Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@. Skimlinks & other affiliated links are turned on

Search
  • FIRST POST
    • username12345678
    • By username12345678 13th Sep 17, 10:13 PM
    • 108Posts
    • 47Thanks
    username12345678
    Meeting with my IFA and Wealth Manager
    • #1
    • 13th Sep 17, 10:13 PM
    Meeting with my IFA and Wealth Manager 13th Sep 17 at 10:13 PM
    They have requested a joint meeting after I gave notice of my intention to cease our 'partnership' at the end of the year. They are keen to show how they 'add value'

    Out of courtesy I agreed and i'll be open minded about what they have to say and if it's compelling i'm fully prepared to change my mind and continue for another 12 months.

    If I go on my own i'm comfortable with understanding my own risk tolerance and i'm happy with structuring my own OEIC/IT/ETF portfolio to diversify and match that risk level.

    I have a list of questions/challenges for them but I fully expect to get 'tag teamed' so I want to be as prepared as possible to stand my corner (in a non-confrontational way of course). So i'd appreciate drawing on the forums collective brain for a sensible approach to the meeting.
Page 3
    • HappyHarry
    • By HappyHarry 15th Sep 17, 4:57 PM
    • 397 Posts
    • 472 Thanks
    HappyHarry
    Maybe the IFA should be made to guarantee a return, after all fees, at least as high as a passive index portfolio invested in a similar asset allocation. That way the investor would be sure to get value and as all IFAs seem to beat the market it should not be a problem.
    Originally posted by bostonerimus
    You are being unnecessarily flippant.

    You do, however, still seem to be struggling with a couple of concepts;
    (i) What an IFA does. (You seem to think they are predominately fund pickers).
    (ii) The fact that many people do not want to risk getting their investment decisions completely wrong and hence put their futures at risk.

    Very few, if any, of my clients are interested in maximising their returns regardless of anything else. They pay me for the security they get with the knowledge that their long-term financial future is being cared for.

    Many people don't have the skills, the knowledge, or the desire to DIY their long-term finances. Those people find the use of an IFA invaluable.

    In the same way, if I knew how to fully service my car, build an extension or tailor a suit, then I could save money. However, I don't, and neither do I have any desire to do so. Many people have the same view when it comes to their long-term financial planning; they would rather pay an expert to help them.

    I'm now wondering if there is a forum somewhere where posters ask about suit fitting and repair, and rogue posters pop up with comments like "you could learn how to sew yourself" or "it would only take five year's practice to know how to tailor a really good suit, it's not rocket science you know".
    Last edited by HappyHarry; 15-09-2017 at 5:01 PM. Reason: Typo
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • bostonerimus
    • By bostonerimus 15th Sep 17, 5:01 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    Passive investments that track an index should return the index...minus a few basis points. So by definition they the benchmark for comparison. If it doesn't then its a poor index and anyone, including an IFA, that bought it isn't too bright. A 60/40 equity and bond index fund can be easily bench marked. Similar asset classes in the active part of an an IFA portfolio should beat these indexes if the IFA is to be of any value. If the IFA can't promise that then I see no reason to use one.
    Last edited by bostonerimus; 15-09-2017 at 5:04 PM.
    Misanthrope in search of similar for mutual loathing
    • dunstonh
    • By dunstonh 15th Sep 17, 5:13 PM
    • 89,446 Posts
    • 54,906 Thanks
    dunstonh
    If it doesn't then its a poor index and anyone, including an IFA, that bought it isn't too bright.
    But that is a management decision. You are not meant to allow management decisions in your passive world.

    If the IFA can't promise that then I see no reason to use one.
    That suggests you do not understand investing as you know full well that no investment, whether passive or managed carries any guarantees.
    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.
    • Aegis
    • By Aegis 15th Sep 17, 5:14 PM
    • 4,762 Posts
    • 2,840 Thanks
    Aegis
    Passive investments that track an index should return the index...minus a few basis points. So by definition they the benchmark for comparison. If it doesn't then its a poor index and anyone, including an IFA, that bought it isn't too bright. A 60/40 equity and bond index fund can be easily bench marked. Similar asset classes in the active part of an an IFA portfolio should beat these indexes if the IFA is to be of any value. If the IFA can't promise that then I see no reason to use one.
    Originally posted by bostonerimus
    How about:
    • Assisting with cash flow forecasting
    • Balancing the various tax wrappers to minimise the impact of income, capital gains and other taxes
    • Planning for inheritance tax mitigation
    • Looking at the risks of morbidity and mortality and how those can best be dealt with
    • Advising on the right types of asset/wrapper to use within trusts
    • Briefing on any legislative changes which might impact existing investments or plans
    None of this requires beating a passive portfolio of investments.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • bostonerimus
    • By bostonerimus 15th Sep 17, 5:16 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    You are being unnecessarily flippant.
    Originally posted by HappyHarry
    No, I'm being serious.

    You do, however, still seem to be struggling with a couple of concepts;
    (i) What an IFA does. (You seem to think they are predominately fund pickers).
    (ii) The fact that many people do not want to risk getting their investment decisions completely wrong and hence put their futures at risk.

    Very few, if any, of my clients are interested in maximising their returns regardless of anything else. They pay me for the security they get with the knowledge that their long-term financial future is being cared for.
    I understand that an IFA can be useful when navigating the strategic complexities of finaces, but I don't think they are useful once someone is on track.

    Many people don't have the skills, the knowledge, or the desire to DIY their long-term finances. Those people find the use of an IFA invaluable.
    There is a general lack of financial knowledge, but it's not difficult to acquire and there is a large industry invested in keeping the consumer dumb. Most people can quite easily manage their finances given the right regulatory frameworks, education, tools and services....and they largely exist in the UK now.

    In the same way, if I knew how to fully service my car, build an extension or tailor a suit, then I could save money. However, I don't, and neither do I have any desire to do so. Many people have the same view when it comes to their long-term financial planning; they would rather pay an expert to help them.
    The skills required to invest successfully are mostly basic common sense. Also you don't need any expensive specialized tools. So with a little reading and a spreadsheet for the more sophisticated and web tools you can DIY.

    I'm now wondering if there is a forum somewhere where posters ask about suit fitting and repair, and rogue posters pop up with comments like "you could learn how to sew yourself" or "it would only take five year's practice to know how to tailor a really good suit, it's not rocket science you know".
    There will be some times when expert knowledge is required and there will always be people who want to pay for someone else to take responsibility for the strategic and tactical management of their finances. But the vast majority of people can handle pension and ISA investing themselves and don't need an IFA on an ongoing basis.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 15th Sep 17, 5:24 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    How about:
    • Assisting with cash flow forecasting
    • Balancing the various tax wrappers to minimise the impact of income, capital gains and other taxes
    • Planning for inheritance tax mitigation
    • Looking at the risks of morbidity and mortality and how those can best be dealt with
    • Advising on the right types of asset/wrapper to use within trusts
    • Briefing on any legislative changes which might impact existing investments or plans
    None of this requires beating a passive portfolio of investments.
    Originally posted by Aegis
    Yes, expert advice is sometims required.
    If people are investing outside of tax wrappers.....those should be precious few in the UK given the pension and ISA allowances....then tax advice might be useful. Also in drawdown income tax advice, withdrawal rates, life expectancy advice might be necessary, but again this is quite easy for most people to understand given a little education. Estate planning is a useful area for advice, particularly if trusts are involved. These are mostly one time bits of advice and that's how I think most people should use an IFA. Tap them for when things get really complex, but don't pay them for doing the simple things that the investor can easily do themselves.
    Misanthrope in search of similar for mutual loathing
    • TheTracker
    • By TheTracker 15th Sep 17, 7:01 PM
    • 1,106 Posts
    • 1,105 Thanks
    TheTracker
    How about:
    • Assisting with cash flow forecasting
    • Balancing the various tax wrappers to minimise the impact of income, capital gains and other taxes
    • Planning for inheritance tax mitigation
    • Looking at the risks of morbidity and mortality and how those can best be dealt with
    • Advising on the right types of asset/wrapper to use within trusts
    • Briefing on any legislative changes which might impact existing investments or plans
    None of this requires beating a passive portfolio of investments.
    Originally posted by Aegis
    These are an excellent accounting of the value financial advice can provide. I may even avail myself sometime of such services. But there are IFAs, at least one on this board, that parade their ability to beat index investing deliberately and confidently over extended periods. It's just not helpful to your profession to make such wild claims.
    • dunstonh
    • By dunstonh 15th Sep 17, 7:34 PM
    • 89,446 Posts
    • 54,906 Thanks
    dunstonh
    These are an excellent accounting of the value financial advice can provide. I may even avail myself sometime of such services. But there are IFAs, at least one on this board, that parade their ability to beat index investing deliberately and confidently over extended periods. It's just not helpful to your profession to make such wild claims.
    Originally posted by TheTracker
    And there are certain biased tracker investors, some using names that make it obvious, who continuously bleat that their method is best and no other methods are suitable.
    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.
    • bostonerimus
    • By bostonerimus 15th Sep 17, 9:12 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    These are an excellent accounting of the value financial advice can provide. I may even avail myself sometime of such services. But there are IFAs, at least one on this board, that parade their ability to beat index investing deliberately and confidently over extended periods. It's just not helpful to your profession to make such wild claims.
    Originally posted by TheTracker
    I agree, some of the items listed are genuinely complex and when people are lucky enough to have to worry about inheritance tax and trusts then professional advice might be necessary. Personally, I'm thinking about estate planning. My basic approach is to keep my estate under the inheritance tax limits with regular charitable contributions and gifts to relatives and if things get out of control I'll put some stuff into a trust .If someone lives in London and has seen the value of their estate jump because of house price appreciation it's easy with a little planning to pass that onto your children without any inheritance tax and for most people that will significantly reduce the size of the estate.

    So as with all things you need to be a good consumer and only buy what you really need and then try to get quality at a good price....IFAs can be useful, but most people should not really need them. Going by the posts on this forum they are used far too much in the UK and given far too much money, much like the rest of the UK personal finance industry.
    Last edited by bostonerimus; 16-09-2017 at 12:30 AM.
    Misanthrope in search of similar for mutual loathing
    • Linton
    • By Linton 16th Sep 17, 4:08 AM
    • 8,176 Posts
    • 8,030 Thanks
    Linton
    These are an excellent accounting of the value financial advice can provide. I may even avail myself sometime of such services. But there are IFAs, at least one on this board, that parade their ability to beat index investing deliberately and confidently over extended periods. It's just not helpful to your profession to make such wild claims.
    Originally posted by TheTracker
    If I remember correctly the claim was to have consistently beaten VLS100, a much easier task as that fund consistently under performs the FTSE World Index. Whether you should class VLS100 as "Index investing" is a matter perhaps better left for the theologists.

    Whether returns do or don't beat some index isnt of much practical significance as concern of risk and whether one's objectives are met are more important to most serious real life investors. The reason to advertise that one has consistently beaten one of the passive movements favourite funds with a portfolio containing managed funds is to demonstrate the point that asset allocation is more important for constructing a portfolio than whether a fund is active or passive.
    • IanManc
    • By IanManc 16th Sep 17, 10:41 AM
    • 311 Posts
    • 428 Thanks
    IanManc
    If I remember correctly the claim was to have consistently beaten VLS100, a much easier task as that fund consistently under performs the FTSE World Index. Whether you should class VLS100 as "Index investing" is a matter perhaps better left for the theologists.

    Whether returns do or don't beat some index isnt of much practical significance as concern of risk and whether one's objectives are met are more important to most serious real life investors. The reason to advertise that one has consistently beaten one of the passive movements favourite funds with a portfolio containing managed funds is to demonstrate the point that asset allocation is more important for constructing a portfolio than whether a fund is active or passive.
    Originally posted by Linton
    You don't need to find a theologist to tell you that VLS100 isn't index investing. VLS100 is a fund of funds, which involves management decisions by Vanguard as to which of its in-house funds it invests in, and in what proportions. VLS100 doesn't follow an index, so clearly isn't "index investing".
    • Linton
    • By Linton 16th Sep 17, 11:37 AM
    • 8,176 Posts
    • 8,030 Thanks
    Linton
    You don't need to find a theologist to tell you that VLS100 isn't index investing. VLS100 is a fund of funds, which involves management decisions by Vanguard as to which of its in-house funds it invests in, and in what proportions. VLS100 doesn't follow an index, so clearly isn't "index investing".
    Originally posted by IanManc
    So the only true index investor is one who buys a single index fund, presumably a whole world one? Anything else would involve a management decision on %'s as I cant see that it makes much difference if you decide on %'s or you are happy to accept the %s specified by the fund manager. But them you have to decide which world wide index to follow.

    If your point is that in practice very few if any investors can accurately catagorise themselves as index investors, I would have to agree with you. Perhaps the concept of an index investor isnt very useful.
    • bowlhead99
    • By bowlhead99 16th Sep 17, 12:47 PM
    • 6,689 Posts
    • 11,881 Thanks
    bowlhead99
    You don't need to find a theologist to tell you that VLS100 isn't index investing. VLS100 is a fund of funds, which involves management decisions by Vanguard as to which of its in-house funds it invests in, and in what proportions. VLS100 doesn't follow an index, so clearly isn't "index investing".
    Originally posted by IanManc
    True, but using it to invest in fixed proportions into indexes is certainly at the 'index' end of the scale on a range from fully passive indexed to fully active freeform.

    We are considering options available to someone who is perhaps not an experienced investor and has hitherto not done their own detailed investment allocations because they were not confident in coming up with their own asset allocation and investment fund selection decisions because of being concerned they might screw it up.

    So, if they want to be 'hands off' after their initial investment decision there are a number of practical choices:

    they could invest cheaply with a fund such as VLS (fund-of-funds with broadly fixed allocations into basic indexes) ;

    or they could invest a little more expensively with a different fund manager (fund-of-funds with variable allocations into indexes) ;

    or more expensively with a different fund manager (fund of funds with variable allocations into other funds which might be a mix of indexes and actives, or all actives - or perhaps not a fund-of-funds at all, just active fund that directly holds investments across asset classes) ;

    or more expensively with an IFA making recommendations on and implementing asset allocation decisions by selecting funds or products that suit from across the passive and active space whose respective managers select the underlying portfolio ;

    or more expensively with an IFA making recommendations on product type (wrappers, risk/volatility levels) and then handing over to a discretionary fund manager for detailed implementation and allocation to asset types and underlying portfolio selection.

    These different options come with a range of fees and are unlikely
    to produce the same results as each other either gross or net of those fees.

    Advocates of 'cheapest is best, just get someone to throw together some basic trackers for you' will point out that if you spend an extra x percent on fees and get the exact same profile of gross returns then the £1.5 million you hope to have in a few decades time might be less than a million.

    Advocates of a more complex approach might say that if they put a% into ABC Hedge Fund and b% into DEF Credit Opportunities Fund and c% into GHI Special Situations Fund and d% into JKL Commercial Property Fund and e% into MNO Infrastructure Fund and f% into PQR Private Equity Fund and g% into STU Real Assets Fund and h% into VWX Smaller Companies fund and i% and j% into Y Cash Fund and Z Short-dated Govt Bonds Fund... plus k% to w% into a variety of regional or sectoral specialist equities and bond funds... you will certainly not get the exact same profile of gross returns as by investing x% into a bond index and y% into a domestic equity index and z% into a foreign equity index, but it will be a good thing.

    As such - the exponents of a more complex approach will say - you will still be able to get the aforementioned £1.5 million while experiencing lower volatility along the way than if you had aimed to achieve it by following the rollercoaster of the cheap index. Or, potentially you will be getting greater returns by identifying better prospective returns for the risk so you can easily afford the fees that take you down from those greater returns to some figure which is still north of £1.5 million net.

    Those on the 'passive investing' side of the argument are sceptical, and will say that the people who help you deploy your money to the more complex products, or who work in the financial services sector and earn money from managing or operating those products, are basically destroying the wealth of the nation; ripping your £1.5m retirement pot away from you and replacing it with a £0.8m one, and that peddling their snake-oil to get fat on your hard-earned wages is as vile and abhorrent as raping a donkey in front of your grandchildren.

    The cynics would think that employing an IFA to implement product selection is bad enough - when you can do it yourself after a few weekends of googling - let alone employing an IFA who is going to pass the buck on asset selection and recommend you spend more money employing a wealth manager / discretionary fund manager. The latter point is quite sensible as IMHO you probably do need to have quite serious wealth for an appreciable amount of value to be added by a DFM ; though I think the former may be naive because some people will make serious mistakes left to their own devices.

    Clearly in this case, the OP who has made up his mind that he doesn't need an IFA or DFM service because he would like to manage his own affairs, shouldn't bother having a "we'd like to convince you to stay" meeting with his IFA and DFM. He is well aware that managing your own fortune badly can leave you in a worse position than paying someone to manage it middlingly - but does not expect to intend to manage it badly

    IMHO there is nothing wrong with paying fees to achieve something - and having a lot of choice and freedom in the marketplace to do just that, is fine - it only becomes a non-moneysavingexpert thing to do when the fees are being paid for something you don't need or want.
    • bostonerimus
    • By bostonerimus 16th Sep 17, 2:01 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    You don't need to find a theologist to tell you that VLS100 isn't index investing. VLS100 is a fund of funds, which involves management decisions by Vanguard as to which of its in-house funds it invests in, and in what proportions. VLS100 doesn't follow an index, so clearly isn't "index investing".
    Originally posted by IanManc
    VLSxxx uses index funds i its allocation and rebalances. This is what index investors do (there are numerous rebalancing strategies, one being to not rebalance). If you own VLSxxx you are agreeing with Vanguard's sector and asset class allocation and pay them a slight premium to rebalance every so often. Whether you want to call that passive indexing or something else is up to you - I'd call it indexing
    Last edited by bostonerimus; 16-09-2017 at 2:16 PM.
    Misanthrope in search of similar for mutual loathing
    • bostonerimus
    • By bostonerimus 16th Sep 17, 2:14 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    T
    IMHO there is nothing wrong with paying fees to achieve something - and having a lot of choice and freedom in the marketplace to do just that, is fine - it only becomes a non-moneysavingexpert thing to do when the fees are being paid for something you don't need or want.
    Originally posted by bowlhead99
    I think this is the crux of the matter. If I pay an IFA for one time advice on how to set up a trust to reduce inheritance tax that's something with a tangible result.....a trust and a lower tax bill. However, If an IFA is charging a fee for portfolio construction and an on going fee for financial management I would want to know that I'm getting value for money. If they additionally sell me those services with a claim to out perform an indexing approach then I want a guarantee of that superior performance.
    Misanthrope in search of similar for mutual loathing
    • dunstonh
    • By dunstonh 16th Sep 17, 3:02 PM
    • 89,446 Posts
    • 54,906 Thanks
    dunstonh
    VLSxxx uses index funds i its allocation and rebalances
    in other words it makes management decisions on how much should be held in each sector.

    If you own VLSxxx you are agreeing with Vanguard's sector and asset class allocation and pay them a slight premium to rebalance every so often.
    Correct. You are agreeing to their management decisions on weightings. You are agreeing to their management decisions in leaving out certain investment sectors and you are agreeing to only using Vanguard trackers in areas that vanguard have a tracker.

    So, its a managed solution using a selection of index trackers.

    However, If an IFA is charging a fee for portfolio construction and an on going fee for financial management I would want to know that I'm getting value for money.
    Paying less does not guarantee you value for money.

    If they additionally sell me those services with a claim to out perform an indexing approach then I want a guarantee of that superior performance.
    Do you get any such guarantee with your method?
    What do you do when when your method underperforms? (for example, most of the VLS funds are undperforming YTD, and not for the first time or the last). What guarantees did Vanguard give you that they would give a superior performance?
    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.
    • grey gym sock
    • By grey gym sock 16th Sep 17, 3:15 PM
    • 4,094 Posts
    • 3,563 Thanks
    grey gym sock
    IMHO, a key way of looking at the active vs passive choice is: what is the hurdle of higher costs which active has to overcome if it is to outperform passive? and then: is there any reason to suppose the active strategy you're considering can achieve that?

    the cost difference is always a bit unclear, because 1 element of the costs, viz. the higher internal trading costs of active funds, is not known in advance, and often not even clearly disclosed retrospectively.

    however, if you are DIY, the total extra costs of active could be as low as c. 0.5% + those internal trading costs.

    and if you're already using an IFA, and you ask them to use an active instead of a passive strategy, the extra costs would be similar.

    OTOH, if you're confident selecting a simple DIY passive strategy (e.g. pick 1 cheap multi-asset fund, on a cheap platform), but not confident using an active strategy (which needs not just to be set up, but more monitoring to decide whether/when to switch active managers), and you're wondering whether to employ an IFA to do the latter, then the incremental costs are much higher: the same 0.5% + internal trading costs for the active funds themselves, but also perhaps 0.5% for the IFA (or more for a smaller portfolio - you might needs £100k+ to get it down to 0.5%), and apparently also more for a platform, say another 0.25%, because IFAs appear not to use the fixed-charge platforms which would be cheapest (for portfolios of £100k+) ... so you are up to c. 1.25% + internal trading costs.

    that extra hurdle is part of why i think it's a bad argument for IFAs to suggest it could be worth using an IFA for their active fund selection. but especially when there's no explanation about why it should be expected to outperform, other than they are paying somebody else to come up with active allocations (yes, but what is the strategy, at a high level? without knowing that, how would 1 know whether it's likely to work?) and that it's worked over some number of years (so what? we know that some active strategies will outperform, so this is no surprise; we just don't know which 1s will outperform in advance, and whether outperformance will persist. we also don't know whether an unspecified bought-in strategy even is a consistent strategy, or whether a data provider is actually radically changing their strategy over time).

    and active via IFA + DFM will be even more. i doubt there is any point in that, no matter how wealthy you are. for it to work, there would need to be investment strategies which are likely to produce outperformance (for a given level of risk) and which are only accessible via DFMs.

    getting back to reasons to expect outperformance from active ... plausible ones might include: small companies are likely to outperform big-cap, and there aren't any trackers available for UK smaller companies. or: "value" companies are likely to outperform, and there aren't any decent passive ways to buy just value companies for some stock markets.

    implausible reasons would include: our active managers talk to the managers of the companies they invest in, and decide whether they're any good (mostly irrelevant: quality of company matters far more than quality of management, and top managers tend to be good at selling themselves, so it can be dangerous to talk to them!). or: our managers hop in and out of different sectors of the market depending on what point in the economic cycle we're in (yes, and so does everybody else: share prices always attempt to anticipate the economic cycle, and why should you be better at this than anybody else?).
    Last edited by grey gym sock; 16-09-2017 at 3:18 PM.
    • bostonerimus
    • By bostonerimus 16th Sep 17, 3:17 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    in other words it makes management decisions on how much should be held in each sector.



    Correct. You are agreeing to their management decisions on weightings. You are agreeing to their management decisions in leaving out certain investment sectors and you are agreeing to only using Vanguard trackers in areas that vanguard have a tracker.

    So, its a managed solution using a selection of index trackers.
    Originally posted by dunstonh
    I agree with all this. Using index funds keeps costs down, even better than using VLSxxx would be to buy a few indexes in appropriate ratios and rebalance yourself. I do that and my fees are less than 0.1%

    Do you get any such guarantee with your method?
    What do you do when when your method underperforms? (for example, most of the VLS funds are undperforming YTD, and not for the first time or the last). What guarantees did Vanguard give you that they would give a superior performance?
    There's no guarantee other than to track the indexes contained within the portfolio. If the indexes inside VLS are tracking their benchmarks then it's doing just what it should. If you want to change an asset allocation because of a perceived under performance then fine. Personally YTD performance would not worry me, nor would any return comparisons, good or bad, I'd want to see that my saving and returns were enough to meet my financial goals. I've never chased return and I've eventually met all my goals, with a few down turns along the way,

    Vanguard gives no guarantees....other than maybe to keep costs low......but really it's not up to the indexer or the DIYer to give any guarantees, it's up to the people that charge for their services to guarantee the out performance that they use to attract clients. I have no problem with people paying for one time bits of financial advice, but it's the cumulative fees that are the big issue particularly if they are justified with intimations of "alpha".
    Last edited by bostonerimus; 16-09-2017 at 3:47 PM.
    Misanthrope in search of similar for mutual loathing
    • A_T
    • By A_T 16th Sep 17, 3:35 PM
    • 181 Posts
    • 83 Thanks
    A_T
    I agree with all this. Using index funds keeps costs down, even better than using VLSxxx would be to buy a few indexes in appropriate ratios and rebalance yourself. I do that and my fees are less than 0.1%
    Originally posted by bostonerimus
    you won't be able to do that in the UK unless you only use UK and US equity trackers.
    • bostonerimus
    • By bostonerimus 16th Sep 17, 4:02 PM
    • 847 Posts
    • 425 Thanks
    bostonerimus
    you won't be able to do that in the UK unless you only use UK and US equity trackers.
    Originally posted by A_T
    I know, I look at the costs in the UK relative to the US and I'm shocked. You can keep costs down using index trackers and low cost platforms in both countries, but it will be hard to match the costs I pay in the US on my largest fund, VTSAX (Vanguard Total US Stock Index), which has an annual fee of 0.04% and I pay no platform or trading fees as I hold it directly with US Vanguard.
    Misanthrope in search of similar for mutual loathing
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

2,237Posts Today

8,192Users online

Martin's Twitter
  • Shana tova umetuka - a sweet Jewish New Year to all celebrating. I won't be online the rest of t'week, as I take the time to be with family

  • Dear Steve. Please note doing a poll to ask people's opinion does not in itself imply an opinion! https://t.co/UGvWlMURxy

  • Luciana is on the advisory board of @mmhpi (we have MPs from most parties) https://t.co/n99NAxGAAQ

  • Follow Martin