Question
I know you are unable to make recomendations but could you suggest a good stockbroker that is able to provide good advice on both individual shares and collective funds.Since my Father's stockbroker retired I have tried 2 firms and both have disappointed. I have a reasonable size portfolio which includes shares, investment and unit trusts, and my 2 sisters have relatively modest portfolios of individual shares which I feel would be better invested in investment trusts, because this would provide a better "spread" in relation to the size of the portfolios and with a reduced number of holdings would be easier for them to monitor.
My sisters are realistic enough to realise their portfolios considered individually probably arent sufficiently large to get a stockbroker excited, but mine would probably meet most stockbrokers minimum criteria for a fully managed service, so on this basis I would have thought a stockbroker would be happy to take all 3 of us on, which is what my Fathers stockbroker did, and as I help my sisters with their portfolios, we would all like to deal with the same adviser.
Geographically my eldest sister lives in the South while I and my other sisiter live in the Midlands but we have used stockbrokers in London and the Midlands, so we dont feel the location of the stockbrokers is a constraint.
I know my sisters could use an IFA as an alternative to a stockbroker if they want to invest in funds, but I prefer the transparency you get with a stockbroker and their charges.
Thank you if you can helpAnswer
I'm probably not the best person to help you find a good advisory stockbroker or financial adviser as I've never used either (having always advised myself).
So if any readers have suggestions or recommendations perhaps they'll be so kind as to post them at the bottom of this answer.
Meanwhile, I can hopefully give you some pointers that might help.
My initial thought is that the chances of finding a stockbroker who can provide high quality advice on shares, funds and tax planning are probably slim. From what I've observed, many stockbrokers who also advise on unit trusts tend to do so as an afterthought (perhaps because fund trail commission can be more profitable for them than share dealing), so funds are seldom their core expertise. This might be fine if they're recommending straightforward trackers, but less satisfactory if you're looking for someone to thoroughly research and monitor investment funds. Any tax planning would probably be outsourced to either an accountant or IFA.
As you've highlighted, many IFAs work on a commission basis which runs the risk of adversely influencing the quality of their advice. Plus, in my view, only a minority of IFAs have either the inclination or resource to deliver high quality investment research and advice. Some outsource this function (which can work well provided the IFA uses the research wisely), some use expensive funds of funds and others simply give basic investment advice. Also bear in mind that most IFAs don't include investment trusts and exchange traded funds in their recommendations and, of course, they're not allowed to recommend individual shares.
While keeping everything under one roof is appealing, you might find you can harness better overall advice by using a stockbroker for individual shares and a good investment-orientated IFA for fund investments. In theory, it should be possible to hold everything on the same platform (see our Using Fund Supermarkets Action Plan for more details), although in practice this might be tricky as most advisers use just one or two preferred options (offering more is unlikely to be cost effective or practical for them).
Whatever you decide, try to avoid stockbrokers and IFAs who make a lot of money upfront (via either commissions or fees), as this gives them less incentive to provide a good ongoing service. Most unit trusts pay ongoing annual trail commissions (of about 0.5%), which fee-based stockbrokers and IFAs should refund to you. If they pocket the trail commission themselves then ensure you're getting advice and service to justify this.
When speaking with potential stockbrokers/advisers then ask for specific details as to how they carry out their investment research. Ideally this will be a separate team of analysts - as the broker or adviser you speak to will likely to too busy looking after clients to carry out proper research themselves. if they struggle to provide a convincing answer then be wary.
Also ask to see example portfolios and past performance data. This should give you a feel for how independent and pro-active the broker/adviser is, as well as whether they've delivered acceptable performance. For example, when recommending funds have they suggested changes following fund manager moves or periods of underperformance? And, specifically re: investment trusts, do they monitor the discount/premium of the share price to the net asset value (NAV)? When recommending shares do they adopt a 'buy and hold' approach or are they more active (which could be a good or bad thing depending on their abilities!). And are their portfolios well diversified, being spread across a range of diffeent assets?
Good luck with your search and I do hope you get some helpful feedback from other readers. If you want any subsequent views on specific companies (i.e. on their charges/proposition etc) just post below and I'll do my best to oblige.
I know you are unable to make recomendations but could you suggest a good stockbroker that is able to provide good advice on both individual shares and collective funds.Since my Father's stockbroker retired I have tried 2 firms and both have disappointed. I have a reasonable size portfolio which includes shares, investment and unit trusts, and my 2 sisters have relatively modest portfolios of individual shares which I feel would be better invested in investment trusts, because this would provide a better "spread" in relation to the size of the portfolios and with a reduced number of holdings would be easier for them to monitor.
My sisters are realistic enough to realise their portfolios considered individually probably arent sufficiently large to get a stockbroker excited, but mine would probably meet most stockbrokers minimum criteria for a fully managed service, so on this basis I would have thought a stockbroker would be happy to take all 3 of us on, which is what my Fathers stockbroker did, and as I help my sisters with their portfolios, we would all like to deal with the same adviser.
Geographically my eldest sister lives in the South while I and my other sisiter live in the Midlands but we have used stockbrokers in London and the Midlands, so we dont feel the location of the stockbrokers is a constraint.
I know my sisters could use an IFA as an alternative to a stockbroker if they want to invest in funds, but I prefer the transparency you get with a stockbroker and their charges.
Thank you if you can helpAnswer
I'm probably not the best person to help you find a good advisory stockbroker or financial adviser as I've never used either (having always advised myself).
So if any readers have suggestions or recommendations perhaps they'll be so kind as to post them at the bottom of this answer.
Meanwhile, I can hopefully give you some pointers that might help.
My initial thought is that the chances of finding a stockbroker who can provide high quality advice on shares, funds and tax planning are probably slim. From what I've observed, many stockbrokers who also advise on unit trusts tend to do so as an afterthought (perhaps because fund trail commission can be more profitable for them than share dealing), so funds are seldom their core expertise. This might be fine if they're recommending straightforward trackers, but less satisfactory if you're looking for someone to thoroughly research and monitor investment funds. Any tax planning would probably be outsourced to either an accountant or IFA.
As you've highlighted, many IFAs work on a commission basis which runs the risk of adversely influencing the quality of their advice. Plus, in my view, only a minority of IFAs have either the inclination or resource to deliver high quality investment research and advice. Some outsource this function (which can work well provided the IFA uses the research wisely), some use expensive funds of funds and others simply give basic investment advice. Also bear in mind that most IFAs don't include investment trusts and exchange traded funds in their recommendations and, of course, they're not allowed to recommend individual shares.
While keeping everything under one roof is appealing, you might find you can harness better overall advice by using a stockbroker for individual shares and a good investment-orientated IFA for fund investments. In theory, it should be possible to hold everything on the same platform (see our Using Fund Supermarkets Action Plan for more details), although in practice this might be tricky as most advisers use just one or two preferred options (offering more is unlikely to be cost effective or practical for them).
Whatever you decide, try to avoid stockbrokers and IFAs who make a lot of money upfront (via either commissions or fees), as this gives them less incentive to provide a good ongoing service. Most unit trusts pay ongoing annual trail commissions (of about 0.5%), which fee-based stockbrokers and IFAs should refund to you. If they pocket the trail commission themselves then ensure you're getting advice and service to justify this.
When speaking with potential stockbrokers/advisers then ask for specific details as to how they carry out their investment research. Ideally this will be a separate team of analysts - as the broker or adviser you speak to will likely to too busy looking after clients to carry out proper research themselves. if they struggle to provide a convincing answer then be wary.
Also ask to see example portfolios and past performance data. This should give you a feel for how independent and pro-active the broker/adviser is, as well as whether they've delivered acceptable performance. For example, when recommending funds have they suggested changes following fund manager moves or periods of underperformance? And, specifically re: investment trusts, do they monitor the discount/premium of the share price to the net asset value (NAV)? When recommending shares do they adopt a 'buy and hold' approach or are they more active (which could be a good or bad thing depending on their abilities!). And are their portfolios well diversified, being spread across a range of diffeent assets?
Good luck with your search and I do hope you get some helpful feedback from other readers. If you want any subsequent views on specific companies (i.e. on their charges/proposition etc) just post below and I'll do my best to oblige.
Read this Q and A at http://www.candidmoney.com/questions/question372.aspx
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