Financial Planning

**DimPrawn** · 21 February 2008, 08:21

Stick to BTL and you can't go far wrong.

**GreenerGrass** · 21 February 2008, 08:34

Ask them how much in % terms they made for their clients from late 2000 to 2003?

Ask them how much they made during the 1970s?

Ask them if they think the current troubles are a just a blip in a never ending bull market.

The "if you'd missed the best 25 days in 1986-2006" thing isn't a great argument if we move into a bear market that lasts until 2012.
How much better would you have done if you'd missed the worst 25 days?

All these models seem to start no earlier than 1982 (like it was the beginning of time), they ignore what happened between 1968 and 1981.

**IR35 Avoider** · 21 February 2008, 08:50

Although my first impressions of their site are good, it seems their starting charges are £900 per year or 1% of assets, whichever is greater. 1% is heading towards about one fifth of the maximum real return you can currently expect on assets. Do you really want to give away 20% of you future investment income for a service you could relatively easily learn to perform for yourself?

As investment advisors go, their proposition looks better than most, but having no advisor could be much more cost-effective.

**tim123** · 21 February 2008, 08:57

I wouldn't touch one of these services that wasn't paid by results.

Even then, there's still little incentive for them to avoid making a negative return as they will be no worse off than a zero return.

Being paid to make investment decisions with someone elses money, is money for old rope.

tim

**IR35 Avoider** · 21 February 2008, 09:15

I've revised my opinion of them. They say

It is striking to note that if the fifteen best days were missed in the All-Share in the period 1986-2006, then investment returns would have been reduced by...

Anyone repeating this argument in any form should be avoided like the plague. They are either idiots or dishonest.

I've seen versions of this in the personal finance section of every newspaper I read, including the FT, whose personal finance editor once repeated it in his inaugral column. It is usually attributed to Merrill Lynch.

This argument is a superb example of how to mislead (lie) with statistics without actually saying anything untrue.

It is the standard argument used against "timing" the markets. I don't necessarily have a problem with people arguing against timing, though my view does depend on what exactly is meant by timing, which is usually left undefined. There are other valid arguments that can be made against timing, my problem is that this argument is bogus. If someone has no ability to time, as efficient market theorists would predict to be the case, then their delusion that they do means they will be expected to be out of shares during completely random periods, in relation to stock-market performance. They are equally likely to miss the N worst days as the N best days, with an overall neutral effect on their investments. Over a long period of time, if their timing strategy caused them to be out of the market say 20% of the time, the overall expected return will be similar to a position of having a permanent allocation of 80% shares and 20% cash. This is a perfecly respectable strategy compared to being 100% in shares. It has a lower expected return with commensurately lower risk.

**ChimpMaster** · 21 February 2008, 09:23

Buy Warren Buffet shares and hold them forever.

**dude69** · 21 February 2008, 10:53

Originally posted by IR35 Avoider View Post

They are equally likely to miss the N worst days as the N best days, with an overall neutral effect on their investments. Over a long period of time, if their timing strategy caused them to be out of the market say 20% of the time, the overall expected return will be similar to a position of having a permanent allocation of 80% shares and 20% cash. This is a perfecly respectable strategy compared to being 100% in shares. It has a lower expected return with commensurately lower risk.

Accurate point, but the biggest fear in investing is that you underperform. If your portfolio has lost 15%, then you won't mind as much if the wider market is down 25%. OTOH, if the market has risen 20% but you have not been invested for that quarter of the year you will be quite aggrieved. It doesn't make any difference to the AVERAGE return, whether you are in 75% of the time with 100% of your capital, or 100% of the time with 75% of it, but the first strategy is more expensive to administer, and does not offer any advantages to the client. So it is BETTER for the client to adopt that strategy, because it will cost them less.

**dude69** · 21 February 2008, 10:59

Originally posted by IR35 Avoider View Post

Although my first impressions of their site are good, it seems their starting charges are £900 per year or 1% of assets, whichever is greater. 1% is heading towards about one fifth of the maximum real return you can currently expect on assets. Do you really want to give away 20% of you future investment income for a service you could relatively easily learn to perform for yourself?

That is quite expensive. However they will claw back some of that because they are getting funds at lower costs than the private investor. There's nothing to stop an individual investing in a basket of trackers that mimic their strategy, the thing I guess is that your time has value, and most private investors will buy at the top and sell at the bottom and invest in expensive underperforming funds, in which context 1% might not be so bad.

I certainly think you could do much worse.

**crack_ho** · 21 February 2008, 11:06

No 1 Liverpool Street – that sounds like an expensive office?

Far from it. Our clients are more than aware that if we have a luxurious office they are paying for this out of their fees. Our office is a “serviced office” which gives us a convenient City location at a reasonable cost. Our financial planners spend their time between the Liverpool Street office and their home offices. We find that this is an extremely efficient, flexible and enjoyable way of working

Far from it, we use a "serviced office" so we can do a runner with your money and you won't be able to trace us.

Financial Planning