Relying on friends or family for your financial advice rather than a professional Independent Financial Adviser (IFA) is fraught with danger for the following key reasons.
- The friend or family member could be breaking the law,
- They are unlikely to have the expertise, experience, risk profiling tools or research tools that an IFA would have,
- You as the investor have none of the protections of using a professional adviser,
- The friend or family member advising you is playing with fire and could be sued should things go wrong, and with no professional indemnity insurance could lose their home and life savings, and
- Using family or friends is not even necessarily any cheaper as IFA have access to cheaper products, often offsetting some or all of their advice costs.
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Rising numbers of confident DIY investors are managing not only their own investments but those of their partners, children, parents and even friends and neighbours. Investment brokers or “platforms” have revolutionised amateur investing over the past decade by slashing costs and giving free access to data and software formerly available only to banks and other institutions This has encouraged experienced investors to take on the role of fund managers, overseeing relatives’ savings alongside their own. In most cases the family members are only too pleased: they welcome the help of someone with the confidence to build and oversee a portfolio.