Where do you get your financial advice?
Discussion
I previously had a local IFA looking after my pension drawdown investments but they have been taken over by a larger firm and their advice is now restricted as they are 'tied' to advising on only the products offered by the larger firm. So in the short term I've had to remove them from my accounts and self manage. So if you do look after your own investments where do you get your advice from - publications / websites / other options ?
I'm not really interested in micro-managing and chopping and changing regularly but would like to make sure I don't score some massive own goals. Would you just look for another IFA in these circumstances ?
I'm not really interested in micro-managing and chopping and changing regularly but would like to make sure I don't score some massive own goals. Would you just look for another IFA in these circumstances ?
I think I see optimisation/structuring and how you use those investments as separate to the actual funds/investments themselves.
i.e. I wouldn't have the first clue around optimising a pension drawdown but if someone said they had a sum of money to invest and they don't know where to start I think I could easily point them to some sensible places to look into options.
i.e. I wouldn't have the first clue around optimising a pension drawdown but if someone said they had a sum of money to invest and they don't know where to start I think I could easily point them to some sensible places to look into options.
cheerfulcharlie said:
I previously had a local IFA looking after my pension drawdown investments but they have been taken over by a larger firm and their advice is now restricted as they are 'tied' to advising on only the products offered by the larger firm.
A slight aside on restricted advice if you chose to look for another IFA:Through RDR, when the requirement to declare if a firm was 'restricted' versus 'independent' came in, a number of larger firms in the 'Wealth' space stated it was genuinely impossible to undertake a genuine comprehensive analysis of the relevant market, and being subject to more regular review with the regulator (and need to justify that decision) they too the view to declare their advice to be 'restricted'. This did not necessarily mean they were not 'unbiased and unrestricted' however, which was a big worry to them at the time. Source - I worked in such a firm during RDR alongside a very large consultancy who was advising a number of other firms.
Genuine shame if you had a trusted IFA who is now forced to use a sub-range of investments, that in itself is not necessarily bad but if you have pulled investments I assume it must be unpalatable to you.
I put mine in a diversified tracker fund with extremely low fees. The fund basically represents the market and is 'set and forget' requiring zero management overhead other than checking the prices now and again.
I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
plenty said:
I put mine in a diversified tracker fund with extremely low fees. The fund basically represents the market and is 'set and forget' requiring zero management overhead other than checking the prices now and again.
I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
Agreed. I have listened to a lot of podcasts from IFAs, books etc and for now deduced a market tracker fund with regular contributions is best to start to build some wealth. I’m currently 32 but in the future when my pot is more healthy I will probably seek out a trusted IFA.I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
Common misconception about the point of an adviser is to outperform the market. They pick by and large from the same pool of investments as you can...
The point of an adviser is in help picking those investments and the planning that goes around them. Ongoing management is either inherent within the type of investment you're in, or you do some of the work like rebalancing, or you pay a bit more for those things to be done for you.
The issue of passive versus active is a separate conversation and advisers can use either approach dependent on client preferences/priorities.
The point of an adviser is in help picking those investments and the planning that goes around them. Ongoing management is either inherent within the type of investment you're in, or you do some of the work like rebalancing, or you pay a bit more for those things to be done for you.
The issue of passive versus active is a separate conversation and advisers can use either approach dependent on client preferences/priorities.
PistonHead007 said:
Common misconception about the point of an adviser is to outperform the market. They pick by and large from the same pool of investments as you can...
The point of an adviser is in help picking those investments and the planning that goes around them
Yes fair point. I don't need help planning but others will. Just like personal fitness trainers are invaluable for some and not for others.The point of an adviser is in help picking those investments and the planning that goes around them
plenty said:
I put mine in a diversified tracker fund with extremely low fees. The fund basically represents the market and is 'set and forget' requiring zero management overhead other than checking the prices now and again.
I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
So much wrong with this. Mainly an IFA will only structure your investments in a way that is intended to outperform the market if you ask her/him to that. An IFA will build a financial plan that meets your needs while mitigating risk and maximising wrapper benefits.I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
Second a tracker is cheap for a reason - just look at what has happened to the Vanguard Lifestrategy range during the recent market turmoil; their "cautious and balanced" portfolios have massively underperformed because of their exposure to bonds in passive strategies. I'm not advocating active as being better than passive but you must understand what trackers give you - passive exposure to an index. They are therefore guaranteed to underperform the Index (they give you Index return minus fees) and in times of volatility it is risky to rely solely on trackers whilst in times of obvious opportunity they will miss out. Most investment managers (accessed via an IFA) will now structure portfolio using both active and passive strategies in order to mximise opportunity/minimise risk and provide good value.
These days an IFA will almost always get you to complete a risk profiling questionnaire which they will the use to match you to a similarly risk profiled investment solution. Hardly any IFAs pick no funds and manage portfolios themselves - they outsource this to other professionals e.g. wealth managers or asset managers. The value the IFA brings is in creating an efficient financial plan that will maximise tax efficiency etc and is usually based on a cash flow model for those needing an income. They will the trawl the market for the best investment solution to meet your needs.
Trust me, using an IFA will add financial value over time (and no, I am not an IFA but I do work in a profession to see the value they add). That has been proven in a study (I believe) carried out by Vanguard who are mainly a tracker provider.
Gixer968CS said:
Second a tracker is cheap for a reason - just look at what has happened to the Vanguard Lifestrategy range during the recent market turmoil; their "cautious and balanced" portfolios have massively underperformed because of their exposure to bonds in passive strategies.
I'd see it more of an asset allocation decision rather than a passive vs active issue.When constructing the LS portfolios, Vanguard will have made decisions on what average bond duration to use and settled on a medium (ish) duration and have been clear on their reasoning. (They have shorter-duration bond funds, which they could just have easily slotted in, but it didn't align with their thinking).
https://portfolio-adviser.com/vanguard-why-were-st...
"Short-term bonds may be less sensitive to interest rate rises, but they offer reduced protection during equity market corrections and provide less income."
Given that equity markets haven't really suffered this year, (in GBP terms) you could argue the bonds haven't explicitly "failed" in what they were designed to do.
Gixer968CS said:
Trust me, using an IFA will add financial value over time
Thanks - genuinely thought-provoking. I'm not closed to what IFAs can offer, but so far I don't believe I would benefit from one based on my current goals which are nothing more complex than "do better than cash in the bank". That could change as circumstances change.Gixer968CS said:
....... whilst in times of obvious opportunity they will miss out.
By what measure is this assertion? Looking at some of the strongest years for stocks in recent times a global tracker has outperformed most actives quite easily.
L&G International Index Trust delivered a 30.23% return in 2016, which is the top 8% of all funds (active and passive) in it's Morningstar category.
It delivered 23.55% in 2019, another strong year for stocks, which is top 15%.
Even in 2020 it was in the top 29% (I'd have thought it may struggle in that year given the wild dispersion of returns but seemingly not according to Morningstar data).
There will of course always be some active funds that outperform the index, but that means there must be others that underperform.
If someone can tell me what will outperform for the next 10 years I'd be very grateful!
Derek Chevalier said:
Gixer968CS said:
Second a tracker is cheap for a reason - just look at what has happened to the Vanguard Lifestrategy range during the recent market turmoil; their "cautious and balanced" portfolios have massively underperformed because of their exposure to bonds in passive strategies.
I'd see it more of an asset allocation decision rather than a passive vs active issue.When constructing the LS portfolios, Vanguard will have made decisions on what average bond duration to use and settled on a medium (ish) duration and have been clear on their reasoning. (They have shorter-duration bond funds, which they could just have easily slotted in, but it didn't align with their thinking).
https://portfolio-adviser.com/vanguard-why-were-st...
"Short-term bonds may be less sensitive to interest rate rises, but they offer reduced protection during equity market corrections and provide less income."
Given that equity markets haven't really suffered this year, (in GBP terms) you could argue the bonds haven't explicitly "failed" in what they were designed to do.
si
800 said:
800 said:Gixer968CS said:
....... whilst in times of obvious opportunity they will miss out.
By what measure is this assertion? Looking at some of the strongest years for stocks in recent times a global tracker has outperformed most actives quite easily.
L&G International Index Trust delivered a 30.23% return in 2016, which is the top 8% of all funds (active and passive) in it's Morningstar category.
It delivered 23.55% in 2019, another strong year for stocks, which is top 15%.
Even in 2020 it was in the top 29% (I'd have thought it may struggle in that year given the wild dispersion of returns but seemingly not according to Morningstar data).
There will of course always be some active funds that outperform the index, but that means there must be others that underperform.
If someone can tell me what will outperform for the next 10 years I'd be very grateful!
But, I agree, over the longer term passive strategies do stack up. What makes the most impact on your investment outcome in fact is having a good asset allocation model (e.g it's better to be out of the UK if Asia is performing better than to simply try and buy the best UK stocks). So what you really need is a good portfolio manager with a well proven asset allocation strategy
Gixer968CS said:
I was referring to shorter term opportunities that active managers could more likely take advantage of. For example where there is a rotation from one style of investing to another - value stocks for example outperformed growth at the end of last year and in to this on. An index tracker would capture both sides of the equation where an active manager could exploit it - and many did.
I'd be interested to see examples of active managers that can consistently time factors.https://alphaarchitect.com/2021/09/factor-timing-i...
“Our results do not support the hypothesis that deviations in risk factor exposures are a signal of skill and we recommend that investors should resist the temptation to invest in funds that intentionally or coincidentally vary their exposure to risk factors over time.”
Gixer968CS said:
I was referring to shorter term opportunities that active managers could more likely take advantage of. For example where there is a rotation from one style of investing to another - value stocks for example outperformed growth at the end of last year and in to this on. An index tracker would capture both sides of the equation where an active manager could exploit it - and many did.
But, I agree, over the longer term passive strategies do stack up. What makes the most impact on your investment outcome in fact is having a good asset allocation model (e.g it's better to be out of the UK if Asia is performing better than to simply try and buy the best UK stocks). So what you really need is a good portfolio manager with a well proven asset allocation strategy
Don't get me wrong, I am not by any stretch a hardcore boglehead But, I agree, over the longer term passive strategies do stack up. What makes the most impact on your investment outcome in fact is having a good asset allocation model (e.g it's better to be out of the UK if Asia is performing better than to simply try and buy the best UK stocks). So what you really need is a good portfolio manager with a well proven asset allocation strategy
I have a foot in each camp, with a couple of actives and a big chunk of passive exposure too. I've personally found from my research, trial and error and being fortunate enough to speak to a few fund managers that the vast majority of actives (speaking 100% equity by the way, for bond exposure if I ever wanted any I'd likely go with Capital Gearing Trust/Personal Assets Trust and let them choose allocation etc and links into your comments on asset allocation) are just a straightforward bet on a factor - growth, value, quality.
Looking at the performance of IA Global this year it's pretty clear that most have been way overweight on growth stocks and aren't looking too great right now.
There are a tiny handful of funds who are actually reliant on proper stock picking rather than just betting on factors, it's definitely the minority though.
rossub said:
DodgeeDave said:
Pistonheads finance forum 
+1I started overpaying my mortgage as a result of it and am far better off overall as a result. Countless other stuff along the way.
Obviously I know what to ignore - like anything to do with buying Crypto.
I am extraordinarily wary of FAs (& indeed IFAs)......at the end of the day, most of the are sales people, and of course good sales earn your confidence along the way.
My view is that the person with your best interests at heart is YOU.
OF COURSE there is also a need to temper your behaviours - don't bail out at the bottom of a market, do some good research......but I have to say I broadly agree with this perspective:
plenty said:
I put mine in a diversified tracker fund with extremely low fees. The fund basically represents the market and is 'set and forget' requiring zero management overhead other than checking the prices now and again.
I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
Okay, if you are a powerful PH Director with multiple millions/businesses/homes/wives(!) to deal with, you perhaps need help....if your life is in a bit of a mess, likewise....I'm not convinced that any IFA can outperform the market, so I don't see the need to pay for one.
......but otherwise there are some very simple basics to follow, & drip-feeding in over time (decades) is a reasonable approach.
Take a look at the short videos at https://kroijer.com & see why I agree with plenty on this.
In terms of other useful resources:
For those starting out, head to this reddit page and follow the latest flowchart to keep your life in order. I can see it has changed from when I last looked a few years back.
For pension thoughts, this MSE Forum can be pretty helpful. The MSE pages in general are useful - if you want the best travel credit card, check there. etc!
For a chat to chew the breeze, you can always head to your local pub with your mates.....OR if you want to natter with a knowledgable fella, hop over to the IM thread and have a chat with Nik. He will NOT give you advice, but certainly has as much (if not more) experience as any FA, & will happily share it with you. Zero pressure to take out any IM products.
Oh yeah - invest in yourself - improve your lot by earning even more!
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