Industry "Professionals"

[stone]

gizmo rat "I did find gilts intimidating to buy;* not available electronically"

The no frills online broker x-o lets you buy 50year gilts online just like you would buy a share, etf or investment trust. It costs £5.99 per trade for any of those irrespective of the size of the trade and the price is on screen just like it is for anything else. x-o seemed a convenient place to hold a PP. It doesn't have any charges other than the trade price. Is there a problem with using such brokers?

[Storm]

I'm curious about something... You mention using mathematics to help manage risk.  What does that mean, as you understand it, to the general finance professional?

To me, using math to manage risk could be something as simple as setting a stop loss order for one of your stock holdings, and using math to determine the optimal price point to set it at, to prevent you from losing too much money in the event of a decrease in the stock price.

What sometimes doesn't get calculated in the mathematical models are systemic risk - for example, what happens if the entire market is in panic mode during a crash, and nobody wants to buy your stop loss order?  In that case you can still lose your shirt.  There were also several people that had stop losses triggered during the flash crash and ended up selling their stocks for an insanely low price.  These are the type of "black swan" events that it is difficult to model in math.

[gizmo_rat]

Is there a problem with using such brokers?

No not at all, I was just unlucky with my choice of brokers. Might give XO a go to spread my risk, thanks. 

[moda0306]

A thought I had...

Most financial advisors charge about 1% in fees for their services.  In a world of vastly lower rates of return than the world of decades past (one that many deflationists here will argue is likely), will that number have to drop drastically?

Are financial advisors going to have to abide by a certain narrative (aka, set of lies) to keep clients paying 1%... maybe the narrative of returning to higher rates or a strong recovery of the stock market is a defense mechanism to them justifying the fees they charge.

Arguing that bond rates will stay low for decades and that we'll see a stagnant stock market will hardly get people excited enough to pay 1% for your services.

[stone]

Moda, I guess volatility will increase more and more, so people will view it as ever more important to get advice. In the UK charges can be so cryptic, many people have no idea what they are anyway. Also people have so little grasp of compounding, they are likely to think any charges are minimal anyway. My impression is that if you are someone who needs financial advice, then you are likely to be a sitting duck for excessive charges. The government of the day needs to worry about the economy now. If the finance industry is spraying itself with champagne now, then that is boosting GDP. If, as a result, retirees are broke in decades to come, then that is a problem for the government then not now.

[moda0306]

I suppose you're right... increasing volatility and an uneducated public will scare people into paying the fees.

I just got my dad out of a bunch of bond/stock funds that were charging him 1%-2% annual expense ratio, respectively, and had a 1% deferred load to boot.

And their performance was very unimpressive compared to indexing.