Sipp lump sum investment

Audaxer

Jim1904 wrote: »

After a poor year with my sipp losing around 7% I've made the decision to leave my financial advisor and move platforms. My costs will reduce from around 3.5k pa to £200 pa.
I was originally intending to split my pot between the vanguard lifestyle 60 fund and Hsbc global strategy balanced . I'm now unsure how effective these funds will be going forward.

That is quite a reduction in costs, so in my opinion it's definitely worth doing. I have fairly large sums in both VLS60 and HSBC Global Strategy Balanced, so I see nothing wrong in splitting you pot between these two multi asset funds if roughly a 60/40 equity split is what you have at present, i.e. if you are choosing the same risk level you had before and are happy with. Both these funds are globally diversified and like most similar funds have fallen this year, but by a lot less than 7% so I think it is a good choice as a I would think a significant part of your 7% loss will be down to the high costs.

These funds, or any others you or an IFA selects, may well fall further in the next few years, but if you are in it for the long run that shouldn't stop you investing in them now.

Jim1904

Thank you Audaxer. 60/40 is the split I'm looking at . My only concern with the vanguard and Hsbc funds was the performance of the fixed interest holdings which don't seem to be doing very well. I was thinking about adding a couple of strategic bond funds to help out.

dunstonh

The problem was that i can pick out gloablly diverse tracker funds without spending £800 a quarter on a financial advisor .

And what weightings are you going to use for the sectors?
What data are you using to amend those allocations throughout the economic cycle?

Remember that a tracker gives you mid table consistency. THat may be what you are after. it may not be.

I am just finishing off a portfolio review for someone whose return after charges is 52.12% but VLS60 (the equivalent for the risk profile) excluding adviser cost would be 38.92%. So, if he had followed your example 5 years ago, he could knock off my 0.5% p.a. and gone into VLS but would be worse off because of it.

Would you prefer 38.92% after lower charges or 52.12% after higher charges? (this is to focus on your mindset rather than covering all the caveats that would normally go with a question like that)

You are focusing on cost but not the benefit. If the benefit is better, then it can be a cost worth paying for. If it not better, then moving it is justifiable. At the moment you don't know.

BLB53

I was originally intending to split my pot between the vanguard lifestyle 60 fund and Hsbc global strategy balanced .

These are both well diversified, low cost global funds so if they fit your risk profile then either or both would be a good option.

Markets will go up and down and if you feel uncomfortable with the current state of the markets than consider the lower equity balance of these funds e.g. VLS40.

I think that it is possibly more important to adopt the correct psychology to investing when you go diy rather than pondering over fund choices.

Audaxer

Jim1904 wrote: »

Thank you Audaxer. 60/40 is the split I'm looking at . My only concern with the vanguard and Hsbc funds was the performance of the fixed interest holdings which don't seem to be doing very well. I was thinking about adding a couple of strategic bond funds to help out.

As well as the VLS and HSBC GS funds, I also have an income portfolio with roughly a 60/40 split. The strategic bond/fixed interest funds I have are all down as well this year, so I'm not sure they are doing any better than the bond parts of VLS and HSBC GS funds. In my opinion, I think unless you are very confident in putting together a portfolio of single sector funds you are as well sticking with the multi asset funds.

Jim1904

I'll take my chances thanks . An annual review for a fixed charge will do me thank you

Jim1904

Sorry my reply was for dunstonh

Audaxer

dunstonh wrote: »

And what weightings are you going to use for the sectors?
What data are you using to amend those allocations throughout the economic cycle?

Remember that a tracker gives you mid table consistency. THat may be what you are after. it may not be.

I am just finishing off a portfolio review for someone whose return after charges is 52.12% but VLS60 (the equivalent for the risk profile) excluding adviser cost would be 38.92%. So, if he had followed your example 5 years ago, he could knock off my 0.5% p.a. and gone into VLS but would be worse off because of it.

Would you prefer 38.92% after lower charges or 52.12% after higher charges? (this is to focus on your mindset rather than covering all the caveats that would normally go with a question like that)

You are focusing on cost but not the benefit. If the benefit is better, then it can be a cost worth paying for. If it not better, then moving it is justifiable. At the moment you don't know.

dunstonh, of course you are correct and I'm sure the OP would prefer higher net returns. I think the difficulty is finding an IFA like yourself where the charges are reasonable and net returns are much better over the long term than multi asset funds. As I think you have said yourself in a recent thread, most IFAs now are small firms that don't need to advertise for business. Accordingly it seems it can be difficult to find a good local IFA. I'm not sure if the OPs adviser in an IFA, but the charges seem excessive at £3.5k if he can DIY it for £200, so unless he can find and IFA with reasonable costs, do you not think he would do better with multi asset funds?

Jim1904

My faith in "independant " financial advisors is pretty non existent tbh. My pot is from a transfer of a defined benefit pension scheme . I'd never had to think about my pension, it was always something guaranteed and secure.... until it turned out it wasn't.
I used unbiased and found an "independant " financial advisor. Naively, and knowing nothing about pensions I assumed that independant wound mean whole market and he would find me the best fit for me. This wasn't the case , the advisor was tied to one firm , the one that was recommended. To be honest I feel I was mis sold my current sipp by someone who knew I was under tight time constraints and perhaps not very knowldgable.
So going forward I'll take my chances , pay for annual reviews but basically choose where I invest my money .

dunstonh

I used unbiased and found an "independant " financial advisor. Naively, and knowing nothing about pensions I assumed that independant wound mean whole market and he would find me the best fit for me. This wasn't the case , the advisor was tied to one firm , the one that was recommended.

unbiased website doesnt just list IFAs. it also lists FAs. Indeed, since unbiased went commercial and started including FAs, many IFAs stopped paying for listings on that site.

You were not naive to think independent means independent. It does mean that. However, if the adviser is not IFA but an FA (as yours was) then it means they are not an IFA and therefore not independent.

My faith in "independant " financial advisors is pretty non existent tbh.

It seems rather silly to have no faith in IFAs when you haven't used an IFA but an FA.