6 Year Investment Review - Good or Bad?

Thrugelmir

bostonerimus wrote: »

The OP could do that themselves and save 1.2% in IFA fees. If the OP is risk averse an investment in VLS20 would have produced a 30% cumulative return over the last 5 years....which looks comparable to the 25% return over 6 years of the IFA bespoke portfolio.

Having hindsight is a wonderful tool. Shouldn't lose sight that accomodative Central Bank policy has driven markets higher across the board. Nobody could have foreseen how this played out.

Hendel

bostonerimus wrote: »

Why did the IFA recommend the trades....did your requirements change? For the amounts we are talking about a single multi-asset fund would be just fine. The OP could do that themselves and save 1.2% in IFA fees. If the OP is risk averse an investment in VLS20 would have produced a 30% cumulative return over the last 5 years....which looks comparable to the 25% return over 6 years of the IFA bespoke portfolio.

My requirements never changed. The changes were made because the IFA believed that: "...potentially, there is an opportunity to increase the value of your investment if you were to switch your funds. I therefore recommend..."

I followed every recommendation.

Hendel

Hi All,

Just got in from work and dug out the original paperwork w.r.t. risk.

My Fina Metrica Risk Profile scored 57, higher than 74% of all scores, putting me in Risk Group 5. I chose Portfolio 3 (i.e. 10% High Risk, 40% Medium, 50% Low).

The Suitability Report prepared by the IFA states that my overall risk profile is Medium.

Do you think the choice of funds reflects this profile? Thanks.

Hendel

dunstonh wrote: »

Maybe its not an IFA but an FA/wealth manager.

At the time, they described themselves as "Wealth Managers", but today they are a "Team of Independent Financial Advisers" with no mention of wealth management.

Although, to be honest, I'm not sure of the difference.

Hendel

bostonerimus wrote: »

This seems like an expensive IFA for the size and structure of the portfolio, but maybe an IFA becomes better value for money the riskier the portfolio...............

I found it interesting that when I told the IFA that I was thinking about putting my £4k 'punt' into a high-risk investment, he replied instantly that SEI Aggressive was the best choice with no alternative suggestions. I wonder how much value I received there.

dunstonh

Hendel wrote: »

I found it interesting that when I told the IFA that I was thinking about putting my £4k 'punt' into a high-risk investment, he replied instantly that SEI Aggressive was the best choice with no alternative suggestions. I wonder how much value I received there.

Do you think IFAs wake up every morning with total amnesia and need to learn everything again?

Hendel

The IFA told me today that my: "average annualised net return from outset (since 20/03/12) is 3.5% well within agreed risk parameters. This compares favourably with the base rate and cash based returns over that time period."

I wonder if a favourable return against the lowest base rate in history and notoriously poor cash-based returns counts as success? (given my risk profile?)

Hendel

dunstonh wrote: »

Do you think IFAs wake up every morning with total amnesia and need to learn everything again?

I'm certain that they don't. But in 2012, SEI Aggressive was also his first choice for high-risk investment. Forgive me for considering the possibility that it might be his go-to recommendation. Sometimes we are all prone to seeking maximum reward for minimal effort.

I value highly your input as an expert who is fully immersed in the world of investing, but are clients not allowed to question their IFA's recommendation?

dmelife

You pay an IFA for advice, not outperformance. Without the IFA you may not have invested and would have sat in cash for 6 years.
Personally I would say the equity allocation is too low given your Finametrica result and time horizon. Whether you have the capacity to take more risk i wouldn’t be able to say without knowing more about your overall financial situation.
The IFA would also have taken your objective into account. If you told he you wanted to keep up with inflation and beat cash rates then he would’ve taken as little risk as possible to meet that objective. In which case it’s a success.
If you told him you wanted to maximise capital growth and get a better than average return, then no success!

Hendel

dmelife wrote: »

The IFA would also have taken your objective into account. If you told he you wanted to keep up with inflation and beat cash rates then he would’ve taken as little risk as possible to meet that objective. In which case it’s a success.
If you told him you wanted to maximise capital growth and get a better than average return, then no success!

Hi dmelife. Thanks for the balanced view. I think my Fina Metrica score and our face-to-face discussions pitched me somewhere in between these two scenarios.

Anyway, it is what it is and the important thing is where to go next.

Cheers.