Where to invest £200k?

Sayr

My wife and I would appreciate some advice on where to invest £200k following her early retirement and an inheritance I have received from the death of my late mother. I'm 46 and have around 15 years to go in public service until retirement. We do not have a mortgage or any debts and kids are close to leaving college. We're looking for a medium risk investement over 5+ years. We've spoken to a local reputable financial advisor but his fee is between 4-5% start up for setting up a general investement fund such as a unit trust I think which seems very expensive but may be the going rate. The fund would be almost minus £10k before starting. We've thought about buying a property to rent but we think we should invest the money in another way at the current time. Any advice much appreciated.

bigadaj

Probably best to speak to one or more advisers and avoid the one you've seen already.

The very most you should be charged on that sum is £6k, and many will do for less given that you,will probably need ongoing servicing for which you'd expect him to get £1000.

Of course costs are the only thing and you need to trust the adviser and ensure his qualifications and regulatory status, ideally get references etc but an initial gouging isn't the best start to any relationship.

ColdIron

4% to 5% is far too expensive if your requirements are straightforward. As a ballpark think 1.5% to 3% initially with 0.5% to 1% for annual review. The higher the sums the lower the proportion.

Is he an 'Independent Financial advisor'? You should shop around and get 2 or 3 quotes

https://www.unbiased.co.uk/

Sayr

Thanks,

It's a local financial adviser directly linked to St James's Wealth Management, there are many of them around the country linked to this company. Its says on its website: "St. James’s Place Wealth Management is a FTSE 100 company with £71.4bn of client funds under management". I think this means they are not independent but very reputable.

I'm only looking for a standard investement, nothing specific. Would it be reasonable to ask them to reconsider their 4.5% initial fee to something more reasonable? Thanks.

Linton

SJP are not independent but sell a range of own label investments. Suggest you look in your area for a long established local IFA. They will almost certainly be significantly cheaper, will gain no personal benefit by selecting particular funds, and could suffer reputational damage were they to do an incompetant job for you. Perhaps you can get recommendations from friends and neighbours. Having identified some possibilities have an initial chat with say 3 and choose one you feel you can work with. £200K is very nice to have but it's not unusually large in the overall scheme of things - you dont need to look for a gold-plated solution.

bowlhead99

Sayr wrote: »

I think this means they are not independent but very reputable.

I'm only looking for a standard investement, nothing specific. Would it be reasonable to ask them to reconsider their 4.5% initial fee to something more reasonable? Thanks.

They are "reputable" in that they have been going for a long time and have a reputation, but they only put you in in-house funds rather than using other choices that might be cheaper or better.

No doubt they will have a portfolio that will almost meet your needs. However, I say 'almost' because one of your needs is to not pay over the odds for your fees. Part of the "reputation" they have is that they are expensive, which can include any or all of setup fees, ongoing fees, and exit fees if you want to get out of the arrangement early.

One of the execs here at work says they are great. He's got decent returns over the years, and has enough money not to want to go shopping around, especially as he doesn't have lots of spare time on his hands. Part of having an advisor relationship is being able to get on with the person and trust them, and he's happy with his guy and the comfort he gets from using a prestigious brand.

However, without knowing his situation intimately (just knowing SJP's reputation) it is likely he could have cut his fees down significantly by using someone else and getting broadly similar gross returns, which would effectively be free money, as some of the money that would have been paid to the FTSE100 behemoth parent company stays in your own pocket.

The link to Unbiased website in coldiron's post is worth using if you don't already have recommendations for excellent IFAs from trusted friends. It's like any job you want to outsource rather than DIY - get a few quotes in first.

ColdIron

Sayr wrote: »

It's a local financial adviser directly linked to St James's Wealth Management

That figures. There is nothing wrong with their (limited range of) funds, they use well known Fund Managers who seem to mostly replicate the portfolios they manage for their day jobs. Think buying Heinz Baked Beans at Harrods prices

Sayr wrote: »

Would it be reasonable to ask them to reconsider their 4.5% initial fee to something more reasonable? Thanks.

Entirely reasonable but somewhat futile I'd imagine