What will a financial adviser do for me?

Jon_W

Al. wrote: »

Whatever most advisers will tell you, we're in sales - you're supposed to like him! Sales isn't a bad word by the way, we just look on it as such. I've had to push really hard sometimes, to sell the right idea to a number of clients, and I do it in a fiduciary way. The client always comes first. They sometimes don't realise it though..



4% upfront is tasty, unless you have a small amount and that's how the fee works out. And if you do have a small amount, consider kicking the hedging nonsense into touch. And if you haven't had it properly explained, or if you don't understand it, AND AGREE WITH IT, walk away from it. In fact, no. Run.

I look at some pension paperwork (Met Life, I'm looking at you boy) and I wonder what planet they're on. Keep it simple.

Hmm, very much food for thought. Thanks very much, Sir. :beer:

No, the 4% is not, say, a one-off fee that works out at 4% of the value of the investment. It's 4% of whatever is invested.

I am going to seek some clarification on how the ongoing charge is worked out. I did get a bit lost during it.

Also, I wanted to transfer my current current cash ISA to a S & S ISA and top that up after 6th April then buy a fund(s).

He suggested opening a S & S ISA, keeping the cash ISA and holding the portfolio outside wrappers to the tune of £19k. This will be transferred into the S & S ISA later. Why's this?

Can I not transfer a cash ISA to a S & S ISA and top-up the S & S ISA in the same year due to the £20k limit?

He also said that transferring the portfolio across into the S & S ISA won't cost any CGT because the gains on it won't put me outside the CGT personal allowance. But surely any CGT would only have been payable if there were gains and I SOLD/cashed-in (whatever it is that you do!) the portfolio, anyway? And he definitely did say this about CGT, this is not my lack of understanding.

Jon_W

dunstonh wrote: »

Why?
Our comparable portfolios (in terms of volatility) outperform VLS60. They cost more.



And paying less could result in you getting less. Costs are a secondary consideration. Not the primary one.

I have asked the IFA for the performance figures to be emailed. He did show them me yesterday, I'll post here when they come through.

Jon_W

Smed wrote: »

Confusion. Are we talking here about Independent financial advisers or fund managers or something else? But whichever way, fees and costs are related to the quality of the service provided and service provided by the office boy is likely to be cheaper than service provided by a qualified and experienced manager and good financial advice is always ongoing and active and never passive

Both.

The IFA will decide how to invest what you want to invest. They will charge you an implementation fee for deciding how and where to invest your £, then investing it. They will then charge you a percentage each year of the value of your investments. I have no experience (yet) of this. Though if they are like everything else in life, there may be a looser correlation to quality of service and charge than hoped for.

If the IFA invests in funds, the managers of those funds will charge an ongoing % of the value of the fund that is placed in their fund.

So you pay a % to both IFAs and fund managers, unless you go DIY, when you only pay the fund management fee.

JohnRo

Jon_W wrote: »

Can I not transfer a cash ISA to a S & S ISA and top-up the S & S ISA in the same year due to the £20k limit?

Annual ISA allowances and limits are an irrelevance when talking about transferring money already ISA wrapped from previous years.

The allowance only becomes an issue when you're transferring between ISA accounts with money deposited in the current tax year that forms some part of the current years allowance.

Jon_W

Which leaves me confused as to why some of the portfolio is being left outside the wrap of an ISA to be transferred into the protection of the ISA later.

Will the IFA get a fee if he does this, but not if I transfer my cash ISA to a S & S ISA?

JohnRo

That sounds like one possible and quite plausible explanation.

However without seeing the numbers it's impossible to say, it's more likely the IFA has a deployment plan that involves the transfer arrangement you've described.

Jon_W

JohnRo wrote: »

That sounds like one possible and quite plausible explanation.

However without seeing the numbers it's impossible to say, it's more likely the IFA has a deployment plan that involves the transfer arrangement you've described.

The figures are approximately as follows:

£16k in non-wrapped investment, to be put into the S & S ISA later*
£16k in S & S ISA*
£4k in LISA
Cash ISA I have to be kept as it is at the limit of £15240
SIPP £3k*

*All invested in the funds chosen as per the IFA's model

I would have thought:

£4k in LISA*
Open S & S ISA with £13k (to keep my investment total at around £40k) transfer cash ISA to it so £33k in total*
£3k SIPP*

*All invested in the funds chosen as per the IFA's model

In my example all the investments are wrapped and there's no faffing about transferring the non-wrapped portfolio to the S & S ISA later. It's done and can be left alone.

Oh, and the portfolio chosen by the IFA has commodities, not shares in commodities as I wrongly claimed earlier. Not a great %, but waiting for the figures to be sent.

JohnRo

Based on what you've written over the last couple of weeks or so I'm sure of one thing, that you're quite capable of doing this yourself, saving a pile on unnecessary fees and that you really did ought to give that some serious consideration.

If you DIY with a single multi asset fund on a suitable low fee platform the upfront costs are zero and you will have saved yourself a big chunk of cash going forward.

The cost of this IFA might take a year or more to recover, there really is nothing catastrophic going to happen if you invest in a regulated global multi asset fund and realistically all you need to weigh up is how much volatility you can (honestly) handle psychologically without becoming unsettled.

Jon_W

I am minded to do that, JohnRo, thanks for your thoughts. I do like the look of the Vanguard LS offerings but I would prefer one which isn't so biased towards the UK (I know this involves additional currency risk).

I am not so sure that all I have written means I can be confident in my own knowledge, though, ask Bowelhead & DunstonH for some of the Qs I've been asking them! ;-)

JohnRo

With the amount of investment capital you've been discussing and the process required to get that capital invested sensibly, I'd suggest that you've been massively overcomplicating something that only needs to be a relatively simple and straightforward endeavour given the circumstances you've described.

Simple and straightforward doesn't mean garbage, it means picking a single, well managed, global multi asset fund. It won't break any investment records but that's not the aim, it's to get an approximate market return which is all that most long term investors can realistically hope for unless they're prepared to start gambling.

The thing to focus on instead, imho, if you do decide to DIY is your own attitude to that money you're investing, what it means to you, emotionally, and how market volatility might then affect your investment behaviour.

If you've got the discipline to make an investment plan, choose a sensible vehicle, act on it and see it through, without getting distracted or diverted by short term market volatility and the occasional severe market downturn, then you stand to gain little if anything and lose a chunk of your capital into the bargain by employing an IFA to look after you. imho.