Ian Sayers blog: What’s good for the goose…


#1

Imagine you went into your favourite restaurant. You went there first as a business client, but now you have to pay for it yourself. It seems a bit pr
[See the full post at: Ian Sayers blog: What’s good for the goose…]


#2

It’s hard to understand why a financial adviser would invest his or her own money in a trust but invest their clients money in a unit trust. just can’t figure out a reason why they can justify that?

Very interesting though @iansayers.


#3

I don’t quite get why from this article why they wouldn’t recommend what they invest in either. Am I missing something?

Surely it’s in their interest to back what is best for their clients because then the clients will be happier and they’re more likely to stay with their IFA.


#4

I think @Mumknowsbest it is because they manage a larger amount of money and wish to place all their investors in the same funds and get them out at the same time. With an investment trust they have to buy and sell in the open market and sometimes there is just not enough buyers and sellers for larger trades.

But having said that, although this is true some of the time in the most part I beleive it is a mix of laziness and bad practice. Investment trusts used to be at a disadvantage because of the commission issue. Although this has gone too many IFA’s havent changed their behaviour.

There are IFA’s who do use investment trusts including one who has been featured on here (can’t remember his name), but the majority need to move on and catch up.


#5

I think IFA’s aren’t using investment trusts because they’ve fallen in to a bad habit. If they are investing their own money in them then it’s obviously because they know how well they perform.

@james-pigott is the IFA you are thinking of @CityGirl. he specialises in investment trusts.

See this article here… http://whichinvestmenttrust.com/adviser-spotlight-james-pigott/

www.pigottsinvestments.co.uk

 


#6

Hi again @CityGirl! You are right I think, in that the IFAs keep blaming liquidity as the issue that is keeping them out of the market in general. If they do put clients in to Investment Trusts then it tends to be the very large ones. Sayers put out a blog today on the AIC website that ITs should be used more in pensions which I totally agree.

Apart from being lazy in general the IFA may well have a shorter view for investment than the client. I have noticed that the discount widening scares them witless and yet very few see it as an opportunity, or have a longer term strategy which will neutralise the discount issue. Once this correction unwinds there will be plenty of opportunities. My favourite Rights and Issues has taken a big hammering so I have some cash flagged for that one!

If each IFA increased their client’s exposure to ITs gradually they would not only fix the liquidity “issue” but also help to close the discount too. However, when the income bubble bursts we may never see them again!

Thanks @jkstone for the awakening!


#7

I remembered you because I had never come across an IFA who advised on ITs before @james-pigot.

You are probably just ahead of your game though because it looks like other IFAs are following you.

 


#8

Well, they are the best vehicle! I have been using them exclusively for more than 20 years now so the other IFAs have a bit more commitment to make but I am glad that since RDR more are at least looking at them.


#9

Maybe @james-pigott just advises his clients in their best interests more than other financial advisers do.

I would expect that doing that would get a financial adviser more business because most people don’t understand much about financial services, and I include myself here too, so I think I’d be more inclined to trust an adviser who recommends investment trusts because they seem to perform better.