Need Advice on Parting with Advisor

[Solaris909]

Hi, Newbie here.

I have used a financial advisor for the last ten years. He has done well for me, but he also takes 1% every year. I'm now on my own of self education in personal finance. I could manage a few funds that track indexes over time. While I am still a beginner with stocks and investing, that I could handle on my own. I want to take responsibility for my finances and as I have learned and save that commission.

But I don't have the confidence. To terminate the advisory relationship and manage it all on my own. I'm so used to relying on a professional, and choosing to be ignorant. But I am on this awakening journey now. Just don't have the confidence to take action just yet.

Can anyone offer personal insight or advice on having the confidence to leave an advisor and manage on your own?!

Thanks!

[Golam]

As in most difficult situations, tell your of your thinking and tell the truth. Thank for what you have learned from the advisor and thank for what she / he has done for you.
In the future, use Lemon Fool for your financial journey. Many people here of experience and good heart. Most of all use the LF search facility. There is an excellent and substantial base therein of investor's thoughts and answers to a great variety of questions.
There are so many books on investing, select a half dozen then read and absorb. The LF resource will aid you in this respect. I have worked this way and have learned much. All to good effect.
Wishing you well. P

[vand]

Check if there are any exit charges - if there are, you may want to just start afresh with your ongoing investments and leave the advisor-managed stuff there until such time as the exit penalties expire.

Otherwise, it's really just up to you. If it were me I would have everything already set up (new SIPP/ISA if you haven't already contributed anything this year) with one of the online brokers. It's self-managed as you say - that means you have to put in the legwork to do the admin to make it happen.

You can then request a transfer-in from your new platform. There will be some forms to fill in -possibly stuff you have to snailmail back, although with some brokers it can all be done online.

Personally I would just ask for a cash equivalent transfer, which means they'll liquidate everything and then transfer the cash to your new account. The other option is in-specie which attempts to maintain the funds that you already hold, but this can be very messy and often not even possible.

Would be courteous to also let your FA know in writing before you request the transfer - just keep it polite and business like. You don't owe them any sort of loyalty or long explanation - it's just business.

[Alaric]

The other option is in-specie which attempts to maintain the funds that you already hold, but this can be very messy and often not even possible.

Some advisors would have put clients into funds which are only available through advisors such as themselves. These can be difficult to transfer. They may be easy enough to replace as they can just be higher charging variants of funds available to everyone from major fund management houses or if indexed funds, straightforward to replicate.

Whilst transferring shares from one Broker to another is usually straightforward, transferring funds can be time consuming and messy. That probably down to the lack of a common back office system for administration and change of ownership of OIECs and Unit Trusts.

[kempiejon]

I have used a financial advisor for the last ten years. He has done well for me, but he also takes 1% every year.

Just how well has the advice done? If I could buy growth of 15% annualised for a decade from an advisor for a cost of 1% that's attractive. That same 1% for 5% return would be much less appealing. Choosing what to buy is difficult and there are many suggestions around here. Taking control of your own finances and destiny is empowering so learn, read - there are more places to get facts on market returns than the Lemon Fool. There are so many things available to invest in. I started slowly with £150 per month into a low fee FTSE100 tracker. Rewinding history and starting again I'd look to a global tracker but back then I didn't know they were a thing.

Now, what are you investing for? A bigger house or holiday home, retirement, school fees, something to start the kids in their first home? Have you done a budget so you know where your money goes. Are you servicing a mortgage? Would paying that down give you more financial stability than having an investment pot? How would you feel about seeing your investment dramatically drop in value. I saw around a 40% drop of my pot when the global pandemic struck, I'd been investing for years and I knew the values could rise and fall but it was galling none the less.

[mc2fool]

Check if there are any exit charges - if there are, you may want to just start afresh with your ongoing investments and leave the advisor-managed stuff there until such time as the exit penalties expire.

Otherwise, it's really just up to you. If it were me I would have everything already set up (new SIPP/ISA if you haven't already contributed anything this year) with one of the online brokers. It's self-managed as you say - that means you have to put in the legwork to do the admin to make it happen.

You can then request a transfer-in from your new platform. There will be some forms to fill in -possibly stuff you have to snailmail back, although with some brokers it can all be done online.

You are conflating advisor, investments, and platforms, which may be the case or it may not be. As Alaric says, some advisors would have put clients into funds, and indeed platforms, which are only available through advisors but some just use "retail" ones that can be taken over by the client in situ, so to speak.

And in any case, when I dumped my IFA a couple of decades ago, even though the investments/platforms they'd put me into were ones that were only openable via an IFA, it was just a matter of contacting the companies and filling in the relevant forms to remove the advisor and declare myself as managing them (although, annoyingly, they wouldn't pay me the 0.5%pa trail commission they'd been paying my IFA, but those days are gone now anyway).

So, more information is needed: So, Solaris909, firstly, welcome to The Lemon Fool. I know it's not directly the question you asked (about confidence), but it would be helpful to know:

(a) what investments your adviser has put you in,
(b) which platform(s) and/or companies they are being held in/by and
(c) the answers to kempiejon's questions.

[dealtn]

But I don't have the confidence. To terminate the advisory relationship and manage it all on my own. I'm so used to relying on a professional, and choosing to be ignorant. But I am on this awakening journey now. Just don't have the confidence to take action just yet.

If it helps, stop thinking about him only "taking 1%". If you are achieving a 10% return (unlikely) he is taking 10%. Other mouths may also be getting fed here too. How annoyed would you be to find that perhaps 25% of your return is being earned (sic) by others?

[monabri]

I would also offer the advice to consider WHERE (which platform) you eventually might transfer your assets to.

[Boots]

I would advise you read Tim Hale's excellent book Smarter Investing as part of your self education.

When digested, you should be able to think through the issues you, and others, have raised. You should also be able to get a reasonable handle on what long term return you might be able to expect for your risk profile. That could then be compared with what your advisor has achieved.

Personally, I did use to use a portfolio management service. I left when it became clear to me that the returns were no better than I could achieve. By removing the associated costs I improved the returns. By taking ownership of this aspect of my life I also felt more involved and confident. I haven't looked back.

Good luck!

[TUK020]

Have a browse of the Monevator website, and in particular the Passive Investing bit
https://monevator.com/category/investin ... investing/

[doug2500]

Firstly I wholeheartedly endorse your desire to learn and take control of your finances.

Secondly, lots of sound advice already.

Thirdly, my opinion...maybe take a year or two to be sure it's the right path for you. Just stop adding money via the IFA and manage new investments yourself, or even take a lump from the IFA and stick it in an ISA. I think, even maybe regardless of results, that you'll find either you really want to do it this way, or it's stressing you and you're not enjoying it.