"Free, independent" investment advice offered to employees

Apologies if this is the wrong forum, it seemed like the most appropriate.

I attended a talk on investing, organised through my employer and delivered by a financial advice company.

There were then followup, one on one sessions which i availed of. I asked if the advice was independent, I was told it was. I also asked who is paying for it, I was told that it was through an education initiative. I wasn't sure what that meant.

In the end, a particular equity based fund with an insurance company was recommended. The investment looks sound enough but in the information provided, it states that the insurance company would be paying a percentage of the investment amount to this financial advice company.

What would all of this say about the independence and validity or otherwise of the advice given?

On the use of the word 'Independent', the Consumer Protection Code states:

4.16 The term ‘independent’ may only be used by an intermediary in its legal name, trading name or any other description of the firm where: a) the principal regulated activities of the intermediary are provided on the basis of a fair analysis of the market; and b) the intermediary allows the consumer the option to pay in full for its services by means of a fee.

4.17 The term ‘independent’ may only be used in any trading name or other description of a regulated activity where the intermediary: a) provides the regulated activity on the basis of a fair analysis of themarket; and b) allows the consumer the option to pay in full for the regulated activity by means of a fee. Where a regulated entity does not provide all of its regulated activities in an independent capacity, it must explain the different nature of its services in away that seeks to inform the consumer. It must ensure that there is no ambiguity about the range of services that it provides in an independent capacity.

Well they are not going to advise you to use spare cash to pay down your debt or your mortgage as they would not be getting any commission on that.

You should point that out to your employer and suggest that the next time they invite someone in, that they invite a fee based advisor and that they pay them for coming it.

If you decide to take the advice and invest in the fund, you should contact other brokers and seek a better deal on fees.

Since you have decided on the fund in advance, you could benefit by dealing with an execution only broker.

Tip off your work colleagues to also do this.

I'd be amazed if @The Ghoul had a mortgage/debt.

GSheehy said:

I'd be amazed if @The Ghoul had a mortgage/debt.

Click to expand...

I know nothing about him. But many of his colleagues will have mortgages.

That's right, I don't have a mortgage or debt so can't say what they would have advised in that case. I'm generally very sceptical about companies invited in to workplaces to give presentations on pensions and AVCs. But in this case I thought the advice might be more independent.

Just looking at more details of the proposed investment, the annual management charge is 1.5%. From what I've read on askaboutmoney, this would be regarded as high/too high.

The Ghoul said:

Just looking at more details of the proposed investment, the annual management charge is 1.5%. From what I've read on askaboutmoney, this would be regarded as high/too high.

Click to expand...

On the face of it, and in the absence of any further information about what the charge gives you, yes, it seems very high. I would be looking for an AMC under 1% but I'm on the execution only and passive index tracker spectrum myself.