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Financial 'Advice'

Back in November my company offered everyone a half day pensions workshop to explain how pensions worked. It covered what limits you might hit in terms of various allowances and other tax implications. At the end of the session, we were invited to fill in some forms for one free financial advice session at our convinence, paid for by our company. So I filled in the form, thinking it would be silly to forgo free advice.

Due to availabilities, it took quite a while to organise the meeting but we had it this afternoon. While I agree the session was free, I would not really consider it advice. It was more like a sales pitch.

I put the word advice in quotes because it was actually just a sales pitch. My Wealth are a Discretionary Investment Managers, a form of active invest, who charge you to invest your money in wherever they see fit and will (at their discursion) move it to other funds. It was certainly not 1 to 1 financial education as I had thought. As far as I can see I could just do the job myself and save myself the annual 1.5% charge (which compounded will add up significantly over the years). Sure they could move it between funds faster than I could, but moving it does not mean that it will do any better. Where it moves to could just as esily move down as it could move up. Attempting to game the market is a zero sum game. Some people will beat the market, others wont, the average will do just as well as the markets in general.

I believe most folk would be better off with passive investments with low charges as per the advice of John Bogle:

He contends that it is folly to attempt to pick actively managed mutual funds and expect their performance to beat a low-cost index fund over a long period of time, after accounting for the fees that actively managed funds charge.

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