Santander's Portfolio Investments?

J2010

Hi folks, just wanted to ask a bit of advice...

I'm new to all this and don't really know much about it but I was approached by a Santander Financial Advisor about possibly taking out a Portfolio Investment with them... I think it's a Growth Portfolio...

They explained the general idea behind them and benefits and also the risks, and the fact there are different types;

Low
Low to Medium
Medium
Medium to High
High

I was advised to maybe start off trying Low to Medium and I just wanted to find out if anyone here has ever done this with Santander, what was their experience and does anyone know is now a good time to take out something like this? or will my money plummet straight away if the market is low?

It's states that the Low to Medium is mainly UK Bonds which I was told is usually tied up in the government and usually a safe bet approx 60%, approx 20% of the remainder is in UK Equity (the UK Stock market) and the remaining 20% is split between US, Europe, Japan and Pacific markets.

Anyone here any stories or encouragement or discouragement or is this all just a 50/50 chance you take when entering something like this?

Thanks!!
J

dunstonh

I just wanted to find out if anyone here has ever done this with Santander

Pretty much amongst the worst of the banks.

Banks are expensive, their investment funds are typically low quality and poor performers and their sales reps are limited to own brand products as they cant portfolio plan as they are not skilled enough. So, they use bog standard portfolio funds (for some people that is not a bad option - just not with the banks).

what was their experience and does anyone know is now a good time to take out something like this?

Timing is always unknown. It is usually futile to try and time the market as you rarely get it right enough to make any money. Its possible if you make frequent investments but not one off investments.

or will my money plummet straight away if the market is low?

The media use the word "plummet" to indicate even the smallest drop nowadays. So, in what context are you using the word plummet?
Investments will zig zag in value all the time. If it doesnt drop today, it could tomorrow, or could next month or next year. Indeed, you should expect it to drop. Sometime the drops will be small, sometimes large. When and by how much will always be unknown. The only thing you do know is that it will happen at some point.

Anyone here any stories or encouragement or discouragement or is this all just a 50/50 chance you take when entering something like this?

See a real financial adviser and not a sales rep. Look up a local IFA on https://www.unbiased.co.uk They can portfolio plan, do have whole of market access and are typically qualified and experienced to a higher level than sales reps. It should end up cheaper as well. Especially if you go on fee basis (unless your investment is small).

Loughton_Monkey

In my opinion, buying from any bank has two difficulties.

1. Bank products for investment are generally speaking amongst the worst value available.

2. 'Financial Advice' from a bank is far from 'Independent' and can only 'advise' you from a limited range of uncompetitive products.

Therefore I, and a large number of people who frequent these boards, would simply not entertain buying from a bank.

An analogy: If I had heard of a good book just published, I could walk down the road to my local High Street book seller. There would be a probability that they didn't have it. If they did, it would almost certainly cost the 'full' list price of, say, £25. However, because I am well versed in these things, I would more likely get onto Amazon Web site and buy it for £12.50 with free delivery, certain in the knowledge that it was 'In Stock' and would arrive within 3 days.

If you want to invest, then probably you should seek out a good IFA unless you know exactly what you are doing. It is inappropriate to be delving into the pro's and con's of 'Medium' as opposed to 'Low' risk funds before going through far more important questions, like (a) Should I be thinking Pension or Stocks & Shares ISA? (b) Should I be 'investing' at all (rather than saving)?

All of these things can best be determined only after a a very deep and critical look at your finances, needs, tax position, objectives...... I suspect the Bank 'Advisor' may not have done this properly.

J2010

Hi Folks, Thanks for replying...

By Plummet, I mean... if I put in £5000, is it likely that it will just straight away drop to like £4000?

I'm not overly fussed about it all, but they're stating they'l split my savings in 3, put a third in an ISA, another in Bonds and another in this Portfolio Investment they have. They reckon by doing this I'll get approx a guranteed 5-6% on both the ISA and Bond and then my Portfolio Investment will either go up or down or stay around the same...

If I don't the interest on the other savings is only 2.9% or so and at the minute the savings account I'm on isn't even 1% which is really bad!

So I'm wondering what's the best I could do...

Thanks!
J

dunstonh

By Plummet, I mean... if I put in £5000, is it likely that it will just straight away drop to like £4000?

Could do. Thats only a 25% drop. The stockmarket has dropped by 43% twice in the last 10 years. Drops on medium risk were closer to 25% in those periods.

So I'm wondering what's the best I could do...

You have a problem. An IFA can wipe the floor with the bank on choice. However, not many IFAs are going to be interested in dealing with a £5000 investment. IFAs typically deal with medium to high net worth. The smaller investors are increasingly being pushed to the banks by the regulator. You may find an IFA that will do it if you phone around. You may catch one who is quiet and doesn't mind doing a small case. Many will from time to time. Otherwise, you are stuck with the bank and accept the products they offer are generally poor value and poor quality. (Or put in the effort to learn and then DIY instead).

Loughton_Monkey

There are so many 'ifs' in this world. It is extremely difficult to make constructive comments here, but I will try.

Almost any 'fund' [equity] investment is just as capable of 'plummetting' as of zooming up 25% (as a lot have in the last 3 to 4 months). Nobody can predict. They go up and down every day. Bond funds also go up and down every day - but usually by lower percentages. Hence they will not 'plummet' as much, but neither will they zoom up by large amounts either.

But the key points people here are trying to make (I think) are as follows:

1. There is a huge question as to whether you as an individual should expose £5,000 of your money into 'funds' and if so, whether you should so it within an ISA, or another form of investment. We simply cannot answer this question without knowing a very long list of things about you - most of which you would not wish to set down in public.

2. Assuming that investment in 'funds' is a wise thing for you to do at this point in time and with this amount of money, then most of us would tell you that doing it via any bank (and probably Santander in particular) is not recommended. Their charges are high. Their 'advice' could be very limited. And their track record in any form of 'servicing' [as opposed to trying to 'sell' you more investments later] is pretty poor.

3. To be more positive, imagine that I, personally, had a new £5,000 to invest and had decided to invest it in the same types of fund that you are outlining. Then here's what I would do. I would open up a Stocks & Shares ISA with someone like HL [there are others, such as Cavendish] who generally rebate the initial 5% initial charge in full, and rebate some of the 'trail commission'. I would pick out funds, from the thousands on offer, that are essentially the 'same' as your own, and buy those funds.

But I find it a bit false to consider a single one-off 'investment' in isolation. Most people have an income. They have expenditure. They have regular money to save/invest. They often have accumulated 'savings' from the past. These people will have pensions (or not). They will have needs [like saving for house deposit. Or retirement income]. They will be looking to save tax. They might be looking for short term and long term savings/investment. They will therefore need an overall 'strategy' of how to deal with their income. Many of us develop this ourselves. Others need the help of an IFA to assist us.

jamesd

J2010 wrote: »

It's states that the Low to Medium is mainly UK Bonds which I was told is usually tied up in the government and usually a safe bet approx 60%, approx 20% of the remainder is in UK Equity (the UK Stock market) and the remaining 20% is split between US, Europe, Japan and Pacific markets.

UK giovernment bonds (gilts) are a bad place to be putting new money at the moment. Quantitative easing and fear or financial troubles has raised their price to artificially high levels and as those two things stop they can be expected to drop in value by as much as 2030%, possibly a bit more. Without considering the current situation their statement would be fine, but the current situation does need to be considered.

For an alternative, have a look at the Jupiter Merlin range of funds sold by Hargreaves Lansdown among others.

My first ISA investment dropped by 15% or so the month after I bought it. Some new crisis could do the same or more to anything you buy now. on average, over the long term, the past results show that it's been a good idea to use investments, but that's long term not tomorrow.

premierfella

J2010 wrote: »

I'm not overly fussed about it all, but they're stating they'l split my savings in 3, put a third in an ISA, another in Bonds and another in this Portfolio Investment they have. They reckon by doing this I'll get approx a guranteed 5-6% on both the ISA and Bond and then my Portfolio Investment will either go up or down or stay around the same...

I would be immediately cautious of a member of bank staff quoting guaranteed returns as there is likely to be some risk somewhere to get that "guaranteed" amount, even if it is just counterparty risk on a guaranteed equity bond or penalties for withdrawing funds early from an investment.

jimjames

I'd echo the analyis by Loughton Monkey; it sums up your choices pretty well. Personally I would also follow the option LM would - in fact I have already done that.

Yes there is a possibility of your investment falling from £5000 to £4000, thats a 20% drop by my reckoning but you also have the possibility of better growth in future. Technically any investment could drop 100% but if that happened for a general UK fund it would mean the economic situation was so bad that you wouldn't really be worrying about money anymore.

The problems with investments from your bank are:

1) Lack of choice restricted to that bank's products
2) High charges compared to elsewhere (both up front and ongoing)
3) Poor performance
4) Advisers not independent

Apart from those the bank is fine

Wooden-one

Have any of you compared Bank products? Are Santander's more expensive than any others?

I have a Santander investment. I paid 1.9% to set it up and pay something like 1.5% for annual management. I've held it for 7 months and made - to my rough calculations - 10%

I personally am quite happy with that.

I do think there are a lot of dodgy advisers out there (in Banks and IFAs) but dont they all have to have they same standard of qualification now?

I have heard many horror stories about IFAs only selling products that generate the most commission.

How independent are most "IFA" with that in mind?

I'm sure that Bank advisers are like the Curry's and PC World of financial advice and I would normally go to Richer Sounds.... but surely a lot of this comes debate comes down to individual circumstances and the adviser they sit with.

Anyone who says something with risks is guaranteed is either a liar or an idiot, but that doesn't mean that all of their advisers are the same.

You just need to be careful - most advisers independent or in a Bank will let you go away and think about it after a first appointment without charging you - if you think they are dodgy and you dont mind doing a bit of research - you can make a more informed decision

I hope that helps even out this debate a little.

dunstonh

Have any of you compared Bank products? Are Santander's more expensive than any others?

Santanders are quite poor value and poor quality.

I do think there are a lot of dodgy advisers out there (in Banks and IFAs) but dont they all have to have they same standard of qualification now?

Bank advisers have a really poor reputation and stats that back up the higher ratio of complaints they get. IFAs have 1% of complaints at the FOS despite dominating the retail distribution for advice products (the FOS recently commended IFAs as well on complaint handling)

I have heard many horror stories about IFAs only selling products that generate the most commission.

There have been pockets of it but despite a number of investigations it has never found to be widespread.

How independent are most "IFA" with that in mind?

As independent as they can be.

I'm sure that Bank advisers are like the Curry's and PC World of financial advice and I would normally go to Richer Sounds.... but surely a lot of this comes debate comes down to individual circumstances and the adviser they sit with.

Not really. There are very few cases where a bank adviser can beat an IFA. However, its not really a problem now as most banks have already or will be pulling out. Indeed, just today, Santander has suspended its investment advice service and pulled 800 advisers off the road as they fail to meet RDR requirements. http://www.moneymarketing.co.uk/adviser-news/santander-suspends-its-800-investment-advisers-due-to-rdr/1063060.article