

I'd love to believe they will give the best, honest, totally impartial advice. However is Barclays commission was double, they would find a feature it was better at and push this. I know there is transparency in terms declaration of being paid 'a fee' but the cynical side of me can't believe that for someone sled employed who makes their money form financial product commission .... the highest commission products will be front and foremost.

Ah ok. So yes we're talking about different things. A mortgage broker is a very different role to a financial planner/IFA.

Having said that they really should be giving the best, honest, totally impartial advice regardless. When researching a clients mortgage there's a sourcing system that ranks the best deals by the total cost to the client. Commission should never, ever be the driver for the recommendation. Though I do get your cynicism and sadly do expect there are many out there who still put their earnings first ahead of the clients needs.

Again it all comes back to finding the trustworthy, reputable ones. We do exist... promise!

[HighlandPete]

Originally Posted by Scoobyd

Again it all comes back to finding the trustworthy, reputable ones. We do exist... promise!

I'm sure you do exist. Add in 'competence' and the challenge to find the right advice is even greater.

Also applies to solicitors, even 'specialist' partners. If you don't check their work they can lead you a mighty dance. Going through that at the moment, where if I hadn't done my own research and found the correct information, would be costing a family trust fund a substantial amount of money.

BTW, my last IFA simply got paid to tell me what I had already researched and decided on. Offered nothing new, except a bill.

[Scoobyd]

Originally Posted by HighlandPete

I'm sure you do exist. Add in 'competence' and the challenge to find the right advice is even greater.

Also applies to solicitors, even 'specialist' partners. If you don't check their work they can lead you a mighty dance. Going through that at the moment, where if I hadn't done my own research and found the correct information, would be costing a family trust fund a substantial amount of money.

BTW, my last IFA simply got paid to tell me what I had already researched and decided on. Offered nothing new, except a bill.

Yup. Applies to almost all professions really. Once you finally happen upon a good tradesman, doctor, mechanic, accountant, solicitor etc you stick with them and don't want to lose them. As sadly good ones can be all too hard to find and bad ones can be costly to say the least.

It's why referrals from trusted friends, family and colleagues is so vital. If I'm looking for someone I'd far rather get that personal recommendation from someone I trust rather than trawling through google and hoping for the best.

Sorry to hear about your last IFA. Sounds like one in all but name.

[Kendo67]

We were offered the assistance of an IFA when my mum passed away last year , did a bit of research myself and stuck the funds in a few different banks / building societies. Keeps everything neat and tidy and more importantly SAFE for us to use at a later date.

Paid myself in watches for being my own IFA.

Perfectly happy with what we are getting , interest wise , especially in todays financial climate as we don't have a particularly lavish lifestyle that we need to maintain.

K

[Scoobyd]

Originally Posted by Kendo67

We were offered the assistance of an IFA when my mum passed away last year , did a bit of research myself and stuck the funds in a few different banks / building societies. Keeps everything neat and tidy and more importantly SAFE for us to use at a later date.

So you've just chosen to leave it all in cash then I take it if you've put it in banks and building societies? Rather than invest it.

If you wanted completely safe and no risk then yup I guess an IFA wasn't needed for you in terms of the investment side. And if you don't need a return on your money to meet your goals as you say.

Just be mindful of inflation and the £85k FSCS protection between bank groups.

[Kendo67]

Originally Posted by Scoobyd

Just be mindful of inflation and the £85k FSCS protection between bank groups.

All sorted , they are in joint names so the FSCS protection amount doubles plus I made sure they are with different banking groups.

Not a massive amount of interest but a safe 2.1% and 1.9% over 36 months will suffice.

K

[isleaiw1]

Originally Posted by Kendo67

All sorted , they are in joint names so the FSCS protection amount doubles plus I made sure they are with different banking groups.

Not a massive amount of interest but a safe 2.1% and 1.9% over 36 months will suffice.

K

Well the first point about that is that with inflation at 2.4%, the real value of your savings will have fallen over 3 years...

That might be OK in your circumstances (it sounds like it is) but if you are trying to make a positive real returnto fund retirement or whatever, it wont do...

I am an accountant, vaguely savvy on tax, not so savvy on investing and i will happily pay an IFA for just giving me more confidence i am doing the right thing, because getting over the worry is important if you dont feel comfortable in this area. Of course, you could feel really comfortable and be a complete numpty, then you definitely need an IFA!

[EvilDrPorkChop]

Originally Posted by Scoobyd

Maybe if you've got less money than the IFA you could really use the help of one...

I wouldn't worry about that one, i'm doing pretty fine without a IFA thanks.

I think the general opinion on here though is that the experiences people of had are that IFA aren't worth it. I'm sure as within any industry there's good and bad ones, however as in any industry the good ones will come at a cost and that's going to knock your returns. It's alright saying that they've had 20-30 years experience but in reality how long can they spend managing you investments? And comparing it to servicing your car or doing a loft conversion is unrealistic - with todays online advice and technology I can manage my investments 24/7 from my phone, even when i'm working!

[Kendo67]

Originally Posted by isleaiw1

but if you are trying to make a positive real return to fund retirement or whatever, it wont do...

Both works pensions will see to the retirement fund , planning to retire and use one at 55 in two years time followed by my "ring fenced" final salary one when I reach 65 , hopefully.

Just got my FS statement through today and it seems that death in service is the best option , well it would be for someone.

K

[Scoobyd]

Originally Posted by isleaiw1

Well the first point about that is that with inflation at 2.4%, the real value of your savings will have fallen over 3 years...

This is spot on and something many fail to see. I often see cash referred to as a 'safe' investment. Well it is in the sense that you don't visually see it go down in value. But as stated inflation is your enemy here. If inflation is 2.4% and you're getting 1% in the bank (and most aren't even getting that) then you're making a loss in real terms of -1.4% each year. So holding your money in cash is not entirely free of risk.

[Scoobyd]

Originally Posted by EvilDrPorkChop

I wouldn't worry about that one, i'm doing pretty fine without a IFA thanks.

I think the general opinion on here though is that the experiences people of had are that IFA aren't worth it. I'm sure as within any industry there's good and bad ones, however as in any industry the good ones will come at a cost and that's going to knock your returns. It's alright saying that they've had 20-30 years experience but in reality how long can they spend managing you investments? And comparing it to servicing your car or doing a loft conversion is unrealistic - with todays online advice and technology I can manage my investments 24/7 from my phone, even when i'm working!

I wouldn't agree that the good ones will come at a cost, it's the bad ones that come at a cost! As I've said already a good adviser should add proven value. If you're not getting that then yes, time to re evaluate.

Again though you've just spoken of investments and returns. As if that's all an IFA's role is. I don't know where this misconception comes from. As I stated before on my longer post an IFA is not an investment manager. Ensuring that you're invested at the right risk profile, with the right asset allocation and in well diversified, low cost funds is all that needs to be done there.

There's so many ways that a good IFA can really add value and much goes back to the whole list of things I mentioned previously. And from the behavioural aspect. If all they're doing is sitting looking at your funds then they're not doing their job properly. A good financial planner is holistic.

I'm not even sure what you mean by manage your investments 24/7 from your phone. If you've made the right investments then my advice would be try not to look at them at all.

[robbiep]

Originally Posted by Scoobyd

I wouldn't agree that the good ones will come at a cost, it's the bad ones that come at a cost! As I've said already a good adviser should add proven value. If you're not getting that then yes, time to re evaluate.

Again though you've just spoken of investments and returns. As if that's all an IFA's role is. I don't know where this misconception comes from. As I stated before on my longer post an IFA is not an investment manager. Ensuring that you're invested at the right risk profile, with the right asset allocation and in well diversified, low cost funds is all that needs to be done there.

There's so many ways that a good IFA can really add value and much goes back to the whole list of things I mentioned previously. And from the behavioural aspect. If all they're doing is sitting looking at your funds then they're not doing their job properly. A good financial planner is holistic.

I'm not even sure what you mean by manage your investments 24/7 from your phone. If you've made the right investments then my advice would be try not to look at them at all.

Whereas my opinion is that being invested in 'funds' can be one of the worst things you can do.
You've got management fees (usually a flat %), platform fees (ditto), the issues around 'celebrity' fund managers leaving, stopping being lucky, or just failing to perform, which means that returns can rapidly turn negative. Plus (in an active fund), you've got the manager and their team churning stocks, dealing fees cutting those returns even further.
If you had, say £100k to invest, and a 20 year timescale, you'd be better off buying 20 sets of £5k in randomly picked stocks on the FTSE 100, and re-investing your dividends - either in the same stocks as SCRIP/DRIP, or, on an annual basis taking the divdend payments for the year and putting it all into another FTSE100 stock.
Held in an online platform you'd have minimal annual costs (I'd guess £100 or less per annum for £100k portfolio value), all the numbers would be in an annual statement for your tax return, and it would be simplicity itself. If the shares were held in an ISA wrapper, you'd not even have the tax return part to do !
I do agree with you about the 'managing 24/7' comment though. Buy the stocks, sit on them, but generally leave them be unless there is a good reason to sell them.

[Scoobyd]

Originally Posted by robbiep

Whereas my opinion is that being invested in 'funds' can be one of the worst things you can do.
You've got management fees (usually a flat %), platform fees (ditto), the issues around 'celebrity' fund managers leaving, stopping being lucky, or just failing to perform, which means that returns can rapidly turn negative. Plus (in an active fund), you've got the manager and their team churning stocks, dealing fees cutting those returns even further.
If you had, say £100k to invest, and a 20 year timescale, you'd be better off buying 20 sets of £5k in randomly picked stocks on the FTSE 100, and re-investing your dividends - either in the same stocks as SCRIP/DRIP, or, on an annual basis taking the divdend payments for the year and putting it all into another FTSE100 stock.
Held in an online platform you'd have minimal annual costs (I'd guess £100 or less per annum for £100k portfolio value), all the numbers would be in an annual statement for your tax return, and it would be simplicity itself. If the shares were held in an ISA wrapper, you'd not even have the tax return part to do !
I do agree with you about the 'managing 24/7' comment though. Buy the stocks, sit on them, but generally leave them be unless there is a good reason to sell them.

But not for the average investor who is ultimately seeking a long term return above inflation. You do have costs to entry attached yes but these can be kept low. For ISA's and Unit Trusts you can now access the Vanguard Direct platform for 0.15% and say a Lifestrategy fund for 0.22%. An all in annual charge of 0.37% isn't one many could argue with.

Celebrity fund managers, being lucky or failing to perform is all in reference to active fund management. Where you can often pay a high price for under performance. The likes of Terry Smith are generally the exception rather than the norm and what's the guarantee he'll be on the right side of things forever.

Why would you restrict yourself to the FTSE 100 over a 20 year time horizon though? Personally I'd want far more diversification than that. The US, Emerging Markets, Asia etc. Over 20 years plus I struggle to see past a low cost global equity tracker with an invest and leave attitude.

Yup. That's where so many tend to go wrong especially the DIY investor. They get too fidgety, chop and change too much and usually end up the worse for it.

[JR1664]

As above look at Vanguard Life Strategy if you want to Invest

https://www.vanguardinvestor.co.uk/

Easy to use, easy to Invest , low fees. I've more than a few bob in there and its doing very nicely.

That said if you want Internet advice rather than an IFA feel free to peruse this website

https://forums.moneysavingexpert.com...gs-investments

I'd recommend an IFA if you have a substantial sum to Invest (say £200K plus) but for general advice and ideas about the savings, Investments etc look at the above link.

[Scoobyd]

Originally Posted by JR1664

I'd recommend an IFA if you have a substantial sum to Invest (say £200K plus) but for general advice and ideas about the savings, Investments etc look at the above link.

This is one of the problems now. A lot of firms won't take on clients unless they have a minimum amount of investable assets as below a certain level it's just not profitable for the client, or the firm, given the costs involved.

An 'advice gap' has been created. I personally try to help everyone that I see in need of it, even if by simply suggesting a direct to consumer outcome to get them up and running or offering some pro bono generic advice to help steer them in the right direction. That's often to my detriment from a business perspective though as time is money but we are who we are!

[R0B]

It's threads like this that make me realise I'm definitely going to be living on soup and handouts should I live beyond 50. Fingers crossed.