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  • FIRST POST
    • patricia1066
    • By patricia1066 14th Apr 17, 2:07 PM
    • 253Posts
    • 73Thanks
    patricia1066
    Pension options
    • #1
    • 14th Apr 17, 2:07 PM
    Pension options 14th Apr 17 at 2:07 PM
    My husband has an IFA report to guide him on how to access a flexiaccess drawdown on pension. It is advised that he amalgamate several DC pensions into a Standard Life SIPP. He will retire in 6 years time and has a total fund valued at a little less than half a million.

    The IFA has offered a portfolio (one of 3 offered by the firm) at an annual charge of 1.71% and £800 to implement the SIPP and other charges for each fund that is transferring over.
    The recommended portfolio is a dizzy making portfolio of 16 funds, of which I cannot distinguish a single bond fund, they may all be some funds of funds.

    It must be implemented using Standard Life, which has a significant charge if you no longer use an IFA at a later point. They charge 0.5% which replaces the IFA's 0.5% charge.

    He has had a 20 year history with this IFA so he is very reluctant to believe that he could get a better deal elsewhere, and he is nervous of self execution.

    That word, execution, sounds so ominous.

    So he won't make any decisions on his own behalf, unless guided by this IFA, and he does not feel confident of his ground in negotiating.

    Any other close alternatives? I was looking at Nutmeg, which has a suitable portfolio for a balanced 3/5 type of investor. He could ask to have a single front end charge, yet Standard Life would charge him 0.5% anyway if the IFA isn't involved in the transfer.
Page 2
    • zagfles
    • By zagfles 18th Apr 17, 10:21 AM
    • 12,474 Posts
    • 10,461 Thanks
    zagfles
    For how many more years would you need to outperform US-heavy market-cap weighted indices which have been arbitarily cludged together in a 60/40 ratio before you started using the present tense?

    Vanguard LifeStrategy 60/40 includes no exposure to commercial property or commodities, negligible exposure to emerging markets or smaller companies. 40% in bonds is more than most people need - the only reason most DIYers pick 60/40 is because there are five options and it's the middle one. And you don't need a crystal ball to see that a blind weighting by market cap is not always the best option. In summary, if you can't outperform (present tense) Vanguard LifeStrategy 60/40 you may as well give up.
    Originally posted by Malthusian
    Not much of a boast to outperform it then really. However, if smaller companies, commercial property, fixed interest or emerging markets nose dived over the next few years then it would likely outperform other portfolios. My crystal ball refuses to tell me if that'll happen, so I'll stick to past tense.

    Though I do agree, I don't really like trackers, I've got a couple but my actively managed funds tend to do much better. I believe I'll do better than VLS60. But I won't guarantee it.
    • BLB53
    • By BLB53 18th Apr 17, 10:25 AM
    • 1,151 Posts
    • 930 Thanks
    BLB53
    In summary, if you can't outperform (present tense) Vanguard LifeStrategy 60/40 you may as well give up.
    Well, that would apply to 70% of fund managers in the same sector (90% for VLS 80) over past 5 yrs.
    https://www.trustnet.com/Investments/MultiManagerMixedAsset.aspx?univ=O&tabType=MI85&mo reresult=true
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • Malthusian
    • By Malthusian 18th Apr 17, 2:46 PM
    • 3,280 Posts
    • 4,980 Thanks
    Malthusian
    Not much of a boast to outperform it then really.
    Originally posted by zagfles
    If DunstonH had been asked "how good is your model portfolio" and he said "it outperforms Vanguard 60/40" then that would be a good point. However, the question being asked was "why not just stick your money in Vanguard 60/40".

    However, if smaller companies, commercial property, fixed interest or emerging markets nose dived over the next few years then it would likely outperform other portfolios.
    I took it as implicit that we were talking about long-term outperformance (since neither you nor dunstonH nor I are day traders), and over the long term a portfolio that includes a sensible proportion in, for example, higher-risk-higher-return areas like smaller companies and emerging markets should outperform one without, otherwise the laws of economic physics are broken. Over a short-term period, of course, anything can happen.

    Well, that would apply to 70% of fund managers in the same sector (90% for VLS 80) over past 5 yrs.
    by BLB53
    That sector is "40-85% Mixed Investment". That will include managers who have a mandate to keep their equity allocation somewhere between 40% and 60%, and in simple terms you wouldn't expect them to outperform VLS 60. Similarly, it will include risk-targeted funds who have a mandate to keep expected volatility at a certain level, which may dictate a more cautious mix than VLS' fixed 60/40 proportions. The category is so broad as to be of extremely limited use.
    • zagfles
    • By zagfles 18th Apr 17, 3:15 PM
    • 12,474 Posts
    • 10,461 Thanks
    zagfles
    If DunstonH had been asked "how good is your model portfolio" and he said "it outperforms Vanguard 60/40" then that would be a good point. However, the question being asked was "why not just stick your money in Vanguard 60/40".

    I took it as implicit that we were talking about long-term outperformance (since neither you nor dunstonH nor I are day traders),
    Originally posted by Malthusian
    I wrote "the next few years"!
    and over the long term a portfolio that includes a sensible proportion in, for example, higher-risk-higher-return areas like smaller companies and emerging markets should outperform one without, otherwise the laws of economic physics are broken. Over a short-term period, of course, anything can happen.
    Yes, should not will.

    Over a longer term period anything can happen too. When do you think Japanese equities will get back to their 1989 level? IIRC the UK stockmarket was lower in 1954 than it was in 1900. Maybe the "laws of economic physics" were broken then?

    Not that I believe this will happen, otherwise I'd change my investment strategy now. I'm just saying the future is unknown and would never take it for granted that just because I'd outperformed a tracker in the past that I would do in the future.
    That sector is "40-85% Mixed Investment". That will include managers who have a mandate to keep their equity allocation somewhere between 40% and 60%, and in simple terms you wouldn't expect them to outperform VLS 60. Similarly, it will include risk-targeted funds who have a mandate to keep expected volatility at a certain level, which may dictate a more cautious mix than VLS' fixed 60/40 proportions. The category is so broad as to be of extremely limited use.
    Although scanning down the risk score column, the vast majority of those performing worse than VLS60 have a higher risk rating, not lower.
    • patricia1066
    • By patricia1066 18th Apr 17, 7:29 PM
    • 253 Posts
    • 73 Thanks
    patricia1066
    Most of the threads is offtopic, as standard life sipp terms are what DH has to consider.

    Option3 is for discretionary investment, and off platform I asked SL today and was told that these are funds other than mutual or insured. If not a SL fund if probably is off platform. Odd use of the phrase.

    The ifa is offering a portfolio service, which should be charged at the fixed rate. Then the ofc and ifa charges can be assessed depending on the transaction in that year.
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