Financial Industry think their clients are "muppets"?

darkpool

brasso wrote: »

And you know, there are millions of people out there (many, no doubt, excellent mechanics) who feel a bit the same way about the long hours that IFAs, fund managers, and yes, inhabitants of the Savings & Investments forum, spend up to their elbows in financial grease and spreadsheets and the financial pages of the broadsheets.

but if you service your own car you'd have to buy tools and buy the spare parts, so you're right it's probably not worth it for people to do their own car servicing to save a few hundred a year.

however to do your own money management you only really need an internet connection, something most people already have. and the savings are a lot more, you're likely to save 2 grand a year for each 100k you have. so someone with 500k could save 10k a year. i don't mind doing my own money management for those types of savings.

dunstonh

however to do your own money management you only really need an internet connection, something most people already have. and the savings are a lot more, you're likely to save 2 grand a year for each 100k you have. so someone with 500k could save 10k a year. i don't mind doing my own money management for those types of savings.

Someone with £100k is likely to save £500 or less in that year by DIY. Not £2000. And on the £500k example, £2500 not £10,000

cloud_dog

darkpool wrote: »

i've no problem with going to a professional for advice, however it does seem to be that by going to an IFA you get sold products that a reasonably intelligent person who has done some research would not invest in themselves.

This is why people take exception to your posts. You make these blase and dangerous generalisations which could end up adversely affecting a persons finances/wealth.

darkpool wrote: »

ii think the evidence that actively managed funds do not work is overwhelming, as such it makes more sense for investors to put most of their money into trackers and direct holdings.

but it seems most IFAs suggest active UTs and investment bonds - things with annual charges well over 2%. I can't think of many other industries where customers pay for advice and end up in a worse position than someone who hasn't paid for advice.

So is it UTs or IFA you have an issue with?

darkpool

dunstonh wrote: »

Someone with £100k is likely to save £500 or less in that year by DIY. Not £2000. And on the £500k example, £2500 not £10,000

i have 150k in my "buy and hold" nominee portfolio, it has quarterly charges of 8 pounds or so. dealing charges are a tenner a time. i'd imagine i spend maybe 150 pounds a year on charges. ie 0.1%

if i go to an IFA he will either tell me to buy UTs (charge 2% a year) or an investment bond (charge 3% a year)

you do the maths.

darkpool

cloud_dog wrote: »

This is why people take exception to your posts. You make these blase and dangerous generalisations which could end up adversely affecting a persons finances/wealth.

So is it UTs or IFA you have an issue with?

you mean saving a couple of grand a year is a bad thing?

Neverland

dunstonh wrote: »

Someone with £100k is likely to save £500 or less in that year by DIY. Not £2000. And on the £500k example, £2500 not £10,000

Nice to see you produce some figures finally

They don't seem to add up though

Lets go back to the Which? analysis as a "fair" basis with a 1.7% TER that ignores portfolio trading costs

http://www.which.co.uk/money/savings-and-investments/guides/different-types-of-investment/are-fund-charges-eating-into-your-returns/

Which? identify £9,000 of fund management industry charges on a £10,000 investment over 20 years at the average TER of 1.7%

(on a higer than average, but not uncommon, TER of 2.5% the investment costs and charges are an astronomic £12,000 over 20 years)

So on a £100k initial investment that would be £90,000 of charges and costs at the average TER...

...and on a £500k initial investment that would be £450,000 of charges and costs

Based on my own experience of self investment and use of low cost tracker ETFs/unit trsuts I am confident that I have achieved savings of 50-75% on these standard fund management charges

Therefore I have would have saved myself £45-77,000 based on a £100k investment and £225-337,000 based on a £500k investment

Bearing in mind a £500k SIPP fund might buy me at best a pension of £2k per month before tax, the very simplistic figures given above (albeit based on lump sums, not monthly contributions, over an usually short period of 20 years) show how I can boost my pension by between 50-75% by investing and managing it myself

cloud_dog

darkpool wrote: »

you mean saving a couple of grand a year is a bad thing?

Absolutely, if you end up losing much, much more in the end.

I'm sure even you would agree that sometimes you can't sweat the small stuff. Not sure who said this but it must have been a great philosopher or gnu.

Neverland

cloud_dog wrote: »

I'm sure even you would agree that sometimes you can't sweat the small stuff. Not sure who said this but it must have been a great philosopher or gnu.

It isn't "small stuff"

Assuming you don't want to be entirely reliant on the state in retirement you will have built up 000,000s of savings by your mid-forties/fifties

Look at the maths above for the effect of standard fund management industry charges on your savings

Lokolo

Neverland wrote: »

It isn't "small stuff"

Assuming you don't want to be entirely reliant on the state in retirement you will have built up 000,000s of savings by your mid-forties/fifties

Look at the maths above for the effect of standard fund management industry charges on your savings

But if my fund beats the index by just say 1% after costs over a 20 year period, it makes your cost saving of 50-75% look bonkers against my massive gains.

Are you saying that trackers are always the best to use? And that managed funds have no use because of their high costs?

Who would have thought that this discussion would have turned into an anti IFA and managed fund thread.

Neverland

Lokolo wrote: »

But if my fund beats the index by just say 1% after costs over a 20 year period, it makes your cost saving of 50-75% look bonkers against my massive gains.

Are you saying that trackers are always the best to use? And that managed funds have no use because of their high costs?

Who would have thought that this discussion would have turned into an anti IFA and managed fund thread.

76% of active managed unit trusts do not beat the FTSE all share index over 10 years*

*source, Which? http://www.which.co.uk/money/savings-and-investments/guides/different-types-of-investment/active-vs-passive-investment/

The odds are not in your favour, but you don't understand the maths so go ahead: gamble and lose anyway