IFA

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Discussion

Ej74

Original Poster:

1,038 posts

184 months

Monday 2nd March 2015
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After some advice regarding IFA's and pensions

I have several pensions of various values that I have accrued over my working life.

As an example I have 1 x pension that is on a SL managed pension tracker which has doubled over 10 yrs, my contributions stopped 10 yrs ago.

The question is would a IFA add some real value in deriving results/ gains from my portfolio


Claudia Skies

1,098 posts

115 months

Monday 2nd March 2015
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I don't think there's an answer to your question.

Personally, I favour a mainsteam investment such as you already hold combined with keeping all the "costs" as low as possible. So I'm reluctant to incur the cost of an IFA.

But each to their own.

Ej74

Original Poster:

1,038 posts

184 months

Tuesday 3rd March 2015
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An IFA won't tell me what they can provide other then minimising costs, what i'm really after investment growth advice

I suppose just wont say and I understand the reason but for an undefined advice the cost is 1- 2% of fund value

Claudia Skies

1,098 posts

115 months

Tuesday 3rd March 2015
quotequote all
It really is very difficult.

The problem IMO arises when you get into a situation of paying 1-2% to an adviser every year. The cumulative effect can devastate performance over the long term. However, if the adviser can "add value" greater than his cost you would come out ahead. "Adding value" is the big question.

One possibility is to buy "one off" advice about what funds to invest in, and then run with them. But this isn't a cure-all because if a fund goes off the boil you might not notice it although a regularly paid adviser should, and recommend change. That doesn't mean he will; just that he should.

I'm sorry I'm not much help.

What I can tell you is that if you look at the websites of big retail platforms you will find suggestions (NOT recommendations) of mainstream/popular funds. Fidelity has its "Select List" and Hargreaves Lansdown has its "150" (with a shorter list as well).

If you feel daunted by the subject then with £100,000 to invest I'd probably suggest (not recommend) paying an advisor for one-off advice. With £10,000 I'd suggest (not recommend) picking four fairly mainstream funds from sectors of your choice and sticking £2,500 in each. Then keep a careful eye on (a) how each sector performs, and (b) how your funds perform in those sectors. All of this can be monitored and managed online with people like Fidelity and Hargreaves Lansdown.

Claudia Skies

1,098 posts

115 months

Tuesday 3rd March 2015
quotequote all
.... just to add. If you are approaching retirement (5-10 years) then it is important to have a clear understanding of the "potential downside risk" of different types of investment. You can find out about this online and there are various "lifestyle" investment arrangements which will handle this automatically for you. Obviously an advisor should cover this as well.

ringram

14,700 posts

247 months

Tuesday 3rd March 2015
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An IFA can never add 1-2% over a DIY approach unless you have the mental age of a 2 year old IMO.
However, sadly that represents 50% of the population.

DYOR FTW

MR DVD

62 posts

257 months

Wednesday 4th March 2015
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So all IFAs are crap and so is half the population , what a muppet you are!

Edinburger

10,403 posts

167 months

Thursday 5th March 2015
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ringram said:
An IFA can never add 1-2% over a DIY approach unless you have the mental age of a 2 year old IMO.
However, sadly that represents 50% of the population.

DYOR FTW
Perhaps the stupidest comment every posted on pistonheads rolleyes

Edinburger

10,403 posts

167 months

Thursday 5th March 2015
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An IFA is more than just investment returns. Think of it as financial/lifestyle planning.

He/she will examing all the pensions you have and perhaps recommend consoilidting those into a portfolio which is designed to match your attitude to risk, your expectations, timescales, etc. And it'll be monitored and reviewed annually by a professional in their field.

If cost is important, you'll usually pay more for a fund going direct to the fund group than via an investment platform used by IFAs. IFAs have to charge explicit fees rather than take a commission so it often makes sense to shop around and look at a few different IFA practices. Initial consoltations are usually free.

Hope that helps. I'm not an IFA by the way but I work closely with them in the financial services industry.

walm

10,609 posts

201 months

Thursday 5th March 2015
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The oft ignored benefit of an IFA is the discipline it helps encourage.

If I spend money on getting advice, I am damn well going to be more diligent about filling my ISAs and SIPPs than if I just put it off and rely on my own research.

Otherwise I don't have the scale of assets necessary to amortise the cost of the advice over.

Cheib

23,112 posts

174 months

Thursday 5th March 2015
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IFA's are in my opinion very good for helping you manage your finances/help you maximise all your investment avenues.

What they are not very good at is telling you where to invest your money.....their ability to tell you whether you should be investing in India vs Brazil vs FTSE 250 vs S&P 500 vs Property is pretty minimal in my experience. If you really were good at picking where the bext investment opportunities are you'd be working in fund management or similar and earning multiples of what an IFA does,.

walm

10,609 posts

201 months

Thursday 5th March 2015
quotequote all
Cheib said:
IFA's are in my opinion very good for helping you manage your finances/help you maximise all your investment avenues.

What they are not very good at is telling you where to invest your money.....their ability to tell you whether you should be investing in India vs Brazil vs FTSE 250 vs S&P 500 vs Property is pretty minimal in my experience. If you really were good at picking where the bext investment opportunities are you'd be working in fund management or similar and earning multiples of what an IFA does,.
That isn't really their job though... is it?

Cheib

23,112 posts

174 months

Thursday 5th March 2015
quotequote all
walm said:
Cheib said:
IFA's are in my opinion very good for helping you manage your finances/help you maximise all your investment avenues.

What they are not very good at is telling you where to invest your money.....their ability to tell you whether you should be investing in India vs Brazil vs FTSE 250 vs S&P 500 vs Property is pretty minimal in my experience. If you really were good at picking where the bext investment opportunities are you'd be working in fund management or similar and earning multiples of what an IFA does,.
That isn't really their job though... is it?
No, but most of them give asset allocation advice.

ATG

20,485 posts

271 months

Thursday 5th March 2015
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walm said:
That isn't really their job though... is it?
Indeed. And frankly no one including fund managers is any good at consistently picking "winners".

If you ask someone what you should invest in and they say something like "Brazilian trouser manufactures are the next big thing" with complete confidence then you're in the presence of a liar or a fool.

As far as stock picking goes, if you're thinking about long term investment you should be thinking about the volatility and average long term returns of different asset classes and maybe have a stab at thinking about what drove those long term patterns and the kind of changes that might make those long term patterns break down. Risk management.

At least as important, think about tax, flexibility, inheritance and fees.

Hot tips are fun, but they are gambling, not sensible investment.

CaptainSensib1e

1,432 posts

220 months

Thursday 5th March 2015
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An IFA does more thna just tell you which investments to buy. They look at your whole situation and make recommendations on that basis, perhaps suggesting something that would never have occured to you.

I am quite happy making my own investment decioisn, but when the stock market can often move 1%+ over a day or two, I really wouldn't begrudge paying someone 1% to make sure I wasn't doing anything daft if I was a less confident investor.

Ginge R

4,761 posts

218 months

Sunday 8th March 2015
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I've just spent a week in rehab ('back', not bottle!) and the time and distance has allowed me time to reflect. Clients I speak with are either too busy to do that, or they simply don't understand the financial battlefield in sufficient detail. That doesn't make advisers all good, but it does make the concept, the principle at least, of advice credible.

I'm an IFA, and I use an IFA. I don't pay her, neither does she pay me, but we are pragmatic enough to know we can provide each other with objectivity. And that's key these days. I read swathes of new guidance, regulation, legislation and diktat and if I am sometimes swamped by the relentless pace, frequency and (sometimes) insanity of it all, god knows what most average investors must be going through.

You can have a pants IFA or you can have a good one. The issue is, will a good one add value and is that value going to be worth it? Do I know the pros and cons of *all* funds, know Woodford's mobile number, when it's just right to sell palladium or get out of Africa? No, of course I don't, and whilst you're at it, why don't you give me a broom to stick up my backside and I'll sweep the pavement whilst I'm at it. I know a good fund by now, and I can smell bull$hit at 50 paces, but all of the above isn't my primary role anymore.

A very good IFA (and we do have some very good ones) should be able to plan, strategise, theorise, be contingent, extrapolate, identify, articulate and prioritise objectives, conceptualise (sorry for the verb ism), and create options, fallbacks and exit strategies. And I'm sorry if that reads poorly, but that's what an adviser should be doing for you and not just simply flogging you a product. And if your needs are simple and modest, do you need all of that? Possibly not. The issue isn't just about whether IFA are any good, but whether a good IFA is good for you.

Claudia Skies

1,098 posts

115 months

Sunday 8th March 2015
quotequote all
^^^ I am happy to say that having seen a number of your contributions on this forum you make a great deal more sense than a lot of the people who consider themselves qualified (and worryingly may be "qualified") to give financial advice.

IMO one of the issues the sector faces is that some "advisers" and "managers" don't really want their customers to understand the subject at all. They make their living from "appearing clever" rather than necessarily "being clever".

Another issue has been the nonsense seen since 2000 where banks/building societies moved away from their traditional businesses to become "retailers of financial products". Never has there been a clearer case of the blind leading the blind.

My particular hobby-horse is that much of investment is made to look complicated when actually, it isn't. And this is what I think gives real value to this Finance forum in PH. People such as yourself, Sarnie and others are able to give top quality guidance without tripping into the difficult area of regulated "advice".

I'm sure members who look at this forum receive a lot of useful information.

Ginge R

4,761 posts

218 months

Sunday 8th March 2015
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Claudia Skies said:
They make their living from "appearing clever" rather than necessarily "being clever".
Thank you, and that's a great quote for me to pinch. wink

Ej74

Original Poster:

1,038 posts

184 months

Sunday 8th March 2015
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Comments and advice much appreciated
Now can someone recommend an IF in and around Surrey

Ginge R

4,761 posts

218 months

Sunday 8th March 2015
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Ej,

A good google search will produce a decent crop of results. Forgive my unsolicited approach, and at the risk of being presumptious, if you think I might be of help please feel free to drop me a line. I'm not based in Surrey but do travel to look after my client-base.