Financial Health check - Advice with ISAs

Aliktren

Hi all, just looking for some thoughts and opinions.

We have recently had a financial healthcheck done as we have a number of insurance policys and an endowment started with Allied Crowbar many years ago and effectively have never reviewed since we took them like 15 years ago. We knew the endowment was probably under performing but our mortgage has been on repayment for some time so we left the endowment as an investment.

We had a son three years ago and decided it was time to review and up our life and critical illness cover, and review the endowment to see if it was best value bearing in mind we needed to re-do the life and crit illness cover that was bought at the same time. (we are both in our fourties)

I very nice IFA has now done this for us, and recommended changes to the life and critical illness cover which I am happy with, costing us more but I am good with that, the cover is far higher than we have now and covers us both

He has given us a surrender value of the ISA of about 22k - and recommended that we switch this into two ISAs, again, happy with this advice in principle

What I am worried about is the choice of ISAs, he has suggested a S&S ISA managed by Sterling.

I have limited experience in ISAs we have three on the go which we have paid in nominal sums over the years, a virgin tracker which has made about 700 quid in 8 years (on top of £1440 paid in by me), a managed ISA which seems to be making decent returns and a self select where I have made about 30% returns in four years.

I guess I am worried that this is a whole new ball game, 20k into two ISAs means we need to make smart decisions, worry about charges, and worry about the long term growth, should we be going with a managed ISA, is Sterling a good provider - what questions should we be asking to help ensure we get better returns than the endowment would have made, where can I see comparisons of different managed ISAs, for instance to compare sterling with, say an III managed ISA


So any advice I can look into myself, any opinions, and hard won advice very welcome!

cheers

alik.

dunstonh

I guess I am worried that this is a whole new ball game, 20k into two ISAs means we need to make smart decisions, worry about charges, and worry about the long term growth, should we be going with a managed ISA, is Sterling a good provider - what questions should we be asking to help ensure we get better returns than the endowment would have made, where can I see comparisons of different managed ISAs, for instance to compare sterling with, say an III managed ISA

Virgin is pretty much one of the worst S&S unit linked fund ISA managers out there. So, almost by definition, every other option is better. Sterling is owned by Zurich. It's a medium sized fund supermarket that retails fund at their normal retail charge (like most bundled fund supermarkets). It has a niche offering in that they have a death guarantee (if you die, you get the higher of the amount invested or the value).

I'm not a particular fan of sterling but have used it rarely in the past where a death guarantee can be useful. Nothing wrong with them but I prefer the bigger platforms.

Loughton_Monkey

Like most people, I would find it very difficult to comment. Such advice can only come after reasonable exhaustive knowledge of your whole financial situation, age, marital status, tax position, and attitude to risk - virtually none of which is available to us.

I'm rather worried about the term "surrender value of the ISA" since ISA's have no such thing as a 'surrender value'.

My main comment would be to recommend stepping back a bit before making final decisions. Many of us have successfully retired early, with a suitable mix of pensions, ISA's, cash, Insurance policies etc... In my own case, I worked in Financial Service and knew a bit about savings/investments but I owe my wealth far less to 'cleverness' in shopping around for products than I do to basic financial modelling - which any reasonably intelligent person can do.

Basically, if you have a very firm grasp on what you spend, and (importantly) what you want to spend in retirement, then by far the main driver of financial success will come from knowing and controlling that your spending, and your retirement investment levels are in synchronisation. If they are not, then no amount of fine tuning as between pension v. ISA, or Sterling v. Fidelity is going to help you! It is not difficult to make reasonable assumptions on investment returns, savings rates, future earnings, one-off spending (as opposed to 'lifestyle' spending)... etc. to model out when you can retire - or alternatively given a fixed retirement date, how much income you can generate from pensions, interest, growth, or capital.

It is only after this type of exercise (I feel) that an IFA can add the maximum value. Put another (simplistic) way, you might go to an IFA and state you can afford £1,000 a month, and he might take this, together with your existing investments, and create the best 'package' in the market, that cannot be faulted. Except that if you should really be saving £1,500 or £2,000 to achieve what you really need (or expect) then you will be disappointed.