Question
Can you advise if there are any minimum standards a chartered independent financial adviser is required to provide a client regarding their portfolio performance?
I know what to expect from an accountant, solicitor or other professionals but my IFA has never provided anything other than an annual valuation of my portfolio followed by a general discussion of fund and market performance, all of which I can follow on the internet.
I have since found out that independent clients of Fidelity receive prefect and loss performance information on each fund which I have not received as an advised client.
After pressing my adviser for performance reporting relative to my Portfolio and requesting we look at Passive index funds he decided he could not go along with this and suggested we go our separate ways.
So I now left 'Advisorless' but still not clear on what portfolio performance information I should be able to receive for the charges I am paying. I know what to expect from a bank, but financial institutions seem to make up their own rules.
So what are the standards for the IFA industry?Answer
In terms of investment performance reporting standards the answer is simple - there are none. It's up to an adviser whether they provide you with performance updates and, if so, how often and to what standard.
In the past, when it was more common for clients to hold funds with lots of individual fund providers, lazy advisers would simply forward annual (or twice yearly) valuations from the providers or arrange for them to be sent directly. More conscientious advisers would produce a single paper valuation containing all your investments while the more technically advanced might offer an online version (Bestinvest was perhaps the first to pioneer this).
Now that it's more common to hold funds from multiple fund providers within a single platform/supermarket/wrap (these words all broadly mean the same thing), such as Fidelity FundsNetwork, it's now simple to view your portfolio online (which you should be able to do independently of your adviser - ask Fidelity for login details if you don't have them).
In light of this, the real value an adviser can potentially add is overall financial and tax planning along with pro-active investment monitoring and advice. For example, if a decent fund manager quits your adviser should be aware and assess whether a change might be beneficial - or perhaps market movements mean your portfolio becomes unbalanced, again the adviser should review and recommend change if worthwhile. There are no set standards as such, but if an IFA can't cover basics like this I'd be very concerned.
You may be 'adviser less', but check whether your IFA continues to receive ongoing 'trail' commission from your investments. Although commission has been banned on advised sales since the end of 2012, it can usually continue to be paid on investments set up previously until events such as switches or transfers take place. If you decide not to use another adviser then your best bet will probably be to use a discount broker/platform to keep costs low - see my guide to ISA Discounts for an overview.
If you're looking for another adviser then independence is important, but I wouldn't get too hung up on whether they're Chartered or not. Unless you have complex needs it'll likely make little difference to the advice you receive - the more important factors being how the adviser selects and monitors investments, their fee levels and the amount/quality of ongoing advice and service you'll receive. Chartered status suggests the adviser takes their career seriously, which should be a good thing, but it's by no means a guarantee you'll receive decent advice or service.
Can you advise if there are any minimum standards a chartered independent financial adviser is required to provide a client regarding their portfolio performance?
I know what to expect from an accountant, solicitor or other professionals but my IFA has never provided anything other than an annual valuation of my portfolio followed by a general discussion of fund and market performance, all of which I can follow on the internet.
I have since found out that independent clients of Fidelity receive prefect and loss performance information on each fund which I have not received as an advised client.
After pressing my adviser for performance reporting relative to my Portfolio and requesting we look at Passive index funds he decided he could not go along with this and suggested we go our separate ways.
So I now left 'Advisorless' but still not clear on what portfolio performance information I should be able to receive for the charges I am paying. I know what to expect from a bank, but financial institutions seem to make up their own rules.
So what are the standards for the IFA industry?Answer
In terms of investment performance reporting standards the answer is simple - there are none. It's up to an adviser whether they provide you with performance updates and, if so, how often and to what standard.
In the past, when it was more common for clients to hold funds with lots of individual fund providers, lazy advisers would simply forward annual (or twice yearly) valuations from the providers or arrange for them to be sent directly. More conscientious advisers would produce a single paper valuation containing all your investments while the more technically advanced might offer an online version (Bestinvest was perhaps the first to pioneer this).
Now that it's more common to hold funds from multiple fund providers within a single platform/supermarket/wrap (these words all broadly mean the same thing), such as Fidelity FundsNetwork, it's now simple to view your portfolio online (which you should be able to do independently of your adviser - ask Fidelity for login details if you don't have them).
In light of this, the real value an adviser can potentially add is overall financial and tax planning along with pro-active investment monitoring and advice. For example, if a decent fund manager quits your adviser should be aware and assess whether a change might be beneficial - or perhaps market movements mean your portfolio becomes unbalanced, again the adviser should review and recommend change if worthwhile. There are no set standards as such, but if an IFA can't cover basics like this I'd be very concerned.
You may be 'adviser less', but check whether your IFA continues to receive ongoing 'trail' commission from your investments. Although commission has been banned on advised sales since the end of 2012, it can usually continue to be paid on investments set up previously until events such as switches or transfers take place. If you decide not to use another adviser then your best bet will probably be to use a discount broker/platform to keep costs low - see my guide to ISA Discounts for an overview.
If you're looking for another adviser then independence is important, but I wouldn't get too hung up on whether they're Chartered or not. Unless you have complex needs it'll likely make little difference to the advice you receive - the more important factors being how the adviser selects and monitors investments, their fee levels and the amount/quality of ongoing advice and service you'll receive. Chartered status suggests the adviser takes their career seriously, which should be a good thing, but it's by no means a guarantee you'll receive decent advice or service.
Read this Q and A at http://www.candidmoney.com/askjustin/859/minimum-standard-for-financial-advice-and-service
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