Anyone had their investesments reviewed?

[howfartospar]

I had a number of investment funds, shares, bonds and a small amount of crypto invested across a number of platforms.

I'd like to have my investments reviewed by a professional to ensure my portfolio is appropriately weighted, diversified and tailored for my retirement needs.

Has anyone used a company to do similar, or do you have any recommendations ?

TIA

We were looking into this but it seemed really expensive. We are now DIY. Have signed up to the meaningful money academy and it's given me a lot of confidence about how to review our finances and ensure we're on track to meet our financial goals.

I'd highly recommend it. Look it up on YouTube.

You could also try 'The Motley Fool', https://www.fool.co.uk/
And forums on https://www.lemonfool.co.uk/
Fixed income on https://www.fixedincomeinvestments.co.uk/boards/
Lots of information out there.

My top tip would be Trustnet. Type in the fund and look at what quartile its performance is relative to its peers over 1, 3 and 5 years. I have to write about investments for work and it's great. Or Morningstar.

In terms of general investment advice, some of the larger investment providers (Hargreaves Lansdown etc) offer add-on financial advisory services.

Whatever you go for, keep an eye on the fees as they can really erode your gains over time,.

@dew141

That post really re assures me, several years ago I didn't have a clue about investing and I looked up everything against morning star and general Google and then trust net

i just took over my tax sheltered portfolio from nesbitt burns (i'm in canada) and had the holdings transferred the the bank of montreal self investing platform.
i'm 65, know only the bare basics and am holding steady.
just this week/10 days or so i can see my holdings by asset class. so i too am looking at balancing this out. but it looks totally do able.
in 2008 my holdings were nearing the 225k mark, dropped to barely 100k mark.
now 15 years later the nb team were barely able to keep it above 200k. at my last 2 annual reviews i cried and begged them to put the money in a tax sheltered saving plan even at 2% interest it wouldn't be a constant loss.
i'm doing fine and pleased with my portfolio's progress, still tweaking the holdings.

NC because slightly outing. This is both a request for advice/feedback, and also an offer to help.

As the user name suggests I am retired from the financial services industry, was previously not an IFA, but rather working in a B2B role (pension funds and the like). Now I would describe my situation as "early retired."

I agree that for many people, paying an IFA an ongoing 1% of asset value, plus often transaction fees, platform fees, and fund management fees, can eat away way too much of their money.

And yet, for people without expertise, there are a lot of ways to be poorly invested. @howfartospar is asking the right questions with "I'd like to have my investments reviewed by a professional to ensure my portfolio is appropriately weighted, diversified and tailored for my retirement needs".

I do not really need to work (see the first paragraph) but have been thinking about whether I could set up some sort of retirement gig working 1 day / week where I help people by doing exactly what you describe. I would get paid a lot less than the 1% of assets or more that an advisor typically charges, allowing clients to keep more of their returns. This would only make sense for me if I could avoid the liability and the regulatory costs and hassle that a traditional IFA has. I do not know whether that is legally tenable. My intent would be to do this mostly by word of mouth, maybe to create a blog or website (although there are so many of those around I am not sure how much value could thereby be created). The idea would be to offer some sort of a fee-based financial health check. Maybe there could be two or three service levels, ranging from one-off assistance with making one specific decision, to a generalised detailed financial health check with periodic reviews every 3-6-12 months thereafter.

Be that as it may, I am more than willing to have a back-and-forth with @howfartospar by DM (or even on this board if you want to post personal information here), for which the only thing I would ask in return is advice and feedback: first, has anybody else thought about doing this and if so what pitfalls did they encounter? Second, do my comments and my approach seem helpful and sensible enough to warrant turning this into some sort of small business? That is all I would be looking for at this stage.

If you aren't authorised and regulated you can't give advice.

Why would I pay you say 0.5% for 'guidance', which has no legal basis, and no redress for me if you cock it up, instead of paying an extra 0.5% to a suitably qualified IFA who will be far better versed in what's going on in the market, and will have a responsibility for the advice they give, thus giving me powers of redress if their advice is inappropriate.

Don't mean that to sound as harsh as it does on a re-read! I think your intentions are good, but why would I want to use you to help me rebalance my portfolio if you're not trained, regulated and authorised to do it?

@howfartospar even without knowing anything about your circumstances, there are a few suggestions I can make for your consideration just to give a flavour ... these are general enough that I think they would be applicable in some for to almost anyone

1. first, if you have any high interest debt such as credit card debt, get rid of that before making any investments. The return from avoiding interest expense will absolutely blow away any sort of reasonably risk-adjusted return.

2. for the investment assets, make sure you know what you have, and also what the fees are, as well as the historical performance if it is an "active fund." A "fund" can be anything from a low-risk, short-duration bond fund to a highly leveraged and concentrated sector fund. Either fund type can have acceptable fees or excessive fees. I would say fund fees should always be below 1%, and the gold standard for passive fund would be no more than 0.2%.
   Be aware, also, of the platform fee you are paying. Most investments involve a platform fee (to somebody like Hargreaves Lansdowne or to a bank), and additionally a product fee (to the fund manager), and then additional in some cases a financial advisor fee. I have seen situations where the fund fee is almost 1%, the platform fee is 0.5% and the advisor charges 1%. That is just too much in fees!

3. for the bonds, you probably know this from 2022, but even "safe" government bonds can go down quite a lot if they are long duration bonds and if interest rates go up. Be deliberate in choosing a fund with an average duration that makes sense for you. A simple rule of thumb is that if interest rates go up 1%, then a bond fund will lose almost 1% per year of duration.

4. be thoughtful in how you divide and balance assets among SIPP, ISA and taxable account types. A SIPP usually gets you a significant tax break when putting the money in, but the money is then inaccessible before a certain age, and it gets taxed mostly as income upon withdrawal. An ISA gets no initial tax break, but usually the money remains accessible if needed, and it does get you tax-free income and capital gains within the ISA. What makes sense for you depends on your current tax bracket, expected tax bracket in retirement, possibly thoughts about estate planning, available liquid funds, and anticipated needs for liquid funds. One you have put as much as you can put or want to put into an ISA or SIPP, the rest, if any, ends up in a taxable account.

5. An investment portfolio should be balanced among the various investment risks that exist. People tend to focus mostly on the risk of losing money, but there is also the risk of having money that is not invested aggressively enough lose its value to inflation, and then for some assets types, there is also liquidity risk (ie the asset may keep its underlying value except that if you need to convert it to cash quickly, sometimes you cannot).

6. Consider the lifestyle and psychic implications of certain investment types. Here, I am thinking about a couple things : a) if you can own your own home, then you cannot be booted out by a landlord. So even if that means you are not optimising financial returns on your net assets, it can be worth doing. b) know yourself. If you are the type of person who will feel anxious about market fluctuations, or who will sell out in moments of market panic, then you may need to either forego stock markets, or find a mechanical approach to investing that you can just with anyway, or hire an IFA who will worry on your behalf and will not sell out at the bottom. I think the main way an IFA can actually add value is by staying the course and keeping clients from getting whipsawed by market fluctuations; an IFA who actually does that where the client would have failed to do so on their own, can be well worth their 1% fee.

7. last point: I, personally, am very skeptical about crypto. It has made money for a lot of people, but iI see it as pure speculation, because they are not backed by any real assets. Crypto derives value only from the willingness of another person to pay for it. While that may also seem true of government-issued fiat currencies, in reality those currencies are backed by the police, the legal system and taxing power of national governments. Stocks are backed by the earnings power of companies. Bonds are effectively a loan to some entity, with legal repayment terms built in. Gold is the closest thing to crypto, but at least it is a real and tangible "thing" that has been around for most of human history. Crypto offers none of these, and as we have seen recently, it seems more vulnerable to fraud as well, compared to almost any other asset type.

@Deehellem your comments are helpful and not taken as harsh. Thank you, that is exactly what I was looking for. Probably a helpful sanity check.

Let me try to answer your question, not as a way to debate, but rather in the hope you might help me to work out a possible answer to how to put finance back in the service of people, where I think it belongs.

Here is why I think that the sort of service would be of real benefit to clients, even if I will probably end up agreeing with you that it is ultimately unmarketable and not worth trying to offer:

1. there are things an IFA probably will not advise you to do, that would benefit you as a client, because it would hurt their business. Just to give one example: a client with a diversified 60-40 fund held any time between roughly 2015-2022 would have, in many circumstances, been much better off selling that fund, putting 50% of it back into a 100% stock fund / 10% into a cash account, and using the remaining 40% to pay down their mortgage debt. But that would lower the IFAs AUM and their fee by 50% (assuming no fee on the cash, either), so not many IFAs would have recommended that!

2. I doubt whether you would, in practice, actually be able to successfully sue an IFA for "getting it wrong", because if they do their job even half well (for themselves, not for you), they will take you through enough of a client evaluation process and enough caveats drafted by lawyers, that if you get poor investments results, you will be unable to sue or at least you will not win. So you are paying 1% instead of 0.5% in order to protect the IFA, who will be safe due to having ticked all of the boxes, but you will still bear 100% of the investment risk.

3. An IFA will probably be affiliated with an investment management platform that makes their administrative lives easier, and it will probably be OK but it might not be the best platform for you: it might not offer the best investment choices for you and it might carry higher platform fees and fund fees.

So what you would get for your extra 0.5% in fees is the reassurance of regulatory filings, charged on a higher portion of your total assets, and possibly worse advice as well.

But maybe there is just no way to remedy that, due to the assymmetry of information (= hard to know who is actually good and who is a charlatan), and that is why even mediocre advice is so very expensive!

Having come from the finance industry, it frustrates me that this industry, as a whole, effectively "wags the dog" (I think the economy serves finance instead of the other way around), while also taking such a high share of the returns on peoples savings (if a long term gross return on a diversified portfolio is 6-8% then stacked fees of 2% are taking 1/4 to 1/3 of that which seems just egregious, especially with the client bearing 100% of the risk!)

Interesting engagement. Cards on the table - I'm an IFA.

In order;-

1. That's a bit of a convoluted scenario that you'd only know post event. The IFAs role is really that of financial planning, and isn't really about timing the ins and outs of the market. That's a stockbroker's role, or a discretionary portfolio manager..

Typically it's assessing medium to long term objectives and then it's 'right product, right wrapper, right risk profile, right fund or portfolio of funds'. Then monitor and tweak, rather than wholesale changes.

For example we buy in the expertise that creates and runs risk rated model portfolios for clients, so there is little we do in terms of trying to time markets. We are identifying the need, recommending the solution, implementing that and then holding your hand.

In the current fee driven environment I genuinely don't think a decent IFA thinks about the detriment you are indicating. You build a long term sustainable and hopefully saleable business by putting your client's interests first.

1. You can't sue for bad investment performance. You can sue for being badly advised.

If I recommend a solution that's unsuitable then the underperformance of that unsuitable solution gives rise to you being able to make a claim.

Part of that 0.5% difference in cost would be me being insured for Professional Indemnity purposes and my Financial Services Compensation Scheme levies. You'd not have that.

And if you have a half decent sized investment you'll be paying a lot less than 1%.

1. An IFA will have no such affiliation. A restricted adviser will. I can recommend any platform and move you between them at any time.

One of the platforms I used most has in excess of 4500 funds from 150 fund management groups. The key considerations are breadth of offering, price to client and then ease of use for me as your adviser.

But remember there's no obligation to pay for ongoing advice as a %age. You can pay occasional fees on an ad hoc basis if you only want a review every 24 months, for example.

In conclusion what you get for the max 0.5% between you and me is probably the following;-

1. Regulatory protection.

1. My ongoing accreditation and regular due diligence as to best solution.

1. Knowledge and expertise across all of your financial needs to deal with your requirements holistically.

1. An expectation that my knowledge of the most appropriate solutions and platforms, aligned to the level of risk that you are best suited to, will create a better long term return than you trying to DIY without that knowledge and research.

Now, your rebuttal could well be 'well you would say that, wouldn't you', and you'd be right. Because I believe that to be true, and my client satisfaction scores bear that out.

But could I come at it a different way. Let's assume that nether of us is going to get the true DIY market. There will always be those who are happy to do their own homework, pick their own solutions and carry their own risk.

So you and me would be competing for those who need their hands held and want some comfort that they are doing the right thing.

Other than price saving, which if you are 0.5% isn't more than 0.25% cheaper than the most anyone pays me, why would someone think that guidance from an unqualified, unauthorised, uninsured individual like you was likely to be a better solution than any IFA that they can check out via the FCA website and sense check via a site like VouchedFor?

Why pay you to guide them, then leave them to do it themselves and hope they've got it right, instead of paying me for research, advice and implementation?

Interestingly I think there's scope for a variation on your theme (but I'm not going to hand you that on a plate....not yet anyway) but I'd be interested in your responses to my points.

And can I just urge you to be cautious about offering to help people via messages on a public forum since you run the risk of straying from 'guidance' to 'advice' since you could be deemed to be giving advice if someone acts on what you've told them, even if they aren't paying you. That has consequences if you're not authorised to do that.

Thanks @DeeHellem, that is extremely helpful.

It might very well be that my musings about what might be useful to others are just unrealistic, and that my only three realistic options are:
a) to become a qualified IFA myself
b) to deliver some sort of "financial education" in a way that toes the proper lines so as to not become advice
c) to just use my knowledge to manage family assets, and refrain from trying to use that to help anyone else with their finances and investments.

Would you be willing to share any insights or links in order to help me work out what would be involved, should I pursue a), and whether it could make any sense for me to consider?

1. I am not even sure what would be the "gold standard" qualification for an IFA in the UK to go and get; would have any view on that?
2. Do any of the platforms such as Interactive Broker, AJ Bell, Hargreaves Lansdowne (with the last one being probably too expensive) offer good tools (trading / reporting / custody) for IFAs and their clients without charging high platform fees to the clients?
3. Are there any firms that an IFA can "affiliate" with, whether or not they have their own trading / custody /reporting platform, that would do a good job helping the IFA to meet regulatory and compliance requirements, without also "managing" the IFA, pushing them to achieve sales or AUM targets, etc.?
4. every profession requires "overhead" time, which is basically non-value added admin that you have to do in order to be active at all. How much "overhead" time is involved in being an IFA?

Actually I'd welcome this on a sort of financial counselling basis.

Recently the accredited financial advisors we've used have either been wrong or completely uninspiring.

Although we did have an absolutely brilliant mortgage broker.

@DeeHellem I wanted to come back separately to the "convoluted scenario" I described, and to explain myself better. I was illustrating a specific case related to the following general issue of clear bond market market overvaluation that affected the markets during most of the past decade.

I would argue that anybody in the UK who made investment contributions to any sort of "diversified" (stocks+bonds) investment portfolio during that period, was guaranteed to get at best a low return, and at worst a capital loss in the eventuality of an interest rate increase.

While I do agree with you that market timing with respect to the stock market may be a complete fools game, I think it is possible to see certain moments of extreme overvaluation in the bond market, because the future cash flows from a bond are capped at the sum of future coupon and principal payments. If the yield to maturity on a non-callable bond is 2%, then you know that the aggregate pre-tax, pre-fee cash flows to all investors through the maturity date will be at best 2% times the remaining number of years, plus the par value. Meanwhile, it is also known that if interest rates go up, the prices of bonds with multiple years before maturity will go down a multiple of the increase in interest rates. So everybody knew that the bond portion of portfolios was destined to deliver low returns at best, and that at worst it could go down quite a lot. And yet the model portfolios continued to include bonds.

My concern about "model portfolios" is that while they certainly protect clients by helping to prevent "cowboy" type IFAs from going off and doing uniquely stupid things on a whim, and they also protect IFAs by helping to absolve them of liability if the investments results are poor (which is necessary for there to be any available advice at all!), those model portfolios might also make it difficult or risk for IFAs or anyone else who is following a "process" to keep clients out of situations of almost-certain loss such as what we had in recent years with bonds.

I suspect that even if the fee issue was a complete non-issue, "institutional pressures" including protecting themselves from liability, avoiding to lose clients by doing something too different, and just avoiding complexity and having to explain themselves, may have have constituted a massive pressure onto IFAs to buy and holding at least some long bonds within their client portfolios, even at a time when they were almost guaranteed to do poorly. Those clients would have had higher prospective returns, while facing lower risk, if they had instead split their contributions between pure stock funds and either overpayments on their mortgages, or increases in their cash balances.

@stayathomegardener I am interested, although I also need to be mindful of what @DeeHellem said about not straying into "advice." I will do a little bit of my own reading on what constitutes "advice." and have a think over how I can potentially be helpful without overstepping that line. I am sure there are some ways in which I can help simply by articulating statements of fact.
Meanwhile, feel free to post thoughts or questions.

Retired IFA here with 30 years experience.

You are on really thin ice here. If you are not FCA registered you cannot give financial advice. Cross the line once and you'll be guilty of giving unregulated advice with all the consequences that entails.

I personally no longer give advice, even the generic advice that you seem to be thinking about offering. It's not worth it

@Elphame thank you very much for that; you are corroborating what @Deehellem said. So I shall tread carefully.

Would you be willing to comment on any of the questions I asked in my post at 21:54 (about what is the gold standard qualification, investment platforms, approaches to be compliant, and "overhead" admin work)?

Also have you seen any good description of what is "advice" versus what is permissible to say?

I'll come back to you on some of your other salient points tomorrow.

I think there is definitely a role for unbiased financial educators. For example, a one off fee to review what people have from the perspective of telling them what they have, how it works and what the pros and cons are, so that they are simply better informed. Especially if they don't have an ongoing relationship with an adviser, and are scared they might be 'done over' and told what they have isn't as good as a new adviser could do. I see that all the time when people are looking at advice that's Restricted and not IFA.

I toyed with selling my business last year and providing that type of service, but the reality is that I have a few excellent professional introducers and I do that for their clients for free already. They trust me to tell their clients what you have is fine, or is fine by could be better if...., or it's awful and you should get out of there quickly.

But the bulk of my income is recurring income from looking after clients I know and enjoy working with so I don't yet want to give that up.

On the 'what's advice' the FCA has some pretty clear guidance, but this is probably helpful too.

Click this link.

Maps

Following

@Deehellem thanks so much for your comments, including particularly the distinction between advice and guidance, which I do realise I should check against what the FCA actually says, particularly in light of @Elphames comments (sorry my apostrophe key does not work on Mumsnet for some reason). I do also look forward to your perspective on the other points, if you find more time tomorrow to elaborate.

@Elphame your perspective does align with what one sad version of the truth that I fear to be only too plausible, ie that regulatory requirements have become so cumbersome as to be getting in the way of good service and advice, leaving most people unable to get that.

And yet ... I am stubborn enough to want to do my own research into whether there is not a way to offer guidance or advice that is aimed entirely at enhancing client wellbeing, without having to become an employee of a firm and adhere to, corporate business strategies, growth targets for AUM and clients above X in size or revenue, etc. One factor potentially working in my favour is that while I would need to charge enough to cover costs, to be taken seriously, and to avoid time-wasters, I would not be doing this with the aim of funding a certain standard of living, Instead I would aim to budget a certain proportion of my time and then see how many people I can effectively assist without losing money.

I would like to ask, if I may one further question of you: which specific diploma or which body would you describe as "gold standard"? Would you be referring to something like the DipPFS or DipFA as referred to in this article, and if yes, would you agree with them that DipPFS is higher rated (and is the "Level 6 Diploma" what you mean by "chartered" or is that something else?)

https://expertpensions.co.uk/what-qualifications-do-i-need-to-be-a-financial-adviser/

I've worked in various parts of investing for 25 years and manage various family members' investments and trusts.

I looked at becoming an IFA and ruled it out. You need to be employed by a firm to get the necessary work experience and I didn't want to do that, particularly if it wasn't whole of market. Great once you've done the work part and can potentially move to a more flexible setup but it didn't appeal.

I won't say exactly what I do but it's related to investment advice (but not technically advice) to the general public. One thing I specialise in is investment platforms so happy to answer any questions. It's a very competitive marketplace since the advent of zero-commission platforms plus the platforms fighting for diminishing assets under management. HL and interactive investor have trimmed their fees this year (and HL recently scrapped all fees on Junior ISAs).

I've also set up online courses to help young people learn about money management and investing and I have about 70 teenagers on the courses at the moment.

So there's other career options relating to investing beyond being an IFA if that's your specialism.

I also have to cover crypto (under duress!) as part of my job and I personally wouldn't touch it with a barge pole. Despite some people having made a lot of money on it.

I don't really like forex trading either but at least that has some identifiable rationale behind its movements.

You don't need to be employed by a firm to become an IFA. Many of the large networks have routes to qualifications whilst being self employed.

That's how I got my IFA adviser status back after well over a decade without being authorised.

In that case, I apologise. My research suggested you had to be employed by an accredited firm to get the necessary work to qualify.

1. Chartered Insurance Institute and aim for Chartered Status. That's as gold a standard as you need.

1. All of the major platforms have those services and facilities.

1. The solution to that is to be part of a network type arrangement. That's how I operate. I pay a monthly fee for compliance, tech support, research, due diligence etc and then a %age of my fee income. Frees up more time to do what I want to be doing with clients. No targets, no minimum expectations, no sales management. I owe them my fixed fees every month even if I spend every day on the golf course. Whilst training you may have to be in an environment with targets or minimum expectations, just so you can write enough business to evidence competence. I'm effectively self employed under the umbrella of a network. I follow their processes and procedures and all the client sees is their brand. If I cock it up they sue the network, not me.

1. How long is a piece of string! Depends on type of business you are involved in. Investment is a lot less time consuming than pensions for example. Every amendment someone makes to a pension plan is regulated advice, so that can create 5 hours of work every year if they amend their income, so you might price that accordingly. My pension clients typically pay more as a %age than Investment clients for that reason.

Every existing client probably creates 3-4 hours of admin time a year, excluding face to face stuff. Training and Continuous Professional Development is probably 2-3 weeks a year.

The way I look at it is from the income end back. Bear in mind I'm semi retired, but my ideal business model is as follows;-

100 review clients paying £1000 on average is £100k a year. Increments, top ups and incidentals from them is another £20k a year.

100 people taking 4 hours of admin time plus 2 hours of face to face time is 600 hours. Training and CPD is another 70 to 100 hours.

Call that 700 hours then round it to 800 for all the minutiae that creeps in too.

That's a £120k a year GROSS income stream for probably the full time equivalent of 25 weeks of the year.

That's pretty bang on to how I operate now.

So since so much of my income in that model is recurring income I take the view that I'm 'earning' 1/365 of £100k every day. So even on an apparently non productive admin day there's nearly £300 rolling in.

Now, it's taken me nearly a decade of hard work and networking to get that that point, but not everyone will need or want to get to that level.

The beauty of my world is that as you build recurring income you have an income for life without any new clients needed. I've worked with many mortgage and protection advisers, but since the bulk of their income is transactional they need new clients every year. I'll be paid £120k GROSS into my business's account this year without needing to acquire a single new client.

And I do give a lot of my time to providing guidance to people who need it but will not need or pay for advice. For example I've had an enquiry in the last hour via one of my solicitor connections for a lovely old lady with shed loads of cash on deposit who just wants a chat about current rates, what's on offer in the market, how that ties in with her likely IHT situation as well. I could charge a fee for my time, but I won't. I'll have a chat and cover all that, and make her feel comfortable about her situation and the solicitor will be happy, and the next one might be something that needs chargeable work done. The circle of life!

Come on in. The water's lovely. And the opportunities have never been greater as more and more of the old school are retiring.