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IFA recommended funds
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He's just gone down the list and picked the best apparent performers ( missing a few candidates on the way) and tacked on a MoM fund for reasons which will probably become obvious if you check the fine print of the charges.
I'm not sure what you see as obvious. The charges do not influence his remuneration that cannot be what you mean.After you've seen this kind of advisor performance a few times, the DIY approach does not seem quite so difficult or risky - and at least you're not paying for someone whose skills appear to be meagre at best.
Its not bad. Its just not good. A consumer who knows nothing could do a heck of a lot worse. This is just average advice.Scot Eq, actually offer a choice of 135 funds for their PPP (Extenal and their own). This strikes me as a pretty good number. I am waiting to see if my IFA recommends a shift away from Scot Eq when she comes back to me after our initial meeting.
Its a good number but I dislike Scot Eq. I find their service standards to be disgraceful and their charges are not that good. Currently, for those retiring at this time, they have a month of backlog. They are on my blacklist for placing no new business with them.
Earlier in the year I took on a new client who had plans with Norwich Union, Standard Life and Scot Eq. I wrote to them all and got NU within a week. Std Life took 2 weeks. Scot Eq sent me a scruffy memo acknowledging my request after 4 weeks and I got the paperwork I needed after 3 months (and lots of chasing). That is not unsual for Scot Eq.
I like the fund supermarket pension personally. You get the 900 odd funds and can treat the pension as an investment and not a bill you pay every month. However, when the fund values are not enough to really make the fund supermarket/SIPP a cost efficient option or you are lower risk (lower risk funds tend to be cheaper in personal pensions) then I would look to 2-3 other providers who can do a better job than Scot Eq.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Can you give me the product name of the Scot Eq plan. I think I know which one it is but want to make sure before I comment. Also, take a look at the illustration and near the back you should see a reduction in yield figure. It tends to come just before or after the values in the early years. (year 1 to 4 and then 5 or 10 year intervals). It will say something like "Putting it another way, this would have the same effect as bringing the investment growth over the term down from 7.00% a year to 5.3%." (the value it goes down to is the key value here).
I'm not sure what the product name is. The front page says "Flexible Pension Plan for Mr. Dithering Dad". I can't see any other title for the plan.
The fund costs are:
NT Cautious MOM - 1.5%
SE INVESCO Perp Inc - 1.8%
SE Lazard Eur Sml Co - 1.45%
SE JPM Natural Res - 1.8%
SE Property - 1.4%
SE SG Bal Man - 1.25%
SE Schrod UK Mid 250 - 1.85%
SE First St Asia PL - 1.95%
On top of those, Scot Eq charge 0.550% per month on regular contributions for the first 5 years and 0.050% for my transfers in.
After year 10, they give me a bonus of 4% of fund value and then 0.5% a year onward.
The reduction in yield figure is as follows:
"putting it another way, expenses, charges, transfer charges and other reductions would bring down investment growth from 7% a year down to":
NT Cautious MOM - 5.5%
SE INVESCO Perp Inc - 5.2%
SE Lazard Eur Sml Co - 5.6%
SE JPM Natural Res - 5.2%
SE Property - 5.6%
SE SG Bal Man - 5.8%
SE Schrod UK Mid 250 - 5.1%
SE First St Asia PL - 5%
Just for compleness of information, the IFA's commision for sorting out this plan would be £5945.87, paid immediately by Scot Equ.
If I just went with this investment plan, yet invested myself with the 10% here and 10% there strategy, would I be able to get a better return on these funds?
p.s. to answer Dunstonh's question about about annual re-assesment of risk and funds and portfolio rebalancing - When I asked about this he looked blank and then said "yes, I'm sure we could review the funds again at some point if you want. Hmnn - perhaps I'm naive but I thought I would have a similar relationship with my IFA as I have with my Accountant, in that he would monitor my financies and make recommendations based on changes in the market. This chap seemed to want to sell the plan with these funds and then that's it. I didn;t get the impression that Scottish Equitable would be monitoring the funds either. Basically the money would be invested within these funds for the next 20 years until I retire, unless I managed them myself. If I'm doing that I may as well just get a blimmin' SIPP and a few investment magazines and have a go myself. :rolleyes:Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
[strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!!
● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.730 -
Its a multi-charge contract, not mono charged. It has bonuses after so many years which offset the higher annual managment charges.
The reduction in yield on a fund supermarket pension or SIPP would be around 5.3%/5.4%.Just for compleness of information, the IFA's commision for sorting out this plan would be £5945.87, paid immediately by Scot Equ.
dear oh dear oh dear. Its full up front commission and this product also pays fairly high commission as well. There is no ongoing trail commission in this case as the adviser is taking it full upfront. So, ask yourself if he is willing to give ongoing servicing for the next 20 years if he is not being paid for it?If I just went with this investment plan, yet invested myself with the 10% here and 10% there strategy, would I be able to get a better return on these funds?
Yes. You can get most of those or equivalent on a personal pension that mixes and matches stakeholder and external funds. I could think of 2 providers that would come in with lower charges than that on full upfront commission as well.I didn;t get the impression that Scottish Equitable would be monitoring the funds either.
They are not allowed to.If I'm doing that I may as well just get a blimmin' SIPP and a few investment magazines and have a go myself. :rolleyes:
You may as well. Although investment magazines are not that good. They tend to focus on who is advertising with them and what has happened. Not what is going to happen.
The other solution is to get a proper adviser. Get an NMA IFA.
This adviser has no buy in to the performance of your investments (as he is taking full upfront commission), the fund selection is random, the contract pays good commission and isnt badly priced but you can do better (charges are on par with SIPP/fund supermarket so why not go SIPP/fund supermarket), the provider (in my opinion) isnt desirable and you arent going to get long term servicing.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
dear oh dear oh dear. Its full up front commission and this product also pays fairly high commission as well. There is no ongoing trail commission in this case as the adviser is taking it full upfront. So, ask yourself if he is willing to give ongoing servicing for the next 20 years if he is not being paid for it?
Sounds like the type of IFA who gives the rest a bad name. If this were me I would definately be wanting ongoing servicing from an Investment qualified IFA, afterall that is the whole point in my view. That would be the IFA doing his job properly and not just taking the (large amount) of money from commission and running off! The IFA I have just consulted will be conducting six monthly reviews on my investments. I realise that I will pay for these and hopefully it will be money well spent when my portfolio value is optimised.0 -
Sounds like the type of IFA who gives the rest a bad name.
And the sort that wont surive the FSA's RDR review. Part of the review involves IFAs moving to CAR - customer agreed remuneration. So, before any product or investment is chosen the remuneration level is agreed. Who is going to agree a remuneration of 6% of the pension value. Especially as the charge should be explicit by then (it mostly is now - although not with the Scot Eq contract on this thread).
I am actually looking forward to the RDR coming into force. Although at this time, it would mean I initially lose my IFA status but fall under general status (which is still better than current IFA level).I realise that I will pay for these and hopefully it will be money well spent when my portfolio value is optimised.
You say that but lets say a fund supermarket or sipp is used. The annual management charges are the same as HL's SIPP (and we all know how well that gets promoted here). So, the ongoing costs are likely to be the same as going execution only.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
peterg1965 wrote: »Sounds like the type of IFA who gives the rest a bad name.
Unfortunately this is pretty normal as Dunstonh says, which is why I keep pointing out that with quite a small amount of effort you can get a similar or better result yourself without paying all this commission.
The position is even worse when you look at bank advisors.
Unfortunately, the number of "good" NMA type advisors who have good skills and a reasonable fee structure is vanishingly small and they are very difficlt to find as they don't label themselves as "new model".Another problem is that most NMA advisors want to deal with high net worth clients, woith 500k or more to invest.
Fortunately you are not entitely on your own these days, as there are quite a few internet sites now where experienced investors gather to share views and investment opportunities.Many of them are very willing to help comparative newbies.It's not as difficult as it might sound.
And although the real gains on the charges front are only made when you move on from funds to investing directly in shares, a period picking your own funds does teach you a lot about how things work.
.Trying to keep it simple...0 -
EdInvestor wrote: »Unfortunately this is pretty normal as Dunstonh says,
Where did he say this?The position is even worse when you look at bank advisors.
Now that I agree on.Unfortunately, the number of "good" NMA type advisors who have good skills and a reasonable fee structure is vanishingly small
The "good" in quotes makes it sound like you don't think there are any good advisers at all.Another problem is that most NMA advisors want to deal with high net worth clients, woith 500k or more to invest.
Where is your proof of this claim? How many NMA advisers have you actually talked to?Fortunately you are not entitely on your own these days, as there are quite a few internet sites now where experienced investors gather to share views and investment opportunities.Many of them are very willing to help comparative newbies.It's not as difficult as it might sound.
Not everyone is able, willing or even interested in going DIY.
There are plenty good advisers out there that we never hear of as no-one ever writes in a forum to sing their praises.
Change the record Ed.0 -
peterg1965 wrote: »The IFA I have just consulted will be conducting six monthly reviews on my investments. I realise that I will pay for these and hopefully it will be money well spent when my portfolio value is optimised.
I'm the same - I certainly don't mind paying for good advice/service - hence in my posts I never comment on the charges - I wouldn't even begrudge the £6k in commission if I felt that he'd really been burning the midnight oil to get me the best investments.
I always viewed the L&G stakeholder as a safe harbour to store my pension until I knew a bit more about investing. It's ideal for this - no penalties for transfers and if I need to (if work dries up during these early years of me contracting) I can stop and start the pension, also without penalties.
At least I know enough about investing to have thought I was getting poor service from this particular IFA - hopefully as time goes on I'll learn even more.Mortgage Free in 3 Years (Apr 2007 / Currently / Δ Difference)
[strike]● Interest Only Pt: £36,924.12 / £ - - - - 1.00 / Δ £36,923.12[/strike] - Paid off! Yay!!
● Home Extension: £48,468.07 / £44,435.42 / Δ £4032.65
● Repayment Part: £64,331.11 / £59,877.15 / Δ £4453.96
Total Mortgage Debt: £149,723.30 / £104,313.57 / Δ £45,409.730 -
Dithering_Dad wrote: »At least I know enough about investing to have thought I was getting poor service from this particular IFA - hopefully as time goes on I'll learn even more.
Way to go.Trying to keep it simple...0 -
Dithering_Dad wrote: »to answer Dunstonh's question about about annual re-assesment of risk and funds and portfolio rebalancing - When I asked about this he looked blank and then said "yes, I'm sure we could review the funds again at some point if you want.
Go elsewhere. He just eliminated the possibility of being a habitually good IFA by showing that he didn't expect to do a key part of the sector allocation approach. Not that he was doing a great job otherwise, anyway.0
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