Investment management

kingarhu

I have set up an appointment with someone who may or may not get the job of managing my investments. My question is, what is a reasonable fee for the company to charge and what sort of improved return should I expect if I decide to take them up on their offer rather than just buying assorted unit trusts etc and leaving them alone? Anybody who can give me the benefit of their experience would be greatly appreciated.

dunstonh

My question is, what is a reasonable fee for the company to charge

0.5% of funds under management is the usual rate.

and what sort of improved return should I expect if I decide to take them up on their offer

It depends. You may get more you may get less. If they research and recommend a portfolio and give reports on it, recommend switches at various times and include rebalancing, then it can be good value for money. If they just stick the money in one place, like you would do, then there is little point paying for it.

If you like, I can give you an example of the sort of thing you should be looking at from this person. You can then use that as a benchmark as to what you can get. If they provide that, you can be satisfied, if they don't, you know not to proceed with them. PM me if you want me to email it to you.

cheerfulcat

Hi, kingarhu,

If an IFA is any good he should be able at least to help you organise your thinking. But there is no guarantee that his choice of funds will be any better than yours, though if properly constructed his portfolio might be more aligned with your requirements.

I would jump at dh's generous offer by the way - knowing what the IFA should be saying will give you an excellent start!

I can't comment on ongoing costs, but I do know that you can negotiate. If you choose to pay a fee expect to pay ~£150 + VAT per hour.

whiteflag_3

dunstonh wrote:

if you like, I can give you an example of the sort of thing you should be looking at from this person. You can then use that as a benchmark as to what you can get. If they provide that, you can be satisfied, if they don't, you know not to proceed with them. PM me if you want me to email it to you.

Dunstonh -this makes me quite uncomfortable. I wouldnt want you to be accused of touting for business. I hope you know what I mean.

dunstonh

whiteflag wrote:

Dunstonh -this makes me quite uncomfortable. I wouldnt want you to be accused of touting for business. I hope you know what I mean.

No, that wasnt my intention. I was offering an example of a porfolio management report and recommendation example to see what he should be getting from the person he is seeing. Purely to give him something to go on as a benchmark. It was purely being offered as an aid to help him judge the quality of the person he will be seeing.

Being a generic example, the report wouldnt be much use as portfolios are built and managed around different people's views. Every portfolio is different depending on those goals and views. However, the presentation of the research and reporting can be viewed as an example as to what he can expect.

You are making me go all defensive now whiteflag!

kingarhu

"an aid to help him judge the quality of the person he will be seeing."

Actually "he" is a "she", but I'd love some really independant advice. I've a feeling the charges are going to be quite high, so knowing what to look for would be a great help. I'll pm you dunstonh for the info you've offered. Thanks.

dunstonh

I knew as i typed it that i shouldnt have assumed he.

Deemy

kingarhu wrote:

I have set up an appointment with someone who may or may not get the job of managing my investments. My question is, what is a reasonable fee for the company to charge and what sort of improved return should I expect if I decide to take them up on their offer rather than just buying assorted unit trusts etc and leaving them alone? Anybody who can give me the benefit of their experience would be greatly appreciated.

Take a look at the following before you commit your hard earned cash to an 'manager'

http://www.fool.co.uk/lrninvnov.htm?NavLoc=LN&NavFrom=strategies&NavTo=investingBP

dunstonh

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Index trackers are the percentage play as far as investing in shares is concerned. Over periods of five years index trackers have produced a better return than 75% of managed funds, primarily because of their lower charges.

That paragraph is so out of date in that link. Index trackers suffered far greater than managed funds in the last 5 years due to the lack of downside protection. It still doesnt clarify whether it means 75% of funds in the same sector or all funds available. If all funds available then the paragraph is pointless as different sectors have different risk and investment styles. If same sector, then out of 379 funds available in the UK all companies sector 5 years ago, the FTSE 100 trackers are all coming in around 300th place. 250s arent doing so bad in that period though. However, they are slightly higher risk.

What is worst about that page is that there is no mention of investment risk and the varying risk with every investment fund. Risk is one of the first things you consider when building a portfolio. Its also the thing that novices too easily forget in rising markets when the growth percentages have been big.


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Deemy

Seems to be pretty good for a free guide.

Contents -
1. The Difference Between Saving And Investing
2. Why You Need To Invest
3. What Are Your Options?
4. Why Shares Are Best
5. Common Investing Vehicles
6. Why Trackers Make Sense
7. The Benefits Of Regular Investment
8. To ISA or not?
9. Going Beyond Trackers

Also a nice section on before your invest -

But before you invest...

You need to be prepared. First of all, you need to get out of debt. By this we mean all debts apart from your mortgage, if indeed you have one. So you need to have paid off your credit cards and any personal loans you may have.

The reason is quite simple. It is unlikely you will make more from your investments than you will need to pay for your debts. So pay off your debts first. We can safely say it is the best investment you will ever make. Find out more in our Get Of Out Debt centre.

Secondly, you need to have cash put aside for the aforementioned rainy day. How much cash is appropriate will depend on your circumstances. If you have dependents or if you are uncertain about your job prospects then you might want to put some more aside. One rule of thumb is that you should have enough cash set aside for at least three months' living expenses.

Last of all you need to be prepared to invest your money for a minimum of five years and preferably a lot longer. Although you can expect to get more by investing than saving, the value of your capital will fluctuate all the time. If you need to get it out in a hurry then you may not get a good price. If you want to use your money to put down a deposit on a house or buy a new car then investing is not the best way to do it. If you need a guaranteed amount of money within less than five years a high interest savings account is the most sensible option.

http://www.fool.co.uk/lrninvnov/startinvesting.htm?ref=lrninvnov

I suppose if one bought a 'good' book there would be a para or two somewhere in there that one could also take issue with

globevestor

I would use my past performance as a benchmark. Anyone who can beat me consistently after fees will be good for me. Since nobody can predict future performance, I will have more than one IFA.