Vestra Wealth Management?

Domain.Rider

I'm a higher level tax payer, and have a chunk of investments comprising various cash ISAs and some shares, which are intended to supplement my work pension in a few years time. My IFA has recently done a review of my 'portfolio' and is strongly recommending that I sign up with Vestra Wealth Management, as for a 1.5% annual fee, they will be able to maximise income and/or growth at a level of risk that I specify (the IFA will get 0.5% of that annual fee). The portfolio would be held in a separate account and covered by the FSA guarantee. My IFA tells me that the ISA investments would continue to be held as ISAs, keeping the tax advantage, but the contents would be managed by the Vestra team. I would get full online access, with monthly updates. If I wanted to wihdraw, there would be no exit penalties.

I've had a browse of Vestra's web site, and they look a reasonably solid bunch.

Does anyone have any comments or criticisms about Vestra Wealth and such an arrangement?

dunstonh

Does anyone have any comments or criticisms about Vestra Wealth and such an arrangement?

Nope. However, a 1.5% charge for discretionary management seems ok. Its consistent with unit trusts with their typical 1.5% AMC. Discretionary management is often more personalised to your risk profile and needs and the portfolio is actively managed more closely than an IFA would do or is even allowed to do. If thats what you want, then there seems nothing wrong with the fee in this case. Its certainly a lot cheaper than the banks onary management arms.

Rollinghome

Domain.Rider wrote: »

Does anyone have any comments or criticisms about Vestra Wealth and such an arrangement?

I'd quite like to offload the management of my assets and so it's something I've considered again myself.

What does concern me is that it seems difficult to know just how successful or otherwise such people are. Have you been offered any solid figures to justify their fee? When I used a discretionary stockbroker some years ago I quickly came to the conclusion that they weren't any better at it than me. The high-profile Nicola Horlick of Bramdean gave a useful insight when it came to light that she'd handed over 10% of her clients' money to Bernie Madoff with the same gullibility as the most inexperienced private investors.

Finding someone to look after your money with the same care as you would yourself seems difficult if not impossible but I'm open to be convinced otherwise.

Domain.Rider

I've not been offered solid figures, but they suggested that I should be aiming for at least a 5% return, so they'd need to make at least 6.5% overall. They have quite a detailed risk questionnaire, and they explained how the investments would be split up and the funds it would be likely to go into. They have a small hedging portion to soften any troughs, and they shift the investments around according to the opinion of their expert panel. It seems to be in their interest to make maximum returns, but if they can get me more than I'm likely to make by my inexpert and irregular efforts, then it seems like a good deal. I get to see all the investments online and can query them or request a risk profile change, or pull out at any point. That's the deal as offered - I was curious to know if there was likely to be any unexpected downside or upside, and whether anyone had experience of this kind of thing...

Aegis

Domain.Rider wrote: »

I've not been offered solid figures, but they suggested that I should be aiming for at least a 5% return, so they'd need to make at least 6.5% overall. They have quite a detailed risk questionnaire, and they explained how the investments would be split up and the funds it would be likely to go into. They have a small hedging portion to soften any troughs, and they shift the investments around according to the opinion of their expert panel. It seems to be in their interest to make maximum returns, but if they can get me more than I'm likely to make by my inexpert and irregular efforts, then it seems like a good deal. I get to see all the investments online and can query them or request a risk profile change, or pull out at any point. That's the deal as offered - I was curious to know if there was likely to be any unexpected downside or upside, and whether anyone had experience of this kind of thing...

Have you asked for a very cautious profile? 5% could just about be achieved using cash at the moment (admittedly before tax), so a 5% overall annual return is not a particularly high one from risky assets.

Jonbvn

OP thanks for posting. What level off minimum investment do Vestra require?

whiteflag_3

Domain.Rider wrote: »

I'm a higher level tax payer, and have a chunk of investments comprising various cash ISAs and some shares, which are intended to supplement my work pension in a few years time. My IFA has recently done a review of my 'portfolio' and is strongly recommending that I sign up with Vestra Wealth Management, as for a 1.5% annual fee, they will be able to maximise income and/or growth at a level of risk that I specify (the IFA will get 0.5% of that annual fee). The portfolio would be held in a separate account and covered by the FSA guarantee. My IFA tells me that the ISA investments would continue to be held as ISAs, keeping the tax advantage, but the contents would be managed by the Vestra team. I would get full online access, with monthly updates. If I wanted to wihdraw, there would be no exit penalties.

I've had a browse of Vestra's web site, and they look a reasonably solid bunch.

Does anyone have any comments or criticisms about Vestra Wealth and such an arrangement?

On the face of it looks fine, with your IFA doing the sensible thing an outsourcing the investment to experts.

The only thing you should be wary of is the actual charges. For example I have recently seen discretionary portfolios with an major UK "wealth manager" that are almost entirely invested if funds, which themselves have ongoing charges of between 1-2% per annum. The broker was then taking their 1% on top, so the actual portfolio was alot more expensive than their advertised 1% annual fee.

I also enquired if the stockbroker received trail commission from the underlying fund managers and if that was offset against their fee. Interestingly their first reply said "yes we do, but its too difficult to track for each client so we cant offset it". I then wrote again pointing out in the modern age of computers it is quite easy to track commissions to which they replied that "they had made a mistake in their first letter and they did not receive trail" (which is unusual to say the least!).

Rollinghome

Domain.Rider wrote: »

I've not been offered solid figures, but they suggested that I should be aiming for at least a 5% return, so they'd need to make at least 6.5% overall. They have quite a detailed risk questionnaire, and they explained how the investments would be split up and the funds it would be likely to go into.

Do you know what funds they'll use and can we assume the management costs of those funds will be on top of the 1% they take plus the 0.5% that goes to your financial adviser? Are they going to manage your share portfolio or sell it off to buy funds? What about your cash ISAs: will they take 1.5% of those too? If so, with current rates, that amounts to half the reurn.

The people I might have a chat with require minimum assets of £500K but then charge an ongoing annual fee of "just" 0.85% p.a reducing to 0.5% at £1M. They seem to generally invest in low-cost passive/tracker funds/ETFs.

The problem is still likely to be learning how effective they are unless they're able to produce figures. There are plenty of absolute/target UT funds with ambitious projections which they've failed to meet but at least their figures are available. I'd be happy to have someone handle my finances provided they could return as much net of their fees as I could myself to avoid the hassle but I'd want to be convinced of that.

Domain.Rider

Aegis wrote: »

Have you asked for a very cautious profile? 5% could just about be achieved using cash at the moment (admittedly before tax), so a 5% overall annual return is not a particularly high one from risky assets.

I'm considering a medium to cautious profile, as it is part of a retirement fund. The 5% mentioned was that required to achieve the minimum retirement income targeted.

The suggested allocation was 18% Fixed Interest, with 40% in 6 UK equity funds, and the rest divided between Commodities (7%), US (14%), Far East (6%), Japan (4%), Emerging Markets (5%) funds. The %s would vary depending on the exact risk profile selected. The funds involved are all named.

Domain.Rider

Jonbvn wrote: »

OP thanks for posting. What level off minimum investment do Vestra require?

I'm not sure - I think their current average for private clients is around £250k, mine is with the minnows at ~ £130k, so maybe they go down to £100k.

Rollinghome

Domain.Rider wrote: »

The funds involved are all named.

I think you need to find out what the total costs would be, both for them and for the fund managers, and what it is that justifies those costs.