Financial Advisor

saveonarola

Having jumped into this thread, I feel I should probably add something for the OP. I must admit, I have more questions than answers. Why can't you influence the funds in your pension, if you're paying your IFA to manage them? Why do you talk as though your IFA is managing your pension money, and then say that you're paying him to put all your money in two funds? Is all your (non-pension) money really in just two funds, and what is the other fund? Why are you unwilling to manage your own money, if you're willing to manage your own portfolio of shares?

I'm always reluctant to comment because I'm really just a beginner, but on the basis of what has been posted, I'm not sure that the OP is really getting full use out of their IFA. Personally, I think of funds of funds as being for people who want a range of managed funds but maybe don't have a big enough pot to make it worth paying an adviser, and don't want to do the research necessary to choose the funds themselves. Can anyone confirm that impression? That was the situation I found myself in, and I strongly considered buying a fund of funds until I started reading about active vs passive management and ended up with a blended index fund (fund of index funds) instead.

gadgetmind

saveonarola wrote: »

you're only paying a smidgen more than, say, a LifeStrategy fund, for what looks like a slightly wider range of investments (international bonds and an actively managed EM fund).

My company will only contribute to this FL GPP, so it's down to finding funds within there that work for me. I'm happy with the asset allocations, underlying funds, and long-term performance of this fund, but I'm comparing it month-by-month with the performance of my self-managed SIPP and various other multi-asset funds.

Interestingly, the vast majority of people here are in the default managed fund, which is sub-par IMO and I'm really not sure why they drift along in it.

gadgetmind

saveonarola wrote: »

I'm always reluctant to comment because I'm really just a beginner

1) Most of us are beginners. Even after being invested for several decades, I certainly know that I am!
2) Beginners often ask the best questions and make the freshest observations, so don't be afraid of chipping in.

If I only wanted to hear the views of octogenarian investors then I'd hang around on the Motley Fool forums all day!

doubleJackD

jamesd wrote: »

I know that IFAs were generally prohibited by regulation from recommending ITs and shares, because those were covered by the stock broker authorisation instead. I'm not in the least shocked by regulations I've known about for years.

You were asking for proof that IFAs recommended UTs.... Now you seem to imply that you knew IFAs recommended UTs all along...

I normally find that people who talk for ever in meetings etc are trying to hide the fact they know little about the subject. Perhaps it is the same for people who make long winded forum posts.

saveonarola

gadgetmind wrote: »

My company will only contribute to this FL GPP, so it's down to finding funds within there that work for me.

Ah - that explains the good deal.

By the way, I notice you're quite happy with the EM fund being actively managed. Just out of interest, do you really think it's worth it, or do you think it just matters less in EM? I thought the essential ideological backstop of passive investing - that even if it is possible to beat the market consistently, it's impossible for a retail investor to predict who's going to do it - overrode whether the market participants have good information or not. When you talk about 'illiquid' markets, do you mean that spreads are higher and therefore an active manager can keep costs down in a way that a passive fund, which has to buy and sell according to the make-up of the index, can't?

jamesd

doubleJackD wrote: »

You were asking for proof that IFAs recommended UTs

Nope, I was asking you to provide just two examples in the last year from posts here to support your claim that 'the advice seen on this forum from IFAs is typically "here are a list of 10 unit trusts, invest in them"'.

You haven't done so and I expect that's because you couldn't even find one example of an IFA doing it.

gadgetmind

saveonarola wrote: »

By the way, I notice you're quite happy with the EM fund being actively managed. Just out of interest, do you really think it's worth it, or do you think it just matters less in EM?

Trackers work very well in markets that are "efficient", which means that the price includes everything that everyone knows about the company or asset. While most agree that developed markets meet this criteria, many argue that smaller markets don't, and that markets for companies with smaller cap sizes aren't either because more research is needed.

As ever, there are two sides to every argument, and my SIPP uses trackers for global smaller companies and EM but I also hold some ITs that operate in those sectors.

When you talk about 'illiquid' markets, do you mean that spreads are higher and therefore an active manager can keep costs down in a way that a passive fund, which has to buy and sell according to the make-up of the index, can't?

Liquidity is more of an issue for open-ended funds.

The classic example is property as this is very illiquid. An open-ended property fund will have problems if investors start to take money out, and will therefore be forced to hold cash just in case, sell property in a hurry during a difficult market, or prevent people taking money out altogether. They usually have to use a combination of these approaches, none of which benefit the investor.

Many argue that emerging markets, smaller companies, and even recently corporate bonds, all have liquidity problems, which means that they are best held via close-ended funds such as ITs and REITs.