Stocks & shares isa - help

I have an advisor that does my managment for me.
The overall total charge (average) I pay is 1.44% (although it varies by fund).
That breaks down into
advisor - 0.5%
fund managements -0.59% (average)
ISA provider - 0.35%

They provide some standard portfolios that they manage e.g. cautious, agressive etc, so you can pick one.
Then they manage these.
They send a report quarterly and advise any fund changes they think should happen which I then accept or not.
Occasionally there is something ad-hoc if something arises that doesn't fit into the quarterly timescales.
This isn't the traditional service where a financial advisor sets something up and then does nothing at all except take commission.

I think 0.5% for doing the management is pretty good.
For the last 6 months I'm showing 16.77% - just for reference.
I note the FTSE has gone up 17.55% so you could consider just trackers but personally I think that's more risky than an actively managed fund and I would expect to see smaller losses when the stock market falls (in fact I did when it was going down).

Personally I'm quite happy to delegate it for 0.5% per annum.

Although I would suggest you double-check your pension (did you check it recently? costs have risen dramatically in recent years) and consider your short term needs as well.
For example would you like to spend some of it - car? holiday?
I'm not suggesting you fritter it all away but if you need a new car or have dreams about travel then now might be time to spend SOME of it.

If the money came my way I'd be looking at spending it on a dream holiday to New Zealand/Australia and any left over would go towards future car replacement, but my cirucmstances probably vary from yours (but thanks for letter me dream for a few minutes).

an actively managed fund is usually a much higher fee, more around 1.5% if not 2%. For this price, I think what they're actually giving you is a tracker fund

No.
I agree with you that they vary, but 0.59% was the average not the lowest.
Some are as low as 0.2% - obviously some are higher.

BTW - This is the institutional price that the advisor passes on, so perhaps that's where your confusion on pricing comes from.

you could be just tracking different markets?

No, it's not just a bunch of trackers, although there are some.
I can go online at anytime and see what the funds are but it's not just a mix of trackers.

ISA provider - 0.35%

It's Novia (for custodian and administration charges).
I'm sure the advisors have their reasons for using them although I couldn't provide the full set of reasons. I suspect it comes down to dealing charges, switching charges, fund management charges, choice of funds etc. so the whol picture needs to be consider not just one single figure.

Looks like to me (and what you have said backs this up) that the advisors get good institutional charging from Novia.

By the sound of the fund management fee it seems you're getting tracking funds

No, it isn't - although there are a few trackers out of the 15 funds.
You're asssumption is wrong here.
It's a balance of all sorts of assets, active/passive, territories etc. so the 0.5% is paying for their expertise rather than DIY which the honest would admit is a massive undertaking to do properly.

BTW - The 0.5% includes any ongoing advice I want from them at any time.

If you're happy delegating the task of picking those funds yourself for that amount, fair enough but you could just get a magazine when you want to rebalance and check the performance of different things yourself? It might take a little bit of learning at the beginning but knowledge is always good...

Thanks for the advice on my choices :-)
I was aware I can do it myself, similarly people can do plumbing, ironing, car servicing themselve OR pay someone else to do it if it doesn't float their boat.

I was simply making the OP aware of this option, which I think is fair enough.
Not everyone wants to spend their time on investments which doesn't mean we don't want to invest, the same as everyone who owns a car doesn't want to service it themselves.
Providing you're getting good value (which I believe I am) then I don't see the issue.

There is nothing wrong with encouraging DIY (I think everyone is already aware of that option) but people need to be aware of the risks as well.
Magazines have vested interests (in selling magazines) just as advisors do.
You wouldn't become an experienced mechanic or plumber overnight from magazines, but the difference here is £25K.
I have no objection to DIY for people that want to do it but you need to accept that not everyone does.

lisyloo wrote: »

Providing you're getting good value (which I believe I am) then I don't see the issue.

That's the main point, so as long as you know what you are being offered, everyone should be happy.

The main issue I can see with the funds approach is that everything is ok until something happens but when that happens no-one knows what to do. Ie, how could you protect the gains of the last 5 years if there's another crisis in 2018?

I'm still in the process of learning things myself but I can see a big flaw in the current set-up that it has been created for people like ourselves, without full and proper knowledge, to start investing without fully knowing how to protect ourselves.

For the OP, start slowly (funds it's the easiest option) but whatever you do, I wouldn't totally delegate that task to someone else. At the end of the day, if something bad happens to your money, no advisor is going to be there to return any of your money back alhtough they could explain that that's the way investing works (going up and then down for a correction).

Difficult to help more in here as we are not allowed to put links, as per the forum rules