Financial Advice (IFAs)

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strugglinauthor

Member
Be great to hear views from any of you working in the industry or those who use the services.

I recently went to see an IFA for a financial review as, having parted company with my previous IFA, it was time to take stock. The guy I met seemed knowledgeable and I asked for a figure to re-structure the investments I had. Having Googled the figure it was in line with what's out there, so I was happy. Although there's clearly a benefit to having someone keeping an eye on the market (other than me, of course!), I decided that I didn't want to pay for ongoing maintenance as the risk profile for the investments is low and the expected volatility/returns likewise. Because the maintenance charge is a percentage of the entire investment then his charge would equate to a considerable percentage of the profit I expected to make. The guy has now turned round and said he feels uncomfortable doing the review without the maintenance element and even mentioned opening himself up to risk of the FCA asking questions. My understanding of the FCA's review of the market was to ensure that IFAs now charge rather than taking commission and so a customer can pick and choose what services he/she wants to pay for. I can't understand why the FCA would have any issue with someone asking for a review and an IFA giving it.

I'm left wondering if the true message is "I'm not going to make enough money out of you" or whether I'm likely to come across the same situation again. Anyone else had this experience?

Thx.
 
I would say you've hit the nail on the head with the last paragraph.

I work in investments and I am amazed by how many people pay fees for some of the 'work' their advisors carry out but actually they don't do any work. I see many taking monthly/bi-annual/annual charges and doing little or no work for that. Some have even gone as far to start charging customers now, that before the changes coded RDR in the industry, we're not being charged fees.

An advisor worth their salt should be doing the review and if you have decided you do not wish to pay an ongoing fee then so be it. If you need further advice in the future they can charge for that accordingly. There is no necessity to sign up for anything other than the review. The FCA would actually not take too kindly to an advisor acting in the manner you've described. They've tried to 'simplify' the advice industry to put the client in charge and restore the faith.

I would walk away to be honest.
 
I echo what Angie4m says.

It's surprising that this guy says this! He clearly doesn't understand his compliance requirements and therefore I'd be worried about using him full stop.

There are IFAs out there that do not offer a maintenance service and simply operate a fixed fee based service and charge this each time they meet the client to reevaluate the portfolio.

As Angie4m mentioned, this is what the FCA's RDR objectives were - a clear and fair charging structure where the customers can see what they are paying for and receiving.
 
Thank you all. What you have said echoes my own thoughts. Fortunately no money has changed hands and so, fighting my cynicism, I will find someone else. Heck, maybe I can even do it myself!

The misses reminded me that before we went I did say, "I wonder if this review will be truly unbiased if we're paying for it or whether this person will be looking to see how much money they can make?"

I actually have no problem with someone cherry picking their customers to make the most money, I guess that's what business is about. But I was surprised he chose to bring the FCA into it as a justification and even to put it in writing. But as you've all said, it's a good reason to move on.
 
When you get older (circa 70) - it begs the question, "is it really worth investing a lump sum?"

If income exceeds outgoings why invest capital that will make 6% it will take several years to get back to sq 1

May as well have some rainy day cash and more toys!
 
ronk said:
When you get older (circa 70) - it begs the question, "is it really worth investing a lump sum?"

If income exceeds outgoings why invest capital that will make 6% it will take several years to get back to sq 1

May as well have some rainy day cash and more toys!
Click to expand...

I like your thinking! :thumbsup:
 
strugglinauthor said:
ronk said:
When you get older (circa 70) - it begs the question, "is it really worth investing a lump sum?"

If income exceeds outgoings why invest capital that will make 6% it will take several years to get back to sq 1

May as well have some rainy day cash and more toys!
Click to expand...

I like your thinking! :thumbsup:
Click to expand...

There are no pockets in your last shirt!
 
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