IFA Retiring, Portfolio Advice Needed

tiptop77

Hi all, I've been reading the forum for a while but have finally signed up to ask advice.

My IFA has managed my portfolio for 13 years but recently has become harder and harder to get hold of when I have queries, as he closed his town centre office and now works from home. As suspected, he has now announced that he's retiring, so I need to either look for a new IFA or go it alone.

I've mostly left portfolio picks to the IFA in the past, but now feel that I want to understand the ins and outs of investing better, even if I do end up going with another IFA instead of DIY. I'd appreciate any input on my current investment holdings, as I'm looking at the Fidelity X-Ray report and trying to make sense of it.

Background:
- 37, no spouse, no children, no pension.
- Currently looking at setting up a work pension (I am a company director of a small limited company, owned equally with my cousin).
- I have a recent inheritance to invest, which is in the mid six figures. It's currently held in high interest accounts, regular savers and NS&I while I decide where to invest it.
- I own my home with no mortgage and have a half share in a rental property, which has no mortgage. These two properties currently make up about a third of my total net worth.
- I have a medium risk profile and would maintain or increase holdings during a downturn.
- I'm currently renovating my house and will be keeping back 70k in cash; 50k for building work including budget buffer and 20k general emergency fund.

Goals: to exit or reduce my involvement in my current business in the next 5-7 years, with the eventual aim of having more time for travel & other interests. I may need to switch a small part of the investments from accumulation to income at that time, but most income will come from property rental and other business interests. I'm aiming at about 55 for full retirement and drawdown.

I currently have 39k in a Cash ISA which I'll probably be transferring to an S&S ISA shortly.
133k is in a Fidelity S&S ISA (IFA selected) which includes:

Fidelity Special Situations W Acc 14.78%
Schroder Mid 250 Z Acc 13.94%
L&G High Income I Acc 13.49%
Henderson Fixed Intr Mth Inc I Inc 12.88%
Jupiter Financial Opportunities I Inc 12.73%
Fidelity European W Acc 10.16%
Fidelity Global Special Situations W Acc 7.56%
JPM Emerging Markets B Net Acc 5.61%
Stewart Investors Wldwd Ldrs B Acc GBP 5.23%
M&G Global Basics GBP I Acc 3.62%

What are your opinions of the above choices? I think I'm possibly too EU weighted and a little overweight in bonds. I'm thinking of transferring the Cash ISA & Fidelity holdings into VLS80, which seems to fit my risk profile. Any other advice or areas to research?

jdw2000

Welcome to the forum!

I'm new here, so I'm not of any use, sadly. I'm sure someone will be along soon who can be.


I was curious at where these "high interest accounts" are, though? Unless one has just come out, they don't exist anymore...?

jimjames

jdw2000 wrote: »

I was curious at where these "high interest accounts" are, though? Unless one has just come out, they don't exist anymore...?

Nothing has "just come out" but the accounts have been available for the last 4 years or so. The link is still on the forum home page as it has been for much of that time.

tiptop77 wrote: »

Background:
- 37, no spouse, no children, no pension.
- Currently looking at setting up a work pension (I am a company director of a small limited company, owned equally with my cousin).
- I have a recent inheritance to invest, which is in the mid six figures. It's currently held in high interest accounts, regular savers and NS&I while I decide where to invest it.

I'm really puzzled by this if you've been using an IFA and not setup any pension. Was that something they suggested and you turned down? As a director it just seems a really strange omission especially over such an extended time.

The portfolio overall looks a bit of a mix and I'd probably agree with your assessment about bonds although that would ramp you up the risk scale. The exposure to USA and Far East is missing and it seems quite biased to Fidelity.

jdw2000

jimjames wrote: »

Nothing has "just come out" but the accounts have been available for the last 4 years or so. The link is still on the forum home page as it has been for much of that time.

I was just being flippant about the fact that "high interest" accounts don't exist. I was trying to ask him what his nearest approximation of a high interest account is.

AnotherJoe

jimjames wrote: »

Nothing has "just come out" but the accounts have been available for the last 4 years or so. The link is still on the forum home page as it has been for much of that time.


I'm really puzzled by this if you've been using an IFA and not setup any pension. Was that something they suggested and you turned down? As a director it just seems a really strange omission especially over such an extended time.

The portfolio overall looks a bit of a mix and I'd probably agree with your assessment about bonds although that would ramp you up the risk scale. The exposure to USA and Far East is missing and it seems quite biased to Fidelity.

My thought as well, gobsmacked that after 13 years with an IFA there's no pension. And not specially impressed by those funds either, all very specialist and focussed, id have expected a backbone of more global or even U.K. Funds

OP, your affairs seem pretty complex and your knowledge limited, I would suggest looking for another IFA. See a few, discard any that don't mention pension.

jdw2000

Given that the OP would appear to be a higher-rate tax payer (I assume, given his financial status and company directorship), it's even more surprising that he doesn't have a pension in order to avoid the 40% tax.

tiptop77

To clarify, I'm not currently a higher rate taxpayer, although suspect that I may be in that bracket in the17/18 financial year. We've been a Limited company since 2013 (a partnership before then), so the pension situation was slightly different. The IFA recommended that we use ISAs rather than a pension at the time. In hindsight I'm not at all sure that this was the best option, but that's why I've become more and more unhappy with the advice given and service (or lack of it) over the last few years.

Unfortunately there's not much choice of IFAs around here, but I had a meeting with another one recently. It went okay, but fees were high at 1.5%, and he went off on such jargon-filled sidetracks that I ended up getting completely lost and confused in places. Another thing that put me off was that he looked at our figures, hmmm'd and said that pensions 'might be worth looking at again now', when everything I've been researching indicates that it should be a top priority for us. I'm planning to set up a few meetings further afield and see how it goes.

jdw2000

tiptop77 wrote: »

To clarify, I'm not currently a higher rate taxpayer, although suspect that I may be in that bracket in the17/18 financial year. We've been a Limited company since 2013 (a partnership before then), so the pension situation was slightly different. The IFA recommended that we use ISAs rather than a pension at the time. In hindsight I'm not at all sure that this was the best option, but that's why I've become more and more unhappy with the advice given and service (or lack of it) over the last few years.

Unfortunately there's not much choice of IFAs around here, but I had a meeting with another one recently. It went okay, but fees were high at 1.5%, and he went off on such jargon-filled sidetracks that I ended up getting completely lost and confused in places. Another thing that put me off was that he looked at our figures, hmmm'd and said that pensions 'might be worth looking at again now', when everything I've been researching indicates that it should be a top priority for us. I'm planning to set up a few meetings further afield and see how it goes.

As I said, I'm new, so don't listen to me. But to give you something to chew on till the more knowledgeable posters give you their tuppence...


I'd suggest you have one of the following two options:

1) DIY option would be a low-cost tracker, on the cheapest platform you can find. You've already mentioned VLS, but that is not the only game in town. L&G Multi Index funds are apparently good (although my platform, Halifax, doesn't do that fund).

2) Active funds which are selected, such as the ones you currently have. This will almost certainly involve getting an IFA, as the research time alone would make it worth your while.


You're talking about big sums there. Have you thought about investing it instead in another property?

Eco_Miser

jdw2000 wrote: »

I was curious at where these "high interest accounts" are, though? Unless one has just come out, they don't exist anymore...?

You've mentioned one yourself on another thread.
Unless I've missed something, there's still one current account and four regular savers paying twenty times BOE rate.

jdw2000

Eco_Miser wrote: »

You've mentioned one yourself on another thread.
Unless I've missed something, there's still one current account and four regular savers paying twenty times BOE rate.

For 2.5k! Look at the numbers he's talking about.

Malthusian

Up until 2014 it was entirely normal for an IFA not to recommend pension contributions for a basic rate taxpayer who didn't benefit from employer contributions.

• Tax on the way out would cancel out tax relief (aside from the 25% tax free lump sum but with successive Chancellors turning the screw on pensions, no-one knew if that would last)

• Annuity rates were dire
• Even if you used drawdown (which was viewed as a high-risk vehicle only suitable for a minority) you were restricted on the amount you could draw each year - basically, once you put money in a pension it would never be your money again
• There was a 55% death tax on unused funds unless you died young and before taking any benefts

Moreover, the benefits of "tax-free growth" within a pension were limited for basic rate taxpayers. Besides, the OP's portfolio is all within ISAs so he got that anyway.

George Osborne's pension freedoms of 2014 changed all that dramatically. But the benefits of pensions v unwrapped funds are still limited for basic rate taxpayers unless you are in danger of using up all your allowances.

I don't find it surprising that the OP's IFA didn't recommend pension contributions. Especially as the OP's investment portfolio is entirely wrapped in ISAs.