How useful is it to consult an IFA?

I dont know, maybe you should ask your Mamaaaaa or Papaaaaaaaaa ?

Waaah, random ?

I found it very helpful and the one I saw got me a much better deal on my investment than I would have done as he knew the market better.

I think the first meeting (40 mins) or so are free so could be worth seeing one anyway.

We used an IFA when we were sorting out our mortgage and it was useful to talk everything through with someone who knew their stuff. He could easily compare deals across loads of providers, and came up with a solution that suited us (an offset mortgage and bank account, which we still have 8 years later).

They will look at whole of market so should find you the best deal. They basically save you the leg work of searching yourself.

Just to be clear an IFA is NOT independent unless you are paying them an hourly fee. Any IFA who is remunerated by commission is not required to consult the entire market, just not be tied to a single provider. They are required to have a justification for the recommendations they make beyond the recommended product providing the biggest commission to them. However, it is pretty simply to justify any recommendation as there are so many variables within products it is simple to pick one feature and match it to your needs.

I was involved in an inquiry into IFAs and the research showed a massive correlation between recommended products and highest commissions. This doesn't mean the product wasn't necessarily the best, or appropriate. However, evaluation suggested that someone independent of the commissions would only have put the recommended product in a list of top 10 recommendations in 8% of cases. An 8% chance that the recommendation makes it into the top 10 (not even top 5 or best) is way too low for me.

In short - yes an advisor is definitely worthwhile (I'm not one, so have no personal interest in this), but choose one who charges an hourly rate ('fee based'). It may seem like a chunk of money up front, but it is, without question, less money than is siphoned off your investment to pay commissions. Not only will you end up paying less money, but you will get unbiased opinions and what is likely to be much higher quality advice.

The key thing an advisor should do is help you get your goals, timelines and risk preferences straight. Matching the products to these parameters is the easier bit. If you know enough about personal finance to be able to work out your own goals, timelines etc go straight to the FSA website to compare products. It is independent - the FSA is the financial regulator, and as much as they stuffed up the recent crises, they can just about gather accurate data. (I don't work for the FSA either, but have acted as a consultant for them on various personal financial investigations they've undertaken.)

http://www.moneymadeclear.fsa.gov.uk/tools/compare_products.html

Forgot to add the kicker. Some commission based IFAs take 40-60% of your contributions/invesments in commissions and 'administration fees' for some products. They don't have to discuss this unless you specifically ask, and even then, they can get away with mentioning a specially arranged honeymoon deal in the first year or two. That is, they are given a lowish - 1-2% commission in the early daysm which is what they mention. Later on it can leap up to 60%. I work in the industry that incentivises IFAs to sell products, so day in day out, I see the commission rates and structures they get paid. OK, I'll get off my hobby horse now...

Thanks everyone.

Dopper2, that's incredibly helpful, thank you. I think I probably need to think a bit more about what we actually want before talking to anybody. I'll have a look at the link ?

There's a guy from this company who comes to our networking group and I would definitely use him if I had any amount of money to invest. For instance, he tells us about instant access high interest accounts, investment opportunities at low levels (£50/month) and they are a very people based company, so it's al about getting to know your overall plans

https://www.edwardjones.com/us-en/en_gb/needs/by_need/money_to_invest/index.html

L
xx

under fsa regulation they are obliged to do this, its not from the goodness of their hearts

i see nothing wrong with consulting with an IFA, but more than one would be better. I'd also talk to your/an accountant about it or a fund manager if the sum is over a hundred grand. if you want a recommendation for that I'm happy to give one and if thats the case, drop me an email.

Business people in non altruistic motives shocker ? I don;t think they are doing it from the goodness of their hearts, but I have used an IFA who really did the absolute minimum he could, and thus I would prefer to use someone who actively seems to take an interest

L
xx

That first statement is not true. An independant advisor has to ask the client how they wish to pay for their advice, be it either by fee, commission or both. You are implying in your post that advisers will sell what earns them the most money. I am sure in some cases this is true, however, if you dont pay a fee, it doesnt mean they wont search the whole of the market. If you deal with a reputable company, this shouldnt be an issue.