An independent financial advisor can help you work your way through the maze of investments, pension funds and future planning. Financial advice can be a little bit like asking for advice on choosing a car. Everyone will have a different answer, think that theirs is the best and you can be left more confused than before. Just like choosing a car, you want to make sure that you are as safe as you can be, and that you have not just thrown money down the drain. You might do some research, take a few different cars out for a test drive, and you'll only buy from a salesman that you feel good about, and trust.
Investing is the same. You want to know that the investments that you are making are based on sound advice and evidence, and that your financial future is as safe as it can ever be. You also want to seek advice from an independent financial advisor that you can trust and get on with, even if occasionally you have different points of view. There is a relationship to be built here, as many investments take time. Whilst consulting a financial advisor is the best thing you can do, doing some research of your own is also a good thing.
The first step in seeking out advice from a financial advisor, would be to consider the type of fees that are payable. Some advisors work on a fixed fee basis, others on commission or percentage fees. A fixed fee advisor is great as it offers you flexibility and all the payments are laid out upfront, so no nasty surprises down the track when you start getting bills. With commission based advisors, even if you are unhappy with them, they still receive their trail commission for as long as you have the investment. Fee based advisors are often more closely watching various products and will only want to recommend the ones that will work for you, otherwise they do not get paid. Shop around and do your homework by all means. Talk to some fee based financial advisors and then make your own mind up.
Next, think about what it is that you actually want to achieve. You might be looking for an investment portfolio, strategies to make your retirement more secure, or simply want to just take a deeper look at existing investments or financial plans. Or, you might be looking for ways to maximise your pension or reduce your tax bill. Any of these ideas can be talked through with a financial advisor, and you will probably find that all of these plans intertwine at some point or lead off in different directions. Putting them all together in a strategy that maximises your wealth is why you need an experienced financial advisor.
Then you can turn your attention to your time frames and short term versus long term goals. You might be looking to put a retirement strategy in place now, even though retirement is 20 years away. Or you might be keen to get all of your affairs in order, and check for any gaps, as you are planning to hang up the boots soon. Alternatively, if you are looking for ways to secure the future of any business ventures you are involved in, then you might want a 5 year succession plan. Most investments take time to bloom, and so getting things started as soon as you can is the key. If there has been a change in your personal circumstances, such as a marriage, divorce, birth of a child or a family death then you might find that you need to change your will or any other legal financial documents quickly. This can all be discussed with an Independent Financial Advisor.
Seek out the advice that you deserve, and make that hard earned money work harder for you. An Independent financial advisor London will be governed by the same industry body as an IFA Cardiff and whilst style, personality, experience and portfolios will change from firm to firm, the codes of conduct are the same. So start planning for your financial freedom now, and live a happy, successful life, well into retirement age.
Showing posts with label Advisor. Show all posts
Showing posts with label Advisor. Show all posts
Thursday, May 24, 2012
Benefits of Hiring a Financial Advisor
When you are planning investment strategies, the most vital is sound financial investment advice. This is where hiring an autonomous financial mentor can be helpful. An independent financial advisor is someone who works in a no-clash environment. They can provide different types of financial advice in an unbiased manner to the clients. These advisors are regulated by Financial Services Authority (FSA), which ensure that their practice is ethical and legal. They have an obligation to give reasons for the financial recommendations given.
There are many advantages in hiring an independent financial guide. You need sound investment strategies and such an advisor has the capabilities to develop a comprehensive outline of your financial status, which will take into account all strengths and weaknesses. They will provide a worthy investment strategy and you do not have to worry about what kind of investments you should make and how. Such aspects are taken care of by the investment advisor itself. They will inform you on what stocks, bonds etc you should put your hard earned money into, how much should be the investment, period of investment, risks involved and so on.
Those who want to streamline their investment will find hiring a financial advisor to be very beneficial. The advisor will map an investment strategy that is within the limits of the investor and monitor their investment, so that they get disciplined in their investment activities. They advice on important investment schemes that are necessary for financial growth and it also prevents them from putting money into risky investments that should be avoided.
A good financial advisor is someone who is bothered about his or her client's future. They will look into their current contracts to find out if they are fine or of they need to be changed. They recommend financial products that will benefit them not just in the present market scenario but also in the future. You can call up your financial advisor for making different types of investments on various occasions of your life such as marriage, child birth etc.
Often investors seek advice on certain financial products in the market on which they do not have information or access. Hiring a financial advisor is best for such purposes because they will be able to provide sound financial advice on financial products that you specifically wish to know about. This helps you in devising customized investment plans. Moreover, they will advise if such an investment is worth the money spent or not.
There are many advantages in hiring an independent financial guide. You need sound investment strategies and such an advisor has the capabilities to develop a comprehensive outline of your financial status, which will take into account all strengths and weaknesses. They will provide a worthy investment strategy and you do not have to worry about what kind of investments you should make and how. Such aspects are taken care of by the investment advisor itself. They will inform you on what stocks, bonds etc you should put your hard earned money into, how much should be the investment, period of investment, risks involved and so on.
Those who want to streamline their investment will find hiring a financial advisor to be very beneficial. The advisor will map an investment strategy that is within the limits of the investor and monitor their investment, so that they get disciplined in their investment activities. They advice on important investment schemes that are necessary for financial growth and it also prevents them from putting money into risky investments that should be avoided.
A good financial advisor is someone who is bothered about his or her client's future. They will look into their current contracts to find out if they are fine or of they need to be changed. They recommend financial products that will benefit them not just in the present market scenario but also in the future. You can call up your financial advisor for making different types of investments on various occasions of your life such as marriage, child birth etc.
Often investors seek advice on certain financial products in the market on which they do not have information or access. Hiring a financial advisor is best for such purposes because they will be able to provide sound financial advice on financial products that you specifically wish to know about. This helps you in devising customized investment plans. Moreover, they will advise if such an investment is worth the money spent or not.
Friday, May 18, 2012
Annoy Your Financial Advisor in 2012 - Buy Investment Trusts
Dear Fellow Investor,
Why does the thought of managing their own investments scare people so much? And why on earth do people think that a smooth-talking, commission-driven salesman or woman can do a better job than they can at choosing suitable investments?
Do the plush, comfortable offices they're led into help to steady the nerves? Does the expensive car parked outside lead them to believe that the advisor must be a brilliant investor himself? Does the smell of those smart glossy brochures have some kind of intoxicating effect? Is the coffee drugged?!
I know I'll certainly never forget my first encounter with this strange breed of pseudo-professional: it was about twenty-odd years ago at one of those ideal home and garden exhibitions held in our local town hall. I remember that my girlfriend at the time and I were wondering whether to blow our savings on the latest comfy sofa, when we were approached by a portly middle-aged gent who'd obviously identified us as a couple of likely prospects - just like a shark smells blood in the water...
Anyway, my girlfriend, being far more the trusting type than me, began to warm to this chap's patter as he persuaded her of the benefits of putting money aside in the latest overpriced investment 'product'. And remember that all this detailed discussion about my partner's financial future was taking place in the middle of a crowded hall where the world and his wife could earwig on proceedings. So much for professionalism.
Me being the naturally cynical type, there eventually came a point where I could take it no more. Just at the point where the smiles and the banter looked like they were leading inexorably to the point where Sharkman was going to bare his teeth and make the sale, I interjected with a question. I asked: "And how much commission do you make on the deal?" This put Sharkman right off balance. I remember there was a lot of blustering and obvious anger at my cheek and impertinence. As far as he was concerned, marks...I mean potential clients like us...just weren't entitled to ask probing personal questions about his income in that way. Needless to say, he soon swam off looking for easier prey.
Now I know things have changed a bit since those days and the rules on transparency have been tightened up a bit...but only a bit. I mean, if you've ever come into contact with one of these advisors, how often have they volunteered information about how much they're likely to earn over the lifetime of the product that they've just sold you?
More to the point though, there are plenty of investment vehicles out there which, on average, are cheaper than the ones advisors recommend and, on average, have far better long term performance. So why don't these products get recommended then? The simple and sad truth is that it all comes down to money again - these superior, yet cheaper products don't pay commission to financial advisors. So once again, I say - so much for professionalism.
To illustrate the point, imagine a tale of two car dealerships. At one end of town you've got the local Ford dealership which advertises heavily in the media and has a "special deal" offering you a new Ford Focus for 10, 000. On top of that, though, you'll have to pay an extra 5% commission to the dealer making a total cost to you of 10, 500. Then at the other end of town you have the local BMW dealership. They're in a quiet back-street, they don't advertise heavily, yet remarkably, they're able to offer their new, superior, high performance M3's for only 9000. What's more, they don't charge commission. What's even better than that, these BMWs are often going for an 8-10% discount! So what car would you go for?
In effect, that Ford Focus deal is the type of bog-standard product the "investment professionals" have been offering their unwary clients for years. Obviously, in all those years, they've never breathed a word about the better, cheaper BMW dealer round the corner.
So my question to inexperienced investors out there who are dissatisfied with the service offered by their banks or financial advisors is simple - would you like the investment equivalent of an overpriced Ford Focus, or an underpriced BMW?
If you're still a bit wary of driving that new BMW off the forecourt and want to take a look under the bonnet to see exactly what you're getting for your money, then I don't blame you. Allow me to explain further.
These high performance vehicles of the investment world that I'm referring to are called investment trusts, whereas the Ford Focuses beloved of investment advisors are called unit trusts.
Now there are a few differences in the way these two investment "vehicles" are structured, but I don't intend to bore you with all those details in this particular article. Suffice it to say that, in my view, the only thing that matters in the end is performance.
So why don't we check and see how the average investment trust has performed over the long term compared with the average unit trust. All figures reproduced below are courtesy of www.trustnet.com and you can go and check them yourself if you're in any doubt.
For comparison purposes I decided to pick a popular sector with UK investors, UK equity income, and I measured performance of the top 3 unit and investment trusts in this sector over 10 years. Here's what I found
UNIT TRUSTS 10 YEAR RETURN
1. Invesco Perpetual High Income 144.2%
2. Invesco Perpetual Income 139.6%
3. SJP UK High Income 111.3%
INVESTMENT TRUSTS 10 YEAR RETURN
1. Perpetual Income & Growth 165.8%
2. Finsbury Growth & Income 155.3%
3. Temple Bar Investment Trust 119.9%
As you can see, even the second placed investment trust easily outperformed the first placed unit trust over the last 10 years. If you check other sectors, like global growth, I'm sure you'll find very much the same story - with, of course, the odd minor exception to the rule. Nevertheless, I think I've proved my case - the average investor is far better off buying a lower charging, higher performing investment trust than a dearer, underperforming unit trust. So why don't they do it?
Well, I suppose, the go-it-alone inexperienced investor is still faced with the decision about which investment trust to buy - admittedly, there's a very wide choice out there.
I'd argue, however, that the internet makes this selection process easier than it's ever been. After all, how difficult can it be to do what I've just done, i.e. pick a sector on a free-to-use website like Trustnet and check for the top performing investment trust over the past 5 or 10 years? You could then just buy it online like an ordinary share through a cheap execution-only broker.
For diversification purposes you could even divide your money up between a number of different sectors e.g. property, bonds, commodities, UK equity income and global growth. Granted, past performance is no guarantee of future returns, but that applies to any product your advisor sells you too. And believe me, their selections are very unlikely to outperform anything you can find for yourself on Trustnet.
Admittedly, I prefer to go one stage further by cutting out the lower costs that even investment trusts have to levy and select my own individual shares and commodities (please see my portfolio page to check on how I'm doing so far).
Whatever route you choose though, whether you feel confident enough to go the whole hog like me and select individual shares, or keep some sort of collective safety net by buying investment trusts, it's still much more profitable to simply cut out the middle man altogether, pocket all the money you would have paid in commission and re-invest it in your own future rather than your financial advisor's. When it comes to making those all-important decisions about where to invest for your future security, do you really want to pay a fortune just to have a dodgy salesman hold your hand?
The bottom line here is that the information is out there and the technology to take advantage of it is out there. So why not make it your New Year resolution in 2012 to start using it and save yourself a fortune in the process? An added bonus, of course, is that it will annoy the hell out of your financial advisor.
Happy New Year and Happy Investing
John Mac, The Hands-On Investor.
Why does the thought of managing their own investments scare people so much? And why on earth do people think that a smooth-talking, commission-driven salesman or woman can do a better job than they can at choosing suitable investments?
Do the plush, comfortable offices they're led into help to steady the nerves? Does the expensive car parked outside lead them to believe that the advisor must be a brilliant investor himself? Does the smell of those smart glossy brochures have some kind of intoxicating effect? Is the coffee drugged?!
I know I'll certainly never forget my first encounter with this strange breed of pseudo-professional: it was about twenty-odd years ago at one of those ideal home and garden exhibitions held in our local town hall. I remember that my girlfriend at the time and I were wondering whether to blow our savings on the latest comfy sofa, when we were approached by a portly middle-aged gent who'd obviously identified us as a couple of likely prospects - just like a shark smells blood in the water...
Anyway, my girlfriend, being far more the trusting type than me, began to warm to this chap's patter as he persuaded her of the benefits of putting money aside in the latest overpriced investment 'product'. And remember that all this detailed discussion about my partner's financial future was taking place in the middle of a crowded hall where the world and his wife could earwig on proceedings. So much for professionalism.
Me being the naturally cynical type, there eventually came a point where I could take it no more. Just at the point where the smiles and the banter looked like they were leading inexorably to the point where Sharkman was going to bare his teeth and make the sale, I interjected with a question. I asked: "And how much commission do you make on the deal?" This put Sharkman right off balance. I remember there was a lot of blustering and obvious anger at my cheek and impertinence. As far as he was concerned, marks...I mean potential clients like us...just weren't entitled to ask probing personal questions about his income in that way. Needless to say, he soon swam off looking for easier prey.
Now I know things have changed a bit since those days and the rules on transparency have been tightened up a bit...but only a bit. I mean, if you've ever come into contact with one of these advisors, how often have they volunteered information about how much they're likely to earn over the lifetime of the product that they've just sold you?
More to the point though, there are plenty of investment vehicles out there which, on average, are cheaper than the ones advisors recommend and, on average, have far better long term performance. So why don't these products get recommended then? The simple and sad truth is that it all comes down to money again - these superior, yet cheaper products don't pay commission to financial advisors. So once again, I say - so much for professionalism.
To illustrate the point, imagine a tale of two car dealerships. At one end of town you've got the local Ford dealership which advertises heavily in the media and has a "special deal" offering you a new Ford Focus for 10, 000. On top of that, though, you'll have to pay an extra 5% commission to the dealer making a total cost to you of 10, 500. Then at the other end of town you have the local BMW dealership. They're in a quiet back-street, they don't advertise heavily, yet remarkably, they're able to offer their new, superior, high performance M3's for only 9000. What's more, they don't charge commission. What's even better than that, these BMWs are often going for an 8-10% discount! So what car would you go for?
In effect, that Ford Focus deal is the type of bog-standard product the "investment professionals" have been offering their unwary clients for years. Obviously, in all those years, they've never breathed a word about the better, cheaper BMW dealer round the corner.
So my question to inexperienced investors out there who are dissatisfied with the service offered by their banks or financial advisors is simple - would you like the investment equivalent of an overpriced Ford Focus, or an underpriced BMW?
If you're still a bit wary of driving that new BMW off the forecourt and want to take a look under the bonnet to see exactly what you're getting for your money, then I don't blame you. Allow me to explain further.
These high performance vehicles of the investment world that I'm referring to are called investment trusts, whereas the Ford Focuses beloved of investment advisors are called unit trusts.
Now there are a few differences in the way these two investment "vehicles" are structured, but I don't intend to bore you with all those details in this particular article. Suffice it to say that, in my view, the only thing that matters in the end is performance.
So why don't we check and see how the average investment trust has performed over the long term compared with the average unit trust. All figures reproduced below are courtesy of www.trustnet.com and you can go and check them yourself if you're in any doubt.
For comparison purposes I decided to pick a popular sector with UK investors, UK equity income, and I measured performance of the top 3 unit and investment trusts in this sector over 10 years. Here's what I found
UNIT TRUSTS 10 YEAR RETURN
1. Invesco Perpetual High Income 144.2%
2. Invesco Perpetual Income 139.6%
3. SJP UK High Income 111.3%
INVESTMENT TRUSTS 10 YEAR RETURN
1. Perpetual Income & Growth 165.8%
2. Finsbury Growth & Income 155.3%
3. Temple Bar Investment Trust 119.9%
As you can see, even the second placed investment trust easily outperformed the first placed unit trust over the last 10 years. If you check other sectors, like global growth, I'm sure you'll find very much the same story - with, of course, the odd minor exception to the rule. Nevertheless, I think I've proved my case - the average investor is far better off buying a lower charging, higher performing investment trust than a dearer, underperforming unit trust. So why don't they do it?
Well, I suppose, the go-it-alone inexperienced investor is still faced with the decision about which investment trust to buy - admittedly, there's a very wide choice out there.
I'd argue, however, that the internet makes this selection process easier than it's ever been. After all, how difficult can it be to do what I've just done, i.e. pick a sector on a free-to-use website like Trustnet and check for the top performing investment trust over the past 5 or 10 years? You could then just buy it online like an ordinary share through a cheap execution-only broker.
For diversification purposes you could even divide your money up between a number of different sectors e.g. property, bonds, commodities, UK equity income and global growth. Granted, past performance is no guarantee of future returns, but that applies to any product your advisor sells you too. And believe me, their selections are very unlikely to outperform anything you can find for yourself on Trustnet.
Admittedly, I prefer to go one stage further by cutting out the lower costs that even investment trusts have to levy and select my own individual shares and commodities (please see my portfolio page to check on how I'm doing so far).
Whatever route you choose though, whether you feel confident enough to go the whole hog like me and select individual shares, or keep some sort of collective safety net by buying investment trusts, it's still much more profitable to simply cut out the middle man altogether, pocket all the money you would have paid in commission and re-invest it in your own future rather than your financial advisor's. When it comes to making those all-important decisions about where to invest for your future security, do you really want to pay a fortune just to have a dodgy salesman hold your hand?
The bottom line here is that the information is out there and the technology to take advantage of it is out there. So why not make it your New Year resolution in 2012 to start using it and save yourself a fortune in the process? An added bonus, of course, is that it will annoy the hell out of your financial advisor.
Happy New Year and Happy Investing
John Mac, The Hands-On Investor.
Tuesday, May 15, 2012
A College Financial Advisor Can Help Answer Any Money Related Questions Students Might Have
Part of making a sound college decision is being aware of what your complete financial situation will look like should you choose to attend a particular institution. After all, one college may award you a major merit-based scholarship, while another school will charge you full price. Some schools may be able to present you with a variety of aid options, while others are not much help at all. The good news is that a financial aid advisor at your prospective college can provide you with answers if you know the right questions to ask.
A financial aid advisor will be one of your most important contacts at every college you are considering. After all, you are likely making a big financial investment when it comes to college, and it is only natural that you will seek support to manage your money responsibly and make good decisions. Scheduling a meeting with an officer to go over your aid package and have your questions answered is a necessary step.
First of all, you'll want to know the bottom line when it comes to costs. What is the cost of tuition and, of equal importance, the cost of room and board? You'll also want to know about any other additional fees added on here or there, because these can add up to a lot! You'll also be interested in learning projected tuition costs for the next few years that you'll be in school. After all, tuition costs can rise significantly from year to year.
You may also be interested to know what the average student's debt is upon graduation, as well as the average aid package given. It is important to know if a college's financial aid is competitive, or if there is limited aid available. Do most students receive aid for all four years of a Bachelor's degree? These are all good questions to ask the financial aid office.
Just because you are promised funding does not mean that you can't lose it. You'll want to make sure financial aid is guaranteed to you for the duration of your degree. If there are factors that could cause you to lose money down the road, you'll want to know about them in advance. For instance, poor grades could result in financial aid being revoked.
What other funding opportunities can your prospective college's financial aid office recommend in addition to the financial aid package they already provide? Your financial advisor is your go-to person for information about grants and scholarships you may be able to apply for. Many colleges have scholarships that are available to students, and they also have information about private scholarships.
If you must take out loans to bridge the gap between the financial aid you have received from your school and your personal resources, you will want to work through your aid office. Find out if they have a partnership with a recommended private lender.
A financial aid advisor will be one of your most important contacts at every college you are considering. After all, you are likely making a big financial investment when it comes to college, and it is only natural that you will seek support to manage your money responsibly and make good decisions. Scheduling a meeting with an officer to go over your aid package and have your questions answered is a necessary step.
First of all, you'll want to know the bottom line when it comes to costs. What is the cost of tuition and, of equal importance, the cost of room and board? You'll also want to know about any other additional fees added on here or there, because these can add up to a lot! You'll also be interested in learning projected tuition costs for the next few years that you'll be in school. After all, tuition costs can rise significantly from year to year.
You may also be interested to know what the average student's debt is upon graduation, as well as the average aid package given. It is important to know if a college's financial aid is competitive, or if there is limited aid available. Do most students receive aid for all four years of a Bachelor's degree? These are all good questions to ask the financial aid office.
Just because you are promised funding does not mean that you can't lose it. You'll want to make sure financial aid is guaranteed to you for the duration of your degree. If there are factors that could cause you to lose money down the road, you'll want to know about them in advance. For instance, poor grades could result in financial aid being revoked.
What other funding opportunities can your prospective college's financial aid office recommend in addition to the financial aid package they already provide? Your financial advisor is your go-to person for information about grants and scholarships you may be able to apply for. Many colleges have scholarships that are available to students, and they also have information about private scholarships.
If you must take out loans to bridge the gap between the financial aid you have received from your school and your personal resources, you will want to work through your aid office. Find out if they have a partnership with a recommended private lender.
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