Should DIY investors take advice?

More and more people are choosing to handle their own investments to cut adviser fees and because they want to take control of their finances. Price remains a barrier for many people looking for investment advice and, as a result, we are seeing a huge number of investors engaging in the process on their own. These DIY investors are at risk of losing money because they are not experienced enough.

Many fund supermarkets offer help if you don't want to pay for advice at all. There is an array of sophisticated low-cost and free online tools to help you choose and manage funds.

Alternatively there are an increasing number of virtual advisers that might be able to help if going it alone is just too scary. Standard Life has set up a ready-made drawdown service for savers who don't want to buy an annuity, don't feel comfortable managing their pension in retirement and don't want to employ an adviser.

Standard Life Active Retirement can be operated entirely online, but you can talk to a human being if you get stuck - for a fee. Once you tell it how you want to withdraw your money and how much, your fund is then split between up to three pots to give a mix of lower risk and growth investments, with the underlying funds selected by Standard Life. Charges vary depending on how your pension is divided between the three pots, and the size of your portfolio, varying between 0.71% and 1.53%. is an online portfolio manager offering guidance based on how much cash you want to save, how long you want to invest for, and the amount of risk you are prepared to accept. It also asks questions about your income, assets, liabilities, age, employment status and living situation. The site's virtual adviser divides your savings into a range of funds and adjusts the mix to reflect market movements. Fees start at 0.3% a year, but can be as high as 1%, based on how much you invest. offers a virtual advice service too. There are no initial fees and the annual management charges on the funds are 1% a year. The minimum investment is a £1,000 lump sum, or £100 in monthly.

Your Comments

This is the great "elephant in the room" and likely to be the next great mis-selling story that will get a lot of people hot under the collar. As an Independent Adviser it never ceases to amaze ma how easily led peopl can be when it comes to money and savings and investing.
It is an incontrovertible fact that investment risk is not about how much you might make but rather it is about how much an investor can afford to lose along the way? However well you dress it up in carefully chosen wording like "virtual advice" or "low-cost tools" or "online guidance" , the underlying principle remains that if it was that simple then everybody would be a fund manager and sunning themselves on a beach somewhere as their clever algorithms do all the work in the background making money! What the marketplace is conveniently overlooking in its rush to promote D2C business models is that over 90% of  the success of any investment portfolio is attributable to the asset allocation. Add to this the need to use qualitative measures as well as simple quants and the DIY investor should start to be aware of just what a complex world they are dabbling in.
I do of course recognise that the investment expert exists in all walks of life and is always happy to extol their theories and rubbish any conflicting ideas. There are also a very small number of very experienced and skilled private investors who have forged their own path throught the investment jungle with some success but i suggest these are the exceptions rather than the rule.
I have looked at most of the platform propositions aimed at DIY investors and am quite frankly amazed that the regulator seems remarkably relaxed about the business model. The most recent one i looked at and signed up for to experience the journey the "investor" would take ,led me through a series of questions online and eventually produced a "portfolio" based upon my input and responses. On close scrutiny of the proposed portfolio--and i use the word proposed rather than recommendation--it consisted simply of a basket of passive index funds--and we all know the way that this approach to "investing" goes!
My research has come up with some very interesting conclusions on the subject of the potential value and benefit of DIY investing--and it doesn't make pretty reading. The idea that the man or woman in the street can simply invest without advice and be successful is a very attractive but flawed message and time will show this to be the case.
Taking advice from a suitably qualified and experienced Adviser will cover of ALL the aspects of financial planning that have potentially enormous impact for an individual and their investment strategy.
To invest without taking account of the taxation implications; future income and capital needs; succession planning; family protection needs and savings etc etc  is fraught with financial peril. To be sure that the correct planning assumptions are made when formulating financial plans requires help and guidance. Yes of course there is a cost but it reminds me of a quite startling mission statement i read on the wall of an architects practice a while back and  i quote:
"If you think our fees are expensive then just try using an amateur and see what happens to your plans!"
Watch this space as things eventually unravel!