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

gemma.zhang

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.

Thanks for your blog, it's been really informative and educational for newbee! I have been doing some research / reading today.. Understand the cost etc for different platform. My fidelity has been charging me of 0.35% platform fee / year, it was nothing at the beginning as i started as a few k, but now it's becoming more and more sizable.

Question i have now is - For the on going charges/TER for a given fund (i.e. Vanguard LS ), are they the same in different platform, or very differently. Where can i find out their charges on IWeb/Halifax before opening an account? I can find out on Fidelity, it charges 0.24%, which makes the total charges on Fidelity comes out at 0.59%.

badger09

gemma.zhang wrote: »

Thanks for your blog, it's been really informative and educational for newbee! I have been doing some research / reading today.. Understand the cost etc for different platform. My fidelity has been charging me of 0.35% platform fee / year, it was nothing at the beginning as i started as a few k, but now it's becoming more and more sizable.

Question i have now is - For the on going charges/TER for a given fund (i.e. Vanguard LS ), are they the same in different platform, or very differently. Where can i find out their charges on IWeb/Halifax before opening an account? I can find out on Fidelity, it charges 0.24%, which makes the total charges on Fidelity comes out at 0.59%.

A fund's TER (OCF) will generally be the same whichever platform you invest through.

However, some platforms eg Hargreaves Lansdown have negotiated slightly lower fund charges on some funds, but not the likes of Vanguard, so that 0.24% is standard.

You should be able to find the fund charges on IWEB here

https://halifaxiweb.digitallook.com/security.cgi?username=&ac=&csi=2569238&record_search=1&search_phrase=vanguard

Or did you mean IWEB's charges, which are here

http://www.iweb-sharedealing.co.uk/share-dealing-home.asp

gemma.zhang

badger09 wrote: »

A fund's TER (OCF) will generally be the same whichever platform you invest through.

However, some platforms eg Hargreaves Lansdown have negotiated slightly lower fund charges on some funds, but not the likes of Vanguard, so that 0.24% is standard.

You should be able to find the fund charges on IWEB here

https://halifaxiweb.digitallook.com/security.cgi?username=&ac=&csi=2569238&record_search=1&search_phrase=vanguard

Or did you mean IWEB's charges, which are here

http://www.iweb-sharedealing.co.uk/share-dealing-home.asp

Thanks! I found it now :T.. When I spoke to IFA, they mentioned that they have access to funds with lower TER, is it correct?.. That was the selling point at the time

badger09

gemma.zhang wrote: »

Thanks! I found it now :T.. When I spoke to IFA, they mentioned that they have access to funds with lower TER, is it correct?.. That was the selling point at the time

If that's what your IFA told you, then I'm sure it must be true

I think dunstonh (an IFA) has mentioned that IFAs have access to investments which are not accessible direct to retail investors.

Rollinghome

gemma.zhang wrote: »

Thanks! I found it now :T.. When I spoke to IFA, they mentioned that they have access to funds with lower TER, is it correct?.. That was the selling point at the time

There are several platforms, including various DIY ones, that have negotiated slightly lower charges with fund managers, usually in return for pushing their funds. One platform will have negotiated on several funds, which they'll make much of, and another platform negotiated on other funds. It's only useful if they happen to be the funds you want to invest in. The discount is given either as a lower charged fund class or as a rebate. Where rebates are given they are subject to tax unless the investment is within an ISA.

See https://www.fidelity.co.uk/investor/funds/fund-charges/fund-discounts.page and http://www.hl.co.uk/funds/wealth-150

dunstonh

badger09 wrote: »

If that's what your IFA told you, then I'm sure it must be true

I think dunstonh (an IFA) has mentioned that IFAs have access to investments which are not accessible direct to retail investors.

Not so much nowadays. The differences, when they exist, tend to be minimal. It is possible to get cheaper than VLS but the cost of advice would need to be factored in.

Are you focusing too much on price? Its an important consideration but it is not the primary one.

gadgetmind

badger09 wrote: »

I think dunstonh (an IFA) has mentioned that IFAs have access to investments which are not accessible direct to retail investors.

Maybe, but DIY keeps getting cheaper, while IFAs seemingly still quote 3% to 5% up front and 1.5% to 2% pa. Yes, IFAs can (in theory) be cheaper, and can charge differently, but this is what we see person after person being quoted before coming here asking "Is this normal/reasonable?".

Maybe we just don't see those being asked for a few hundred quid as a fixed fee and then 0.2% to 0.4% pa? Dunno.

gemma.zhang

dunstonh wrote: »

Not so much nowadays. The differences, when they exist, tend to be minimal. It is possible to get cheaper than VLS but the cost of advice would need to be factored in.

Are you focusing too much on price? Its an important consideration but it is not the primary one.

What others we need to consider?
Would be interested to know for those going with IFA, how much better it is comparing to DIY ones. Would have been difficult to find out

dunstonh

while IFAs seemingly still quote 3% to 5% up front and 1.5% to 2% pa.

Some might. However, the FSA average was 1.8% initial some years ago. Way off the 3-5% you mention. of course, it gets cheaper relative to the amount you have. If I was investing £10k for someone, I would charge 5% (£500). it would also be £500 if it was £20k etc.

Would be interested to know for those going with IFA, how much better it is comparing to DIY ones

Its a different type of service. Rebalancing, research, due diligence, tax wrappers etc. Time.

gemma.zhang

Thanks Everyone. Thinking about doing following -

1. Open Halifax S+S ISA, as comparing to IWEB, i prefer it's interface as it gives more information.

Invest 15k to each -
Vanguard 80 acc
CF Woodford Equity Income Fund C GBP Acc

2. I have a bunch randome-chosen ISA with fidelity, which charges me 0.35% currently for platform fee, they are spread across different funds.

BlackRock UK Special Situations Acc
Close FTSE techMark X Acc
Asian Special Situations Fund GBP Shares
China Focus Y-GBP
Fid China Special Situations PLC
Fid Special Values PLC
Fidelity Global Property W-Acc (UK)
Fidelity MoneyBuilder Growth ISA-Inc
Fidelity Multi Asset Strat A-Acc (UK)
Fidelity South East Asia A-Acc (UK)
First State Greater China Growth Fund
HSBC American Index Acc C
HSBC FTSE All Share Index Acc C
Invesco Perp Latin American Fd Acc
JPM Emerging Markets Fund A Acc
Polar Capital Glbal Technology I GBP

Now I want to fix my mess by doing rebalance/consolidate/switch above into simple smaller number of funds. I am interested in Tech fund and China focused ones. Anyone can point me something similar to Vanguard, which I can buy and forget?

Thanks again!