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CHAPTER 16 GETTING INVESTMENT ADVICE
THE BEST PLACE FOR INVESTMENT ADVICE IS THIS BOOK AND ASKABOUTMONEY
This book is the only comprehensive guide to savings and investments. It is written from a completely independent point of view. It makes no financial difference to us if you take or leave our advice. We do not receive any commission or advertising or payment from the companies whose products we recommend. We recommend products because, in our opinion, they are good products. We criticize products because they have deficiencies. We have no loyalty to any company whatsoever.
The book reflects the opinions of Brendan Burgess. But it also includes CounterViews from people who disagree with Brendan's opinion. What other book or advisor provides that service?
If you don't understand something or if your particular question has not been addressed in the book, you can ask a question on Askaboutmoney. You will get answers and opinions from ordinary people and from professionals.
IRISH BOOKS
The best book on investments, apart from this ebook, is
Investment Advice for Life The ABCs of Investing - available free from Bank of Ireland Asset Management on 01 661 6433
There are three general books on money and tax issues which are updated for the Budget each year. These books are excellent on tax, mortgages and social welfare but have very limited coverage investment issues.
| Your Money | Bill Tyson |
| The tab Guide on Money Pensions and Tax | Jill Kerby, Sandra Gannon and Sebastian Devlin |
| Family Finance | Colm Rapple |
These books are available in most book stores. You can browse the tab Guide here (http://www.tab.ie/guide_read.html) and you can buy Colm Rapple's book here (http://booksirish.com/search/details.asp?ID=48374 ) .
IRISH NEWSPAPERS AND MAGAZINES
The most
extensive coverage of personal finance issues is in the Irish Independent,
to which Brendan Burgess contributes on Mondays. There is also excellent
coverage by Niall Brady in the Sunday Tribune.
Eddie Hobbs is always worth a read in the Irish Examiner on Fridays. Liam
Ferguson, a regular contributor to Askaboutmoney writes occasional articles
in Business & Finance.
WEBSITES
My favourite website is the Motley Fool ( www.fool.co.uk ) which covers a very wide range of issues, but from a British perspective.
BE VERY CAREFUL ABOUT GETTING INVESTMENT ADVICE FROM YOUR BANK
Most people look for investment advice from their bank. But if you go into AIB, they will only sell you the products of Ark Life because they own Ark Life. Likewise Bank of Ireland owns Lifetime and will only sell Lifetime products. Other companies may have products which are more suitable for you, but your branch will not tell you about them. Shop around.
BE VERY CAREFUL ABOUT BROKERS
Brokers are usually paid by commission, so they may sell you the product which maximizes their commission. These are usually the products with the highest charges. They will rarely recommend some of the best products on the market such as Quinn Life or the EBS, because these companies don't pay commission.
If you do go to a broker
Ask if he is an Authorised Advisor or a RAIPI (Restricted Product Intermediary). An Authorised Advisor is authorized by the Central Bank to advise you on all products and issues, whereas a Restricted Product Intermediary can only sell you the products of the companies for which he has an agency. A Restricted Product Intermediary is not allowed to advise you on any other products. An honest and competent Restricted Product Advisor is better than a dishonest or incompetent AA, but an honest and competent AA is better again.
Insist on paying a fee instead of commission. This way the broker will refund all commission to you and so will be more likely to give you good advice which is not influenced by commission.
Ask for a written summary of his recommendations and the reasons behind those recommendations. What alternatives were considered. In particular, did they consider the non commission paying companies such as Quinn Life or the EBS.
Never, ever make out a cheque to a broker. Make it out directly to the company whose products you are investing in. There have been some very high profile cases where highly respected brokers pretended to invest their clients' money, but actually diverted it to their own use.
Discount Brokers/Execution Only Brokers
Brokers are paid a standard commission by the insurance companies. For example, if you invest a lump sum of £50,000 with Standard Life, your broker will get a 3% commission or £1,500. He might also get additional commission each year or a special commission if he sells a lot of products for Standard Life.
If you decide that you want a broker company such as Standard Life, there is no advantage in going directly to them. The company just keeps the commission for itself. If you go to a discount broker, they will refund you some of the commission.
Examples of such discount brokers are
Ferguson
& Associates www.fergA.com
who is a regular contributor to Askaboutmoney
And
www.labrokers.ie
who occasionally offers commission free deals.
BE CAREFUL OF STOCKBROKERS
Stockbrokers also earn their living through commission. They will often encourage you to buy and sell shares more often than is necessary as they will earn more commission this way.
BE CAREFUL OF ACCOUNTANTS
Because accountants usually work on a fee basis instead of on a commission basis, their advice is usually independent and honest. But, as an accountant myself, I am disappointed in the level of investment knowledge and expertise of my fellow accountants. They will often just refer you to a broker and some will even split the commission with the broker.
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CounterView by Mithrandir an Authorised Advisor Building a constructive and two way long term advisor to client relationship, is a lot more complex than the type of shortcuts some, but not all, personal finance books have taken. These shortcuts assume that many people require a bottom line, 'what's the cheapest' solution to unraveling the mystery of money as they see it. But they don't. There is a widespread and overwhelming need in people to be able to call on, and rely on good advisors right across their lives, be they solicitors, accountants, financial intermediaries, or even travel agents! It's called holding people by the hand, and it's very human. And people are prepared to pay for it. This essential and unavoidable fact upsets the applecart for those who write DIY guides to money. Much easier to come up with a smart plot though the wilderness, to the promised land. A land populated by informed, independent, and DIY money enthusiasts with a similar profile to Brendan. The motive and wish is however highly understandable when a writer like Brendan takes a helicopter view of the market. It's not pretty. and he's absolutely right that it can be dangerous, I'd say, positively lethal place when the uninformed are 'advised' by the untrained, or untruthful. It's easier, when writing in a campaigning style to go for the pigeon hole solution, especially when the forces of industry plea for differentiation. But Brendan can't afford to relent from his views. He is writing a DIY guide for the DIY marketplace. It's small. Look at the dot.com disaster, or the number of personal finance books that actually are read. Most are bought as presents. Better, consider that 'Quicken' a wonderful and cheap personal finance software product flies off the shelves throughout the world for Intuit Inc. But less than 5% are reckoned to use it beyond holding basic names and addresses type stuff. I've no problems with Brendan's guide, nor his earnestly held, and very long held views. More luck to him for expressing free speech, and for making a valuable addition to this generation old debate. I don't agree with his view. I think it's unreflective of the reality of helping people understand what to do in financial planning. I think that much more, and not less, informed independent professionals are needed to service the needs of society. I'll argue it here and elsewhere. |