Independent Financial Adviser

In my experience the name IFA is a total misnomer - they are salesmen, trying to sell you policies. Interestingly, almost every piece of advice that I have had from so-called IFA's has been less profitable than if I simply put my money in a sock and stuck it under my bed

Haddock - if you want a pension, you've got to "buy" one from somewhere, be it a company one or otherwise. It's a case of where to go.

If you go to your bank or building society you'll only be given advice on their products - yes, they'll explain all the different terms,etc and how the different products work but they're locked into one or two companies only. For example - if you go to Barclays, you can only take products from Legal and General.

An independent financial adviser will essentially work for himself or a company and have access to hundreds of different products from hundred of different companies.
What he should do is arrange a visit and give you a financial healthcheck and assessing your wants and needs before recommending any products he thinks will suit you. He is bound by law to disclose the amount of money he will earn from you.
He should also have a thorough understanding of the financial market and be able to clearly explain the "rules of engagement".
He should also have some suitable qualifications.
Personally, I trawled through the Yellow Pages and contacted the company which had been established the longest: they must be successful so they must have satisfied customers, etc.
All people who buy a financial product have a 30 day cooling off period to change their minds if they want to.
Lastly, if you are employed by a company with a Financial Director, why not have a word with him? If the company has a pension scheme it will inevitably pay you to go into it as they'll contribute a certain amount in with your own contributions.
Good luck!

I agree with BLT. Avoid them.

A Contradictio in Terminis.

Rob.

My problem is that a pension scheme I have froma previous employer is being wound up. I need advice on what to do with this scheme next.

I'm guessing that the best thing to do is to transfer the old scheme in to the scheme I have with my current employer. The cynic in me tells me that this is not going to be straightforward!

Nick

Haddock,
If you see an IFA about this he will simply tell you to put the funds in some sort of pensions or investment vehicle from which he gets a fat commission. I guarantee it. It won't be what's best for you. They are the lowest of the low.
Simon

quote:

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Originally posted by Simon Perry:
Haddock,
If you see an IFA about this he will simply tell you to put the funds in some sort of pensions or investment vehicle from which he gets a fat commission. I guarantee it. It won't be what's best for you. They are the lowest of the low.
Simon

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Simon, please excuse my vulgarity, but this is bollocks.

Fat commission? Please expand.

Regards

Mike

Spending money I don't have on things I don't need.

So what's so wrong abut a guy earning commission? If someone tells me it's taking money off the customer I'll have to agree but everything we buy, no matter what, results in someone earning money out of it, be it the guy who sold you the paper down the corner shop, or the chap who sold you your Hi-Fi system.
I think what we're dealing with here is a case of stereotyping: Financial Advisers are for some reason as maligned as estate agents and second hand car salesmen.
Some may say that the adviser cannot be independent when the fee they receive varies between products,(the implication being that he will "advise" you take the product he earns the most from).
Unlike other trades,(such as retail, etc), he has to disclose how much he or his company will earn from the product he advises you on.
If the guy puts in the work, explaining your options and showing the products available to you and you feel happy enough to go ahead, why the hell shouldn't he have earned his money?
If it was so simple, the business wouldn't be regulated, FA's wouldn't exist and we'd all be able to do it ourselves.....

The main problem with IFAs is that they charge too much as an hourly rate (i.e. overvalue themselves).
Most will be totally straight about whether you wish to pay them directly or via commission. It is just a bit of a shock when you see what they have charged you.
If you just want to buy a pension, you shouldn't need ongoing IFA advice, so I'd pay a one-off fee. If your finances are complicated (like an NHS GP) you may need yearly advice. My guy charges an outrageous 100 quid a month retainer, but I'm too scared to leave him now as retirement is on the visible horizon.

quote:

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Originally posted by BLT:
In my experience the name IFA is a total misnomer - they are salesmen, trying to sell you policies. Interestingly, almost every piece of advice that I have had from so-called IFA's has been less profitable than if I simply put my money in a sock and stuck it under my bed

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So what if they are salesman? So what? Do you live on love and air?

Can you give us examples of the "advice" you have been given that is less profitable that the bank of sock? By the way, if your £ is under the bed, best check you have insurance to cover fire, theft, vermin damage etc. An IFA will be best able to advise on which policy.

Too many people have no idea wbout IFAs, and would rather beleive Which? Magazine, or cancel endowments because the Daily Mail says they are crap.


Lets have a look at the easy way that IFAs can make money from us, by means of a £100 per month pension policy, 25 year term. Once he is Authorised by the FSA, hHe needs to complete a factfind, and ensure that it is kept up to date. Needs to ensure that the risk / reward profile of the client is suitable, and that the client can afford it. These records have to be maintained indefinately, and if legislation is enacted that makes the original advice wrong *in retrospect*, a hefty claim can be expected.

At retirement, the IFA needs to consider the type of annuity, open market options, drawdown vs.phased retirement, etc.

During this time, offices need to be rented, rates paid, staff employed, PI cover maintained, electricity paid for, etc etc etc. The evil IFA may even take a cut himself....

For they get paid the Kings Ransom of about £300.

Whoopee.

Regards

Mike

Spending money I don't have on things I don't need.

Mike
One example of many
Simon

quote:

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Originally posted by Rockingdoc:
. My guy charges an outrageous 100 quid a month retainer, but I'm too scared to leave him now as retirement is on the visible horizon.

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RDoc

This is over the top: in fact, in fact, this is by far the largest retainer I have ever seen from an IFA.

You are not tied to any particular IFA: what services does he provide for this amount? I would lay money that the services can be matched by another IFA for a *considerably* lower fee structure.

BTW I am not an IFA - but check your pms!

Regards

Mike

Spending money I don't have on things I don't need.

Mike,
You wouldn't be an IFA would you?
Simon

OK so you are not an IFA. Have you considered becoming one?

Simon

0.5% of a fund is hardly a fat commission.

By law these charges would have been detailed to the client prior to the contract, and post sale.

A gun is not held to a clients' head.

This 0.5%, if it is taken, can be used to offset running costs as outlined above. Maybe some profit too.

I have no problem with profit: those people that dont make a profit go out of business.

Regards

Mike

Spending money I don't have on things I don't need.

quote:

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Originally posted by Simon Perry:
OK so you are not an IFA. Have you considered becoming one?

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I am not, nor do I wish to become one because of the increasingly litigious nature of the British Public, and the utter lack of understanding from the Government, about what IFAs do.

What do you do for a living?

Regards

Mike

Spending money I don't have on things I don't need.

AG

The silence leads me to believe he is an accountant who realises that I will just ask him to quote his hourly rate, and then, attempt to justify it.

Bloody accountants.

Regards

Mike

Spending money I don't have on things I don't need.

As with most things in life you tend to get what you pay for, I think it is only right that fees, commissions and such are detailed prior to the contract. If on the other hand you decide take "free" advice from a Bank offering only products from that Bank you often do not see the hidden cost of buying something that does not perform as well as other available products. Both purchases have costs attached, one you see and one you often don't - the choice is yours.

Alex

I was in a seminar ran by a woman who, amongst her other interests, ran Endowment Reviews for a number of IFAs. In a large percentage of cases, the clients realised, halfway through the interview, that there was the possibility of a payout. "At this point the tone of the answers changed markedly."

She was too polite to say: "at this point the client started to lie. "

Hope the Grim North is not too bad.

Regards

Mike

Spending money I don't have on things I don't need.

IFAs are like hi-fi dealers.

Some are good, some less so.

The good ones offer excellent value for money and thrive on their reputation.

Like everyone else they are in it to make a living. The good ones make their living over the long term, the crooks try to make a fast book.



Regards,

Steve.

[QUOTE]Originally posted by mike lacey:
[QUOTE]Originally posted by Rockingdoc:
. My guy charges an outrageous 100 quid a month retainer, QUOTE]

RDoc

This is over the top: in fact, in fact, this is by far the largest retainer I have ever seen from an IFA.

Mike

QUOTE]

For this he looks at my income/expenditure over the year, meets me once for about two hours (at his office), and prints out detailed forecasts for my retirement. I am always overspent, so there is nothing extra to invest, even if he suggests it. BUT as a strange sort of self-employed person with an NHS pension and added-years, and various suspended non-performing personal pensions (which would be better in a sock ), it is all too much for my brain. I pay him so I don't have to think about it, in the belief that I won't starve in retirement if I do what he suggests.

www.Inter-alliance.com

is a firm who employ only IFAs. They do actually tell you if they are getting commission or not, and charge you a fee if they aren't.

The IFA concept is regulated. They aren't allowed by law to take commission and not tell you and all the other horror stories you hear just aren't true. The real dodgy ones are the salesman from the insurance/IM companies themselves.

Also watch out for the "mutual" companies as they don't have the best investors (look at what happened to Equitable Life etc

cj

quote:

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Originally posted by AlexG:

See : this whole endowment shambles - the general perception is that ALL endowments are the work of Satan, and to own one is to be a fool. The truth is somewhat different.

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I concur. Although to be fair the endowment sales fiasco was mainly FA not IFA related (ie salaried members of the IM/Insurance company fraternity, rather than fee earning)

Quote from pingu:

I concur. Although to be fair the endowment sales fiasco was mainly FA not IFA related (ie salaried members of the IM/Insurance company fraternity, rather than fee earning)

Has this been proved?,(I'm asking out of interest not skepticism!).

Mike,
Not that its all that relevant, but seeing as you asked, I am an accountant. What are you? We've established that you are not an IFA, but might be one if it wasn't for the fact that you might get sued, but little else. And why we are on the subject of what is and is not relevant, I don't give a piss about an IFA's electricity costs or his rate bill.
What I said was:
1) An IFA will be looking to do all he can to sell Haddock a product that is good for the IFA i.e maximises his commission. Not what is best for Haddock.
2) The commission is 'fat' because the IFA is likely to get an introductory commission plus commission for as long as Haddock is contributing to the plan. Your example of the £100 monthly contribution equating to £300 commission is so disingenuous as to be worthy of an IFA. Let's talk about a more realistic pension fund with a value of £100,000. In those circumstances the IFA will be receiving at least £500 per year. And while we are on the subject of commissions, they are 0.5% of fund value as a minimum - often they are higher. The typical view in the industry is that commissions are OK value for customers who are only putting in up to £100 per month into pensions. After that you are better off paying an hourly fee.
3) My closing comment was that they are the lowest of the low. Many are. The three I have had were. There may be a few who are OK.

regards
Simon