Discretionary investment fund/poerfolio?!

bellydancer_2

We are a couple in our mid 50's and have about £300K to invest in a discretionary fund/ managed investment portfolio ( not sure which is the correct term)
can anyone help with advice in plain English as to what we should do

Thanks

dunstonh

Discretionary investment management would involve stocks, shares, investment trusts, unit trusts (almost anything). This would be controlled with the manager in full control of your investment with the ability to switch and alter your investments as they see fit. Some (but not all) discretionary management firms are very expensive. Tend to be better suited for larger investments and often priced with that in mind.

Fund management comes from IFAs and uses packaged products so you wouldn't see shares or investment trusts (unless packaged). IFAs are also not allowed to switch funds without going to you first with the justification and for you to give the go-ahead or not. Typically, you would see unit trusts or unit linked funds being used. Charges vary (like any retail/service business) but you should get a good deal on £300k.

So, how do you want to invest the money? what are you looking to achieve? are you looking for a transactional IFA, a servicing IFA or a discretionary investment manager?

I know you said plain English but I am assuming you have done some research already having found the term discretionary manager.

EdInvestor

dunstonh wrote: »

I am assuming you have done some research already having found the term discretionary manager.

Or maybe bellydancer has just had this mentioned to him by someone at the bank.

It's often a very expensive option resulting in poor performance (because of high charges and lack of investment expertise by the "discretionary manager" who's quite likely to be a junior oik in the back office of the bank).

Upmarket widows appear to be the main targets of such sales pitches.Lesser folk with smaller amounts to invest normally get directed to 'investment bonds', though they will not necessarily be suitable now, following the new CGT rules.

egamar

bellydancer wrote: »

We are a couple in our mid 50's and have about £300K to invest in a discretionary fund/ managed investment portfolio ( not sure which is the correct term)
can anyone help with advice in plain English as to what we should do

Thanks

300k - about the size of the typical nil rate band discretionary trust for comparison.

We saw a 'regular' IFA (whatever on eof those are) and I shudder at someone having whispered words like "discretionary fund/ managed investment portfolio" in your ear, since they inevitably mean high commission and mediocre performance.

I'd lookup 3 IFAs on the website dunstonh will surely post for us momentarily*, get them each to do a fact-find to give you an outline of their proposals (you won't get any details for free, but you should get a 'strategy' at least), then come back here and let folks pick the advice apart. Tell each one of them that you are seeing the others - that's only fair an is common practice.

We got a load of b*ll*x from the first IFa we approached about my late father's trust - waaay too over-engineered and didn't pay attention to our main objective of preservation of capital value. The second one is a gem. Down to earth, sensible, very keen to understand what we want and for us to understand the implications of what we want.

You're only 15 years off retirement, as I am I. Don't take a gamble if you can't afford to lose 25% of your capital, and whatever anyone says do NOT put all your eggs in one basket.

*I can't remember it.

jem16

egamar wrote: »

I'd lookup 3 IFAs on the website dunstonh will surely post for us momentarily*,

*I can't remember it.

Presumably you mean this one?

http://www.unbiased.co.uk/

egamar

jem16 wrote: »

Presumably you mean this one?

http://www.unbiased.co.uk/

That's the one! Thanks

bellydancer_2

Thanks for your ongoing advice
It sounds like discretionary fund mangers are not a good idea!
Will check out some of our local IFA's
What kind of specific questions should I ask?

egamar

bellydancer wrote: »

Thanks for your ongoing advice
It sounds like discretionary fund mangers are not a good idea!
Will check out some of our local IFA's
What kind of specific questions should I ask?

The embarrassing ones. find dunstonh and ask him what questions he hates to be asked!

I'll come back in a bit with a more sensible answer if no-one else has, Domestic chores are calling ....

jem16

bellydancer wrote: »

Thanks for your ongoing advice
It sounds like discretionary fund mangers are not a good idea!
Will check out some of our local IFA's
What kind of specific questions should I ask?

How about;

What would it cost, both commission and fees?
How do you decide where to invest?
Can I see the research on why I should invest there?
Will you monitor my investment and rebalance yearly?

The last one I think is particularly important - you don't want the adviser simply to set it all up and completely ignore it thereafter.

You basically want the type of adviser who takes a low initial commission and then relies on the natural trail commission from the providers to monitor your ongoing investment. That means he/she usually has some kind of incentive for your portfolio to do well. The other type of adviser tends to take all the commission upfront and has no incentive to monitor it.

JDinho

bellydancer wrote: »

Thanks for your ongoing advice
It sounds like discretionary fund mangers are not a good idea!
Will check out some of our local IFA's
What kind of specific questions should I ask?

If you're asking anybody to comment on what is best for your investments ask them what returns their advice have generated i.e. the return of their own 'model' portfolio. Wholly separate to the performance of the funds they're punting here and now. That way you can make a value judgement on what their advice is worth. If they're good they will tell you what they have generated and should be able to provide something to benchmark this against i.e. relevant FSTE APCIMS index.

If you feel an IFA is better than a pure investment manager ask them how they generate their ideas, where they get their research from (independent from fund providers or regurgitated marketing splurb), what value they add compared to the next advisor, why they use the platform they do.

Why not also ask them what qualifications they have i.e. have the studied fund management strategies, asset allocation. Can they explain Beta, Alpha and Sortino ratios or systmatic vs unsystematic risk for example?

ramagel

JDinho wrote: »

ICan they explain Beta, Alpha and Sortino ratios or systmatic vs unsystematic risk for example?

Err ... how would the OP know whether they could or could not, unless/he was equally trained ....?

These are a bit old but might be a bit of background for the OP

http://www.morningstar.co.uk/UK/Funds/archive.aspx?lang=en-GB&dataType=4