Many articles have been written about active versus passive management. Active management aims to outperform a benchmark (such as the FTSE-World Index) by careful sector and stock selection. Passive management simply replicates the index and tracks it up and down. An actively managed investment fund will typically cost c. 0.75% per annum. Passive funds are available for 0.10% per annum or less.
The fact is that these arguments miss the point. There is a place for both management styles in a diversified portfolio. The most important ingredient is active risk management (ARM).
I know a lot of financial advisers. It’s a terrible thing to say but I wouldn’t trust most of them with my kids’ pocket money. I don’t like the suits they wear.
I get the same uncomfortable feelings when I go into a car dealership or an estate agent. Or when I go into a shop or bar and that disinterested voice says “Are you alright there?”. What does that mean, anyway? Whatever happened to “May I help?” or “What can I get you?”.
I am starting to sympathise with Victor Meldrew. Since I turned 50 more and more things seem to drive me mad. I spoke to a client the other day who told me that pensions were a waste of time and the only sensible investment was residential property. So I ran through some figures...
In this second article in the series we will be focusing exclusively on investments. Investments are for the longer term – at least 5 years, as opposed to savings which are for the shorter term. Investments usually imply a degree of risk. The main reason for accepting risk is to try and achieve better returns than normal savings. That is important if you are trying to maintain and grow your money relative to inflation. As a saver, inflation is your enemy because it erodes the value of your capital.
Click here to read 6 top tips on how to make the most of your investments...
This guide outlines what schools should teach about money so that school leavers have a solid understanding of their financial options when they leave.
Here at HDA, we don't like to mince our words, especially when it comes to personal finance. That's why we feel more needs to be done to give the next generation the best start we can so they can be secure in their financial futures.
In Part 1 I looked at the nature and value of financial advice and highlighted what a client should be paying for. In Part 2 I explored how advisers charge for their initial services and whether clients are getting good value for their money. In this final article in the series I will look at ongoing fees.
All savings and investments carry ongoing charges whether you can see them or not and Advisers too have overheads but you should not be required to pay toward them unless you are receiving an ongoing service. To understand more about how and why these charges are made click here.
In Part 1 I looked at the nature and value of financial advice and highlighted what a client should be paying for. In this article I will explore how advisers charge for their services and whether clients are getting good value for their money.
When it comes to paying for advice it can sometimes be difficult to know what a fair price is. The very need for advice implies a lack of understanding of the matters at hand – how then to value the advice you are given?