Your IFA Could Go Broke

I won't lose a huge amount of sleep worrying about the poor IFAs losing their jobs, based on the limited dealings I have had with them, as well as hearing the horror stories of others.
Someone once wrote that using an IFA is a bit like pouring your money into a bucket with holes in it. The IFA then runs around gleefully collecting anything that escapes ! An apt analogy I thought.

I don't have an IFA and have no plans to get one.

I'm not a fan of using an IFA and have never used one. Commission charges do of course eat into your returns and many products designed by the finance industry shamelessly take more than they should over time.

Self management at cheapest cost is the way to go.

However, as has been pointed out above, Not everyone can do that. I know, at a guess, about 200 people. I am almost certain that other than the 4 people in my little share club, not one of those people read the Mötley Fool and as far as I know not one of them truly manages their money other than switching bank accounts occasionally. Whenever I talk money at dinner parties or actual parties etc, the almost universal reply from people is that they don't understand savings accounts and ISAs let alone shares and pensions.

These are not dumb people. This weekend I had this conversation with two doctor friends, last week with my retired ex senior advertising executive neighbour.

I know an IFA who has recently retired, as he says that he knows people will not pay the sort of rates that he would need to get a decent living, unless he trebles his client base. I have little sympathy here as it does suggest he gets more than he should from hi commission based sales.

However, his point is that he has offered fee refunds for years in option against fixed hourly rate advice, and other than a very few, already well informed and indeed rich clients, every single "man in the street" opted for the commission based charging instead of a £60 per hour fixed rate for advice.

I fear that we are in for trouble ahead, as the great British public shun all advice on what to do with their money, and henceforth either spend it, bang it in the bank or B/S, or buy bank sold products because they are the only game in town.

Easy to disparage IFAs on a money based site that probably less than 1/10th of the population have even heard of.

Trouble ahead, I feel.

Tony

The only two financial products to which I ever succumbed were an Equitable Life pension (enough said) and one with Sun Life of Canada, which I took out through an IFA friend for whom I felt sorry. This was worth less after 10 years than what I'd paid into it.

The best definition I ever heard of an IFA is a man who takes your money and invests it until it's all gone.

Any idea how this will impact St James income and share price ?

I have a hobby-horse.

It is a matter of constant amazement to me that we allow the Financial Industry to pull the con-trick upon us that is ANY charge based upon the Capital Value of the money that we may place in their hands.

By any rational evaluation we are hoping to use the purported expertise of these people to increase the post-inflation worth of the Capital that we place in their charge.

Thus, the only rational basis for a charge that we should allow them to make is a charge upon the post-inflation-adjusted INCREASE in the value of our investment.

Let us try a little analogy – what would be your reaction if, when you asked a builder to add an annex to your property, he computed the cost not based upon the work that he planned to perform but upon the present value of your whole house and curtilage. I imagine that after the initial annoyance of the cheek of it you would just laugh and tell him to go away. But this is exactly what we happily accept from the Financial Industry.

How on earth has this egregious con-trick come to be both accepted and lawful?

Goodlifer. When I started work in the bank in February 1972 at age 18 a guy joined my section, about 26, who said he was already an IFA but was not earning enough in the evenings, (when both people were at home) Hence taking n a DAY job. So before 1972 at least.

S.

It is indeed heartening to see such an ingorant prejudicial set of views all gathered together in one place.

Now if anyone would like me to blanket trash whatever you lot do (or did) for a living just let me know what you do and I'll be happy to oblige.

One or two of you may have had a bad experience so I will apologise on behalf of my profession for that.

As it happens I am one of the fee based advisers that TMF so grudgingly and mealy mouthedly accepts on its unashamed hyped-up financial sales site - sales that they need no specific qualifications to provide I may add.

It's amazing how many people gobble down the sort of rot that passes for financial wisdom, tips and nudges on this site, apparently unaware that you are being sold a pup by people with very little justifiability for claiming any sort of high moral ground.

Most of my clients are highly qualified professional individuals.

Now why do you think they use people like me?

It most certainly isn't stupidity so what could it possibly be?

CK - I'm surprised to see a solicitor entering into such claptrap - I could tell you some tales that would make you ashamed.

Coleyfish