Vestra Wealth Management?

Domain.Rider

Rollinghome wrote: »

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?

Yes, I know the funds, and will have online access to view the portfolio with performance reporting & valuation. I expect the funds will have their own charges, but that seems reasonable.

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 shares are a very small part, I expect them to be sold & reinvested. The Vestra 1.5% is of the total portfolio value. The cash ISAs they will manage, but I've yet to discover exactly how that will work. I imagine they will ask me to switch them to stocks & shares ISAs.

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.

Agreed. Having said that, my own portfolio management is superficial and fitful, so if their expert team can't do better, I'd be very surprised.

dunstonh

discretionary invesmtent managers tend to use shares and other direct investments rather than unit trust funds. Those that use unit trust funds and charge on top of that are not good value.

So, when you say funds, are you referring to unit trusts or investment trusts?

Thrugelmir

Domain.Rider wrote: »

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.

A 1.5% fee is high for managing fixed interest funds on top of the funds own fees (as other have previous mentioned) is high. Quality corporate bonds are yielding 5% to 6% currently.

Domain.Rider

dunstonh wrote: »

discretionary invesmtent managers tend to use shares and other direct investments rather than unit trust funds. Those that use unit trust funds and charge on top of that are not good value.

So, when you say funds, are you referring to unit trusts or investment trusts?

They are mostly investment trusts.

lolly5648

We have been with Vestra more or less since they started. They came into being as a result of a mass walkout from UBS over a dispute when UBS tried to push their fund managers into recommending greater levels of UBS funds to clients. We were with them at UBS and would have moved earlier but were held back as a result of a legal dispute between UBS and Vestra. Like you we were introduced by our IFA.

Our portfolio which was only about £100K at the time of transfer was in a mess because UBS did nothing with it for 6 months once we had indicated our wish to move to Vestra and this was for the second half of 2008 when financial markets were in turmoil. Since we transferred in January 2009 Vestra have managed to improve performance and value but due to our ages we have a very cautious approach to investment so maybe had we been less conservative they could have done better. We're still with the same guy who we were with for several years at both Laing & Cruikshank and UBS and he certainly seems creative and on the ball. We know that he does much better than we would do if left to our own devices and we don't have any cause for complaint so far.

Hope that helps

Rollinghome

Domain.Rider wrote: »

They are mostly investment trusts.

ITs, and usually their charges, are very different to UTs so you really do need to know exactly what service you're buying and paying for.

dunstonh

They are mostly investment trusts.

Good. That brings the charges down and makes more sense and is what you would expect.

The banks that do discretionary invesmtent management tend to use unit trusts so you pay not only the UT charges but the banks charges on top. Lloyds Private Banking is amongst the worst as they always seem to be heavy on Scottish Widows funds as well (which they own).

The whole point of using a discretionary investment manager is that you get access to investments that IFAs do not have access to. Most IFAs cannot provide advice on investment trusts, ETFs, shares etc. Discretionary investment managers can. So, in this case, you appear to be getting exactly what you expect from a DIM.

Domain.Rider

lolly5648 wrote: »

We have been with Vestra more or less since they started. They came into being as a result of a mass walkout from UBS over a dispute when UBS tried to push their fund managers into recommending greater levels of UBS funds to clients. We were with them at UBS and would have moved earlier but were held back as a result of a legal dispute between UBS and Vestra. Like you we were introduced by our IFA.

Our portfolio which was only about £100K at the time of transfer was in a mess because UBS did nothing with it for 6 months once we had indicated our wish to move to Vestra and this was for the second half of 2008 when financial markets were in turmoil. Since we transferred in January 2009 Vestra have managed to improve performance and value but due to our ages we have a very cautious approach to investment so maybe had we been less conservative they could have done better. We're still with the same guy who we were with for several years at both Laing & Cruikshank and UBS and he certainly seems creative and on the ball. We know that he does much better than we would do if left to our own devices and we don't have any cause for complaint so far.

Hope that helps

Thanks Lolly, that is useful - I know it's not been long, but what sort of returns have you seen with a very cautious profile?

lolly5648

From 31st March to 30th September 2009 we have seen a growth of 35% in our Vestra Funds. Because the money was transferred from UBS in dribs and drabs this is the most appropriate period over which to take a view.

Rollinghome

What would seriously concern me about this arrangment is that you appear to be paying at least three, and possibly four, levels of charges.

In particular, I'd wonder what the IFA is doing to justify 0.5%? Normally an IFA working on commision would pocket a 0.5% trail commission on the UTs he sells. For this he supposedly gives some sort of ongoing service that would include reviews and portfolio balancing. A better option for many would be an IFA who charges on an hourly basis and refunds the trail commission to the client. In this case, if the IFA's work is being done by Vestra I'm not sure what he's getting paid for. It seems to be solely an ongoing introduction fee.

Investment trusts, in which I invest myself, are often a better option than UTs/OEICs but we shouldn't get the idea that there aren't management charges. While the charges can be low that isn't always so. I know of several with TERs of around 2.5% and at least one charging close to 3.5%. Those run by the traditional UT managers tend to have the highest charges. If they are investing in ITs, who pays the the stockbroking costs? Are they included or on top of their fees?

Lolly, do they really charge their fee on cash ISAs?

The other major problem seems to be that this a new operation with no significant track record even if they were willing to reveal it. How does anyone start to benchmark a service like that? It's not clear to me what advantage they offer over a simple fund of funds or Cautious/Active Managed fund where at least the track record of both the fund and the manager would be reasonably transparent and the total charges probably far less.

Despite lacking any real track record this service also seems to charge top dollar. I seem to remember even the incompetent but high-profile Nicola Horlick at Bramdean was restraining herself to taking 1% from her luckless clients. I'd be fascinated to know how they justify it.

Looks rather like a case of:

Great fleas have little fleas upon their backs to bite 'em,
And little fleas have lesser fleas, and so ad infinitum.
And the great fleas themselves, in turn, have greater fleas to go on;
While these again have greater still, and greater still, and so on.

.