Advice needed on 60k investment! DIY ISA or IFA?

gemma.zhang

Want a bit advice on what to invest with 60k cash isa.
We are thinking about to transfer then into share and stock ISA, want to know where is the best platform: shall we use IFA to help with investment and management, or DIY ones using platform like Fidelity?

Little bit about us: couple in mid 30, with two young children.
We both work full time with relative comfortable salary. One house with mortgage, one Let out currently. No immediate plan to use this money, maybe in a few years time for school fees. We have some investment experience but not much.

We have spoke to a few financial advisors:
One is HSBC, not impressed at all, and not quite convinced he can choose the portfolio rather than recommending the pre-select ones: world selection ISA.

Two are independent financial advisor: A charges £500 setup fee, around 2% yearly management fee. B charges 3% setup fee, 0.5-1% yearly management fee. Their portfolio performed roughly similiar with 10% yearly. We have some share and stock ISA with fidelity, which performs around 8%. I don't know what's the big benefit to go with IFA as their recommendation - management performs roughly the same as what I get by DIYing myself. What charges should we be expecting?

Would like to get advice from experts here on the forum.
What should we do? Better DIY platform than fidelity? Better Financial advisor/wealth manager? Or should we put them into SIPP pension?


Many thanks!

colsten

I would DIY it as there is plenty of information on how to do it in books (e.g. Tim Hale's "Smarter Investing") or on websites (e.g. monevator.com) on how to create and manage your own portfolio, and on the best platform (e.g. on monevator or comparefunds).

Others might prefer to pay a professional. Personal choice. I would say though that I would never ask and pay any bank for help, and you really got to have a basic grasp of investments (see above) if you go to an IFA, so you can judge whether you get value for money from them

BLB53

What should we do? Better DIY platform than fidelity? Better Financial advisor/wealth manager? Or should we put them into SIPP pension?

As you already have some experience of managing part of your savings in S&S, it should not be too difficult to take another couple of steps.

So far as brokers, it may be worth considering Halifax for a large lump sum as their platform fee is only £12.50 p.a. - I have recently done this and hold the Vanguard Lifestrategy fund which are very simple and popular with DIYers.

For broker comparison, check out http://monevator.com/compare-uk-cheapest-online-brokers/

For more on Vanguard LS see recent articles on https://www.diyinvestoruk.blogspot.co.uk - also basics tab for further reading.

With the upfront fees from IFAs it may take quite a while to recover this from any outperformance from the portfolio they recommend so DIY low cost passive route is probably worth the effort.

dunstonh

shall we use IFA to help with investment and management, or DIY ones using platform like Fidelity?

Its like any job you do. If you can DIY and make a good job of it, then you could save money. If you make a mess of DIY then it can cost you more money.

One is HSBC, not impressed at all, and not quite convinced he can choose the portfolio rather than recommending the pre-select ones: world selection ISA.

Never get advice from a tied sales rep/bank.

Two are independent financial advisor: A charges £500 setup fee, around 2% yearly management fee.

That could be cheaper than DIY within a few years assuming its just an initial charge and the annual is fund and platform.

I don't know what's the big benefit to go with IFA as their recommendation - management performs roughly the same as what I get by DIYing myself. What charges should we be expecting?

I dont know how that IFA gave an example of growth without knowing your risk profile or whether your existing holding is suitable or not because neither have been mentioned.

Is your existing Fidelity holding invested well or was it just a random selection? What period has it been invested over? (i.e. if its just the last 7 years then you havent experienced a downturn. So if you were investing above risk profile, you would think you have done well but you could be hit with a 45% loss anytime)

What should we do?

This site will predominantly tell you to DIY. That may be suitable for you but you need to decide if your knowledge is going to be there and what type of portfolio you are going to run. Only you can answer whether you have the knowledge and ability to do what is best.

gemma.zhang

Thanks! will check it out. What's the return like for Vanguard Lifestrategy fund?

Reason we are thinking about IFA as we don't have much time actively managing the fund, and given it's a lumpsum thought might be easier with IFA as they will monitor and adjust according to the market condition.

Agree, it's difficult to judege whether it's worthy or not with IFA..

BLB53 wrote: »

As you already have some experience of managing part of your savings in S&S, it should not be too difficult to take another couple of steps.

So far as brokers, it may be worth considering Halifax for a large lump sum as their platform fee is only £12.50 p.a. - I have recently done this and hold the Vanguard Lifestrategy fund which are very simple and popular with DIYers.

For broker comparison, check out http://monevator.com/compare-uk-cheapest-online-brokers/

For more on Vanguard LS see recent articles on www.diyinvestoruk.blogspot.co.uk - also basics tab for further reading.

With the upfront fees from IFAs it may take quite a while to recover this from any outperformance from the portfolio they recommend so DIY low cost passive route is probably worth the effort.

gemma.zhang

Never get advice from a tied sales rep/bank.

:T Excellent point!

That could be cheaper than DIY within a few years assuming its just an initial charge and the annual is fund and platform.

Yes, that's initial charge, and annual includes managment fee of 1.1%, 0.2% platform fee, around 0.8%-01% fund fee.. So not too bad, and they are award winning finance mangement firm. They have pre-selected portfolio according to your risk level, and just choose that portfolio accordingly. They have in house researcher to actively manage what goes into different portfolios.

I dont know how that IFA gave an example of growth without knowing your risk profile or whether your existing holding is suitable or not because neither have been mentioned.

Sorry , didn't mention. They show me the growth for the fund that suits my risk profile, which is adventerous. Yearly is around 10%, over the past 5 years, it was somehow accumulatives 50%.

Is your existing Fidelity holding invested well or was it just a random selection? What period has it been invested over? (i.e. if its just the last 7 years then you havent experienced a downturn. So if you were investing above risk profile, you would think you have done well but you could be hit with a 45% loss anytime)

Agree, with Fidelity ones i made a few mistakes at the beginning with investing into BRIC, which costs me a few hundred pounds. As I just spread across different funds like £1000 here and there.. so not big gain nor big lose over the past 7 years ( since 2008 ).. total it's 30% since beginning, again as i put monely from time to time. So it's difficult to work out exactly my total return. But per average, it's 7-8% yearly. I am a beginner into investment, sure it could have done way much better if i just concentrate on a few really good funds. Rather than random selection.

This site will predominantly tell you to DIY. That may be suitable for you but you need to decide if your knowledge is going to be there and what type of portfolio you are going to run. Only you can answer whether you have the knowledge and ability to do what is best.

Agree :T, I think given having two young kids and busy jobs, I think we do need some help. I just don't have time to drill down deeper. Anyone has experience using IFA can give advise whether they are worthy or not ?

EdGasket

Go DIY, get a low-cost broker e.g. x-o, get a selection of Vanguard and HSBC ETF's (typical charge of 0.2% to 0.6% pa), job done.

dunstonh

Anyone has experience using IFA can give advise whether they are worthy or not ?

Its a bit similar to asking the internet if your local butcher down the road is worthy or not. Most IFA firms are small local firms with 1-5 advisers. There may be bad apples but you can generally tell the quality of an adviser just in discussion and presentation (no info and just sign here is bad - detail and explanation is good. Using regulated mainstream is good. Going unregulated and weird is bad)

BLB53

Thanks! will check it out. What's the return like for Vanguard Lifestrategy fund?

Reason we are thinking about IFA as we don't have much time actively managing the fund, and given it's a lumpsum thought might be easier with IFA as they will monitor and adjust according to the market condition.

The range was launched in June 2011 so 4 yrs - average return for say LifeStrategy 80 is around 10% p.a.

This could easily be a buy-and-forget option as the LS range are automatically rebalanced between equity/bonds to stay in line with the equity allocation chosen.

gemma.zhang

BLB53 wrote: »

The range was launched in June 2011 so 4 yrs - average return for say LifeStrategy 80 is around 10% p.a.

This could easily be a buy-and-forget option as the LS range are automatically rebalanced between equity/bonds to stay in line with the equity allocation chosen.

Thanks for your reply. Yes, I am looking for something like this: low or no maintainance and good return. Why this fund is so popular on the forum? Sure there are other similar ones out there?

I have been using fidelity for a while, doesn't seem to be mentioned a lot here on the forum? Doesn't look popular somehow.

mvarrier

Gemma,

Have a look at this article (and the rest of the site):

http://monevator.com/vanguard-lifestrategy

Best wishes