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  • FIRST POST
    • fisibs
    • By fisibs 17th Mar 17, 10:54 AM
    • 6Posts
    • 1Thanks
    fisibs
    IFA charges?
    • #1
    • 17th Mar 17, 10:54 AM
    IFA charges? 17th Mar 17 at 10:54 AM
    Hello, I'd be very grateful for some sound practical advice, but keep it simple! Financial jargon is confusing and intimidating (ie, what is a tax wrapper?!)

    I opened a S&S ISA through an Independant Financial Advisor 5 years ago. It's grown slightly, but they're now recommending changing it to a different portfolio provider, and adding more savings (which I have languishing in a very poor basic savings account). However there will be a charge for this, plus annual fees thereafter. The fee is minimal but I object to paying charges and fees for my savings! Would it be worth finding another IFA for a 2nd opinion? All I want is a decent fee-free return on my hard-earned saved money..... Would I, in fact, be better off, finding a good cash ISA and setting it up myself? Also, what's the investment limit on cash ISAs, how many can you have?

    Any advice would be much appreciated.

    Thanks
Page 2
    • dunstonh
    • By dunstonh 19th Mar 17, 11:38 AM
    • 87,683 Posts
    • 52,913 Thanks
    dunstonh
    Troy Trojan is a very defensive fund. It spent over a decade at over 10% a year returns on average and lost nothing during the credit crunch. You used to see it mentioned a lot by the DIY investors on this site as being a good option.

    Following the credit crunch, it went even more defensive. A wrong decision with hindsight and it actually lost money in a period of growth or stayed still and did nothing for a few years. However, it has been having a good recovery. 26.8% over 3 years for one of the lowest risk funds you can get.

    It had around 2 bad years where it made nothing but 8 good years in the last 10. Nearly doubling its money over that period (90.5%). A highly defensive fund nearly doubling in 10 years is unheard of.

    An investor in Troy Trojan would not be suited to VLS40 as that is higher risk.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Linton
    • By Linton 19th Mar 17, 12:20 PM
    • 7,645 Posts
    • 7,418 Thanks
    Linton
    I suspect Trojan-U should be Trojan O.

    In my view it is a reasonable choice for a very risk averse investor. During the 2008 crash the fund barely moved. If you had invested in it 10 years ago you would still be ahead of a FTSE AllShare tracker.
    • JohnRo
    • By JohnRo 19th Mar 17, 12:55 PM
    • 2,302 Posts
    • 2,041 Thanks
    JohnRo
    What I don't understand is how the OP has only seen a return of 3K over five years with a 20K initial.

    Trustnet reports Trojan O returning just over 27% in the last five years which should equate to something like a gain of 5.4K on 20K given the OP has not been taking income.

    Surely charges haven't accounted for the discrepancy?
    'We can't solve problems by using the same kind of thinking we used when we created them.' ― Albert Einstein
    'Facts do not cease to exist because they are ignored.' ― Aldous Huxley
    • ColdIron
    • By ColdIron 19th Mar 17, 1:15 PM
    • 3,141 Posts
    • 3,551 Thanks
    ColdIron
    The learning point is probably for Bowlhead to be more concise. However, we all have our preferred communication styles.
    Originally posted by bowlhead99
    I'm guessing that Twitter isn't your preferred medium
    • dunstonh
    • By dunstonh 19th Mar 17, 2:21 PM
    • 87,683 Posts
    • 52,913 Thanks
    dunstonh
    What I don't understand is how the OP has only seen a return of 3K over five years with a 20K initial.

    Trustnet reports Trojan O returning just over 27% in the last five years which should equate to something like a gain of 5.4K on 20K given the OP has not been taking income.

    Surely charges haven't accounted for the discrepancy?
    Originally posted by JohnRo
    Possibly using the last statement issued (around Oct last year) rather than a latest value?

    OMW on commission basis had a 4.5% initial charge. The fund was soft closed but OMW did not levy the fund initial charge. However, as you say, the return doesnt quite meet the expected return over the timescale suggested by the OP. Also, its quite possible (indeed probable) that since Jan 2013, that there has been no ongoing trail as OMW required the client to sign to move them to charge based 3 (unbundled) to continue paying an ongoing amount. That does not appear to have happened. So, it would have dropped to nil ongoing trail in early 2013.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • JohnRo
    • By JohnRo 19th Mar 17, 2:40 PM
    • 2,302 Posts
    • 2,041 Thanks
    JohnRo
    Possibly using the last statement issued (around Oct last year) rather than a latest value?
    Originally posted by dunstonh
    Would that explain the difference between stated/expected though, based on the numbers provided and assumptions made?

    Trojan O +24.9% end of Oct 2016 (from Mar 2012)

    OP needs to provide more timing detail.
    'We can't solve problems by using the same kind of thinking we used when we created them.' ― Albert Einstein
    'Facts do not cease to exist because they are ignored.' ― Aldous Huxley
    • fisibs
    • By fisibs 20th Mar 17, 10:06 AM
    • 6 Posts
    • 1 Thanks
    fisibs
    My statements definitely say Trojan-U , not O.
    Just checked up to date value, now crept up to 23,730! Yes, the charges have eaten into the overall value, hence my IFA proposing a new portfolio with lesser charges, the Aviva NISA Multi-Asset III. I'll be speaking to her today in the hope of a confirmation of a more lucrative return with this new portfolio.

    I know many of you have said to 'go it alone, do a DIY', but with the never - ending list of portfolio types, market conditions, investment companies, etc etc, I may as well try reading Chinese! With the interest rate being so low on general savings for so long, I'm relatively glad of any return. I'm not a high risk taker, I don't want to lose what smalll savings I have, but if you think opting for a higher risk will most likely pay higher returns in the next few years (given the current political climate), then please do let me know.

    Thanks again
    • BananaRepublic
    • By BananaRepublic 20th Mar 17, 10:17 AM
    • 806 Posts
    • 557 Thanks
    BananaRepublic
    There is nothing stupid about an observation that one person's return over a five year timescale (what the OP got on their low risk investments) may be beaten by another person's return over one year (what you got) when they have different objectives and are willing to take different risks.

    If we take out what has offended you we could distill it as:

    - there are a massive variety of risk levels out there and different people have different objectives; funds suitable for one person might not be suitable for another. Person A's return that was designed to produce a return with low volatility should not be compared with Person B's return which was set up for different objectives. Comparing returns of cash or gilts with return of international equities in a bull market does not allow you to conclude that cash or gilts was inappropriate just because the returns are lower. They are supposed to be lower in a bull market and you did not know five years ago it was going to be a bull market.

    - It is ridiculous to castigate a firm of advisors as 'rotters' after they spent time with you assessing your risk and concluded you should not be in a fund that would suffer wild swings and be set up for high returns, and recommended something very cautious instead. Your returns on what you invested depend on what it was invested in, and whether their fees were taken from the amount you invested rather than being paid separately, but they are not bad guys for charging you a fee nor for recommending funds with low return prospects just because with hindsight you'd have got more from a funds with high return prospects. The ones with greater prospects have greater risk on a sliding scale.

    - If someone (or you yourself), has assessed one of your objectives to be a low risk of loss it would be exceedingly unwise to listen to an anonymous stranger on the internet who gloats that your return is pathetic over five years compared to his return in one year and suggests a fund invested in global equities offering greater than 50% loss potential over a year or two. The stranger behind the screen name says that would be a good fund compared to the rotten advice you have had. But he's not a regulated professional and has no duty of care towards you and you have no comeback when the fund loses the 50% which it will do at some point.

    - Although you can do simplistic screening off the tools available at Morningstar/Youinvest, you do need to know what you are doing to get good results and you should make sure your research is not geared to finding the funds in a 'league table' that have done well in a relatively short period where many funds outperformed their long term norms.

    - Although you may feel that you object to paying fees for managing or advising on your hard-earned savings, it is a fact of life that you must pay if you do not want to do it yourself. Investing small amounts of money (compared to how much some people have) means that the advice will be costly per pound invested. A fee of a few hundred pounds that is large to you (in the context of the amount you are investing) is not large to the independent financial advisor (in the context of the work he has to do to create and run a business which is in a position do provide the advice, and then go ahead and meet with you and actually provide the advice).

    - If you do not want to continue to pay fees for personalised advice, options include doing a decent amount of your own research to understand differences in risk profiles of individual multi-asset funds which might be suitable for your needs and could be bought via a fund supermarket. Or using one of the newer 'robo advice' offerings which charge on a percentage basis for putting you into the portfolio that their software says is suitable for the pigeon-hole into which you fit on their risk/reward scale.


    -
    BananaRepublic may say that the above points which were all generally being made in the previous post are "certainly not constructive" but perhaps that is because he is a little sensitive to criticism or sarcasm and therefore unwilling to understand how the points which contradict his own might be helpful to others
    Originally posted by bowlhead99
    You made many assumptions about the OP, and about my post and then launched into a long winded and rather condescending rant. Rather than write war and peace, you could have simply asked the OP for further details.

    I think you need to understand something. In the past you have often insulted me, by for example saying I have a problem reading anything other than short pieces of text. In other words you insult my intelligence. Not wishing to read your incredibly long winded and often very self indulgent posts is not the same as not being able to read large amounts of text. To suggest that it is shows a degree of egotism on your part. I simply do not have the time or desire to read your very long posts. If you see yourself as a great expert, then why not create you own web site, where people can go if they wish to learn, or write a book. Thet way you won't be repeating the same thing again and again, and you won't need to insult people like me for the 'sin' of not reading all of your posts. Life is too short.

    What I do wonder is how you find the time to write so much.Do you have a full time job?
    • Malthusian
    • By Malthusian 20th Mar 17, 2:56 PM
    • 1,975 Posts
    • 2,828 Thanks
    Malthusian
    My statements definitely say Trojan-U , not O.
    Originally posted by fisibs
    Same thing. "-U" is Old Mutual's terminology for clean share classes (i.e. those that don't incorporate advice and platform costs into the management charge; U is short for Unbundled). "O" is Troy's clean share class. You can confirm this by reading Old Mutual's fund list and looking under the "Share Class" column.
    • ermine
    • By ermine 21st Mar 17, 2:38 PM
    • 537 Posts
    • 754 Thanks
    ermine
    With the interest rate being so low on general savings for so long, I'm relatively glad of any return. I'm not a high risk taker, I don't want to lose what smalll savings I have, but if you think opting for a higher risk will most likely pay higher returns in the next few years (given the current political climate), then please do let me know.
    Originally posted by fisibs
    Equity valuations are very high across the board IMO. I wouldn't personally start upping risk right now. You did okay given your risk tolerance. If you were prepared to put more work into understanding the principles of investing you might be able to do better DIY simply by getting rid of the IFA fees. But it's work of a different kind.

    But so many years into the bull market that started in 2009 at the low-water mark is probably not an illustrious time to start learning the craft. I started in 1998 and got soaked in the dot-com bust. The good news is that I learned from that and consider the money I lost an inexpensive tuition in learning what not to do It took me ten years to get back on the horse, but at least it was in the middle of a bear market. This is a good summary of the rationale of why it was good to start then, very little in that is true of now. Even then I was stupid and saved half in a cash ISA in that year because I was still scared, I was facing a potential 50%-100% drawdown. It is always tough to invest into a bear market, but doing that is what you need to do to have notable success. It gets easier after you have done it once, but it never gets easy IMO.

    There is absolutely no shame whatsoever in taking a lower return if you demand a lower volatility (what may people wrongly call 'risk'). You IFA will hopefully be able to show you why the new proposal is better for your attitude to risk (sounds like basically - lower fees)

    I look at the total value at the bottom of my ISA and I mentally knock off at least about 30%. Because an awful lot of that 'value' isn't real at the moment. Some of it is inflated because Brexit has devalued the pound, but some of it is inflated because governments have forced interest rates down after the credit crunch. Those problems still haven't been properly fixed, and some of the symptoms are high market valuations compared to history.

    tl;dr - don't raise your risk unless you can accept seeing your 20k go down to 10k next year or the years after and resist the urge to sell. Even then ask yourself why you are taking that chance, what for? If you're in it for 30 years, fine. Ten, maybe not.

    From what you say you seem to be in about the right place. Sure, I did a lot better than you did over the last five years. You will probably see a much lower percentage fall than I will at some point over the next five
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