How to pick a Financial Adviser

It could be the most important decision you make in your life (after selecting the right spouse and finding a career that is fulfilling)
How to pick a Financial Adviser (Washington Post)

Fraud Watch

Credit Suisse, the Jailed Banker and the Oligarch's Millions (Bloomberg)

Masters of the Universe or Men of Clay?

Do not get seduced by glamorous names or 'sexy' investment stories. The recent implosion of the much hyped Valeant should be a warning.

Sector ETF's better than Market Index

While no advocate of market timing for the average investor I think it is preferable to keep an eye on overvalued or undervalued market sectors and allocate new money based on constant sector weightings. Index ETF's are a great - and cheap - instrument to get exposure to the Equity Market but this approach avoids money being allocated to expensive and possibly overpriced market sectors. It is perfectly possible to create a near-perfect replication of the overall market by carefully selecting sector ETF's.

How is your Financial Adviser, Planner, being paid?

Costs are a major drag on performance and the one variable that you can control with certainty. So always check how your Financial Adviser or Planner, is compensated. This documentary from Australia is a good example of what you should avoid. It examines a sales-driven culture inside a major bank that has been described as profit at all cost - a culture that has been built on commissions.

Financial Planning - is it worth the Fees?

A glimpse at the fees charged by Standard Life's Financial Planning affiliate 1825 is an eye-opener. The example provided - I suppose it would illustrate a middle-class family, comfortable but by no means wealthy - is already a warning as the fee appears to be quite high. What hourly rate is the basis for the implied hourly charge? Would the client learn much more than he would be reading any of the available DIY investment books?
Many people are not really able to look after their finances. Most often this is due to spendthrift habits, but many are also not too keen to get into the nitty-gritty of investment.
But why would you use a Financial 'Planner'? In my opinion the selection of a Financial Adviser is a much more critical decision to make. Paying a Planner and then paying fees for an Adviser would lead to exorbitant expense.
Looking at the annual maintenance fees charged by 1825 and adding the fees charged by the typical Investment Adviser is just paying over the odds.
One should not forget that any investment vehicle (fund) the Adviser selects for you will also charge various fees.

IPO offerings - Buyer beware!

Looking at the valuation of the Purplebrick online property agent one has to ask if investing in publicly offered shares is really a suitable investment option for the broader public. It does not take a mathematical genius to figure out that there is one certainty: the selling promoters and insiders make a hefty packet while the investors coming in at a later stage buy into a lot of hope.  I am all for 'free' markets but one has to wonder whether the regulatory and tax framework does not need a healthy dose of adjustment. Listings such as these may only be backed by 'skilled' (?) professional intermediaries, but they are ultimately investing the savings of Joe Sixpack, not their own money. The London Stock Exchange has been converted into a profit-seeking business which is a shame as it should really be in the forefront of guarding the end investor's interests above all other objectives. Talk of shareholder 'engagement' is really so much hot air if that is not the case. That one of the backers of this issue has reaped a double digit bonus in the recent past adds to the discomfort of the interested observer
 (20 December 2015)

Gymania?

News that Pure Gym will give investors (or shall I say punters?) the opportunity to value it at anything close to £500 Mio must raise an eyebrow or two. Looking at the Gym Group which has already publicly traded shares it should be clear who the main beneficiaries of any going public would be if the valuation would be on a similarly elevated basis: These are the Gym Group metrics: Market Cap £287 Mio, 12 month revenues a grand total of just over £52 Mio and if that is not enough of a yellow light - tangible book value is £27.6 Mio vs long-term debt of £78 Mio. You may want to keep an eye on your financial adviser when he submits your next account statement. As a matter of principle, PBA advises against taking part in New Issues unless there is a very clear valuation argument in favour of the Buyer.

Robo Advisers and Private Bankers - what is in the tin?

The internet has already caused major changes to the business model of several industries - retail, music and travel come to mind. Do-it-yourself investing via online brokers is also growing rapidly.
Now it may be the turn of investment advice for the rich and not-so-rich private investors. Robo Advisers are on the march! They are claiming to offer a cheaper service, and maybe their investment choices are also superior to those made by humans in Private Banks. The history of Robo Advice is not going back long enough so a proper comparison of performance with traditional investment managers is not possible. And simulated historical performance is to be treated with caution. As this article explains, Robo Advice is also fraught with problems but to compare it with personalised advice has to be made by comparing apples with apples. Many providers of Private Banking services claim to offer a tailor-made service (and charge fees accordingly) but the adviser handling the account is often spoon-fed investment models that come out of - you guessed it! - some computerised model. Do you really think that the armies of account managers employed by the likes of UBS, JP Morgan etal can all be superior money managers in addition to being personable and skillful in holding client's hands or gathering more assets? You may be lucky and hit upon an investment genius but you are as likely to be allocated a dud picker of investments.

Target Date Funds no Panacea for Retirement

Nobel Prize winner is no fan of Target Date Funds