S&S ISA by financial advisor - opinions needed

bcfclee27

Ok so following on from my other thread......
"S&S ISA 10 - 15 year performance guess"

Basically we have invested 100k in S&S ISA.
40k is in already (20k mine - 20k in my wife's)
40k will go in at the start of financial year and the rest the year after.
In the meantime its sat in a GIA until it can be put into the ISAs.

We decided to use a financial advisor as my father in law has done very well and recommended the IFA he uses.
Also although I have read this forum many many times I still find the investment side of things very difficult to understand.

I know on this forum IFAs aren't particularly highly thought of shall we say however we came into this money from my dads inheritance and wantedd to make the most of the money we got.

Thanks to this forum I invested most of it and paid a little down on my mortgage, I was originally just gonna put it all in the mortgage until receiving great advice from you guys.

Anyway back to the point, my IFA rated me risk group 5 out of 7 and my wife 4 out of 7 (scores 59 & 45 respectively).

He has invested our money with Brewin Dolphin.
Mine is in the Brewin Dolphin MPS Balanced.
Wife's in the Brewin Dolphin MPS Cautious.

Without listing every single holding the asset allocation is....

33% Equities UK
19% Equities US
5% Equities Europe ex UK
4% Equities Asia ex Japan
2% Equities Japan
2% Equities Emerging
16% Bonds
12% Absolute Return
4% Cash
2% Commercial Property

So just wanted to know people's opinions on this.

Much appreciated
Lee

AlanP_2

So that's about 70% equities so reasonably aggressive in terms of targeting capital growth as opposed to wealth preservation.

No experience with Brewing Dolphin so can't comment on that.

I've read the other post as well and TBH I am still not clear on exactly what you want comment on. If you have worked through your objectives, attitude to risk, timescales etc. with an IFA at a cost are you now thinking of second guessing his allocations and investment choices?

bcfclee27

AlanP wrote: »

So that's about 70% equities so reasonably aggressive in terms of targeting capital growth as opposed to wealth preservation.

No experience with Brewing Dolphin so can't comment on that.

I've read the other post as well and TBH I am still not clear on exactly what you want comment on. If you have worked through your objectives, attitude to risk, timescales etc. with an IFA at a cost are you now thinking of second guessing his allocations and investment choices?

Hi Alan, yes it seems as thought in second guessing everything at the moment. Think I'm just looking for a bit of reassurance that were making the right choice with our money really.

Think the thing that threw me was on the other thread a few stating that a rough guide of 100k progressing to 140k over a 10 year period seemed a fairly small amount of growth.

Thanks for your time

bcfclee27

To be clear when I asked my IFA for a rough guesstimate of what our 100k will look like in 10 years, he stated that roughly 4.5% would be realistic which is the return after costs.

He stated it could be more but that it was better to be realistic than over optimistic.

I think what I'm basically asking people's opinion on is that after costs is a growth of that amount over a ten year period a decent return.

Audaxer

I would have thought as it is presumably joint money, the IFA would have recommended either the Cautious or Balanced fund for both your ISAs, but presumably he has to assess each of your risk tolerances separately and base recommendations on that. I have just had a look at the Brewin Dolphin website and the OCFs are low which is good, but I suppose they should be as they are mostly index funds, but again nothing wrong with that in my opinion. Looks okay to me but interested to know what percentage fees the IFA is charging on top of the published fees on the website.

Alice_Holt

Average annual growth of 4.;5% would see a £100k portfolio valued at c.£155k after 10 years.
You've not accounted for compound interest growth in your calculation.

However, no portfolio will grow by a steady 4.5% a year over 10 years,
The sequence of returns will vary, and given that we have had strong investment growth over recent years I would anticipate the next 10 years could bring more volatility and uncertainty.

As your portfolio is reasonably aggressive, are you happy to accept it's value falling over certain time periods during the 10 years?

bcfclee27

Audaxer wrote: »

I would have thought as it is presumably joint money, the IFA would have recommended either the Cautious or Balanced fund for both your ISAs, but presumably he has to assess each of your risk tolerances separately and base recommendations on that. I have just had a look at the Brewin Dolphin website and the OCFs are low which is good, but I suppose they should be as they are mostly index funds, but again nothing wrong with that in my opinion. Looks okay to me but interested to know what percentage fees the IFA is charging on top of the published fees on the website.

The IFA gave us a 25% discount due to his business relationship with my father in law.

He charges us 2.25% initial one off charge.
0.75% ongoing advisor fee.

bcfclee27

Alice_Holt wrote: »

Average annual growth of 4.;5% would see a £100k portfolio valued at c.£155k after 10 years.
You've not accounted for compound interest growth in your calculation.

However, no portfolio will grow by a steady 4.5% a year over 10 years,
The sequence of returns will vary, and given that we have had strong investment growth over recent years I would anticipate the next 10 years could bring more volatility and uncertainty.

As your portfolio is reasonably aggressive, are you happy to accept it's value falling over certain time periods during the 10 years?

Hi, yes I understand the market crashes and rises etc.
I am happy that we're this to happen I would leave it be and let it recover. The money is invested for the long haul 10-20 years and I understand this could be volatile in between.

bcfclee27

Alice_Holt wrote: »

Average annual growth of 4.;5% would see a £100k portfolio valued at c.£155k after 10 years.
You've not accounted for compound interest growth in your calculation.

However, no portfolio will grow by a steady 4.5% a year over 10 years,
The sequence of returns will vary, and given that we have had strong investment growth over recent years I would anticipate the next 10 years could bring more volatility and uncertainty.

As your portfolio is reasonably aggressive, are you happy to accept it's value falling over certain time periods during the 10 years?

Thanks Alice glad you brought up compound interest as I feared this had been included in the estimate. If not then hopefully the longer over the ten years I leave it the more it will compound and grow.

Audaxer

bcfclee27 wrote: »

The IFA gave us a 25% discount due to his business relationship with my father in law.

He charges us 2.25% initial one off charge.
0.75% ongoing advisor fee.

Probably worth it if it gives you peace of mind. The 0.75% ongoing advisor fee seems high to me as the portfolio looks as if it is managed and regularly rebalanced by Brewin Dolphin under their Managed Portfolio Service. I just wonder what the IFA will do over and above the Brewer Dolphin service on annual basis?

Linton

The allocation looks reasonable to me. Using Absolute Return, Property and cash alongside some bonds seems appropriate under current circumstances. Having 60% equity and 40% something safer is sensible rather than cautious. 50% of the equity being in the UK could be questioned but not long ago it would be standard, perhaps a little adventurous.

Dont take the 4.5% too literally, it is a possible average of a very wide range of annual returns. It is helpful to set and plan on relatively cautious expectations.