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BritishInvestor

Anonymous101 wrote: »

Perhaps not the most efficient way possible but certainly better than the vast majority even with financial advice.

Thy say one of the reasons a typical DIY investor undershoots their chosen benchmark by a horrifying margin is overconfidence. Obviously that doesn't apply to you

BritishInvestor

dmelife wrote: »

I believe we cover our fee through the value of our advice, tax efficiencies, increased performance vs their old portfolio. We run active and passive and our active consistently outperforms after taking account all fees. It’s true that many funds to not beat their benchmarks but many do. Personally I don’t think £2m belongs in an index tracker but others do.

If you are able to pick funds that outperform their benchmark it's probably worth digging to understand why the fund has an incorrect benchmark. When you consider that once factor loading is taken into account there is very little alpha in the active world, I'm not sure how it's possible to achieve genuine outperformance.


But as I said previously, investment management is a commodity and will become harder to charge for IMO.

BritishInvestor

dwsjarcmcd wrote: »

Re the SJP aspect of this, I read this analysis of them recently which makes grim reading if you are one of their customers and should make anyone thinking of engaging them to run away....very quickly!

https://www.yodelar.com/insights/st-jamess-place-review

You need to dig deeper and understand whether they are comparing apples with apples.

Spreadsheetman

BritishInvestor wrote: »

A 1% fee won't bring the SWR down by the same amount.

Why? I have seen that mentioned before by others, but no-one has justified it.

BritishInvestor

Spreadsheetman wrote: »

Why? I have seen that mentioned before by others, but no-one has justified it.

https://finalytiq.co.uk/impact-of-adviser-fees-on-withdrawal-rates-in-retirement-portfolio/

Spreadsheetman

BritishInvestor wrote: »

https://finalytiq.co.uk/impact-of-adviser-fees-on-withdrawal-rates-in-retirement-portfolio/

Thanks, that is very interesting.

bostonerimus

BritishInvestor wrote: »

A 1% fee won't bring the SWR down by the same amount.

In the first few years the reduction in spending will be 1:1 with the fees, but over the years it should lessen as your withdrawal increases with inflation. The 4% rules does not include fees and so they will always reduce the amount you can spend and will be one of the larger costs. If 1% fees over time actually reduce spending by something like 0.5% that's still 12.5% of your annual budget.

dmelife

BritishInvestor wrote: »

If you are able to pick funds that outperform their benchmark it's probably worth digging to understand why the fund has an incorrect benchmark. When you consider that once factor loading is taken into account there is very little alpha in the active world, I'm not sure how it's possible to achieve genuine outperformance.





But as I said previously, investment management is a commodity and will become harder to charge for IMO.

So all active funds have the wrong benchmark? And nobody outperforms? I think you are confused. Performance figures are net of costs, so I’m pretty sure if your 10yr annualised returns are say 10% net of fees and the equivalent tracker fund has returned say 8% per annum then I don’t think it is incorrect to claim outperformance.

Clive_Woody

BritishInvestor wrote: »

If you speak to an IFA that focuses on the product, find someone else.

If you speak with an IFA who doesn't explain the product they are recommending, find someone else.

BritishInvestor

dmelife wrote: »

So all active funds have the wrong benchmark? And nobody outperforms? I think you are confused. Performance figures are net of costs, so I’m pretty sure if your 10yr annualised returns are say 10% net of fees and the equivalent tracker fund has returned say 8% per annum then I don’t think it is incorrect to claim outperformance.

I'm not confused, and nor are the authors of the enormous amount of research on the subject.
These guys are pretty good.
https://us.dimensional.com/

When you say equivalent tracker fund you will need to adjust for volatility and also the head/tailwinds due to factor tilts. It's very rare for active funds to outperform once this has been done. Doesn't stop the people that market it claiming otherwise.