Excessive or reasonable charges for managed SIPP?

beamyup

Prism wrote: »

Yes you can get charges very low. Its cheap to hold ETFs on many platforms. The point is that I am choosing not to hold cheap ETFs. My choice is to hold other funds that happen to cost more than 1% including platfrom. Thats not always a bad thing nor does it mean that I am going to underpeform because of those fees. In the same way, if an IFA can add 0.5% of value (amongst the other stuff they do) then thats not a bad thing either.

The point is of course. They have NO CHANCE of outperforming the market by 0.5 percent over the medium or long term.
MSEers should not be paying for poor advice costing so much.
That's the point of MSE in my opinion, to advise people against throwing their money away.

Before the deluge of IFA tell me I am stupid AGAIN. I am aware that good financial advise is valuable.

Personally I would be happy to pay someone 100 pounds an hour for sound advice.

Not happy for an IFA to cost me a lot more. Nor should anyone be !

[Deleted User]

beamyup wrote: »

The point is of course. They have NO CHANCE of outperforming the market by 0.5 percent over the medium or long term.
MSEers should not be paying for poor advice costing so much.
That's the point of MSE in my opinion, to advise people against throwing their money away.

Before the deluge of IFA tell me I am stupid AGAIN. I am aware that good financial advise is valuable.

Personally I would be happy to pay someone 100 pounds an hour for sound advice.

Not happy for an IFA to cost me a lot more. Nor should anyone be !

Exactly. Transparent cost - fee for service advice on a per hour basis is often needed. There are complex situations when one may need specialist help. Some people need to be pointed in the right direction.

Prism

Deleted_User wrote: »

I’d like to see how many IFAs buying a bunch of expensive funds and putting together portfolios outperform boring benchmark indices. Will be very, very few over 5 years, a fraction of that over 10 years and none over 20 years. Plenty of analysis and data showing this for active funds; active funds with another fee on top is going to make it even worse.

What makes you think IFA's are buying expensive funds? What makes you think that DIY investors are not buying expensive funds? What has this got to do with active vs passive? I know of no analysis that says that DIY investors out perform IFAs. I don't think you do either.

Prism

beamyup wrote: »

The point is of course. They have NO CHANCE of outperforming the market by 0.5 percent over the medium or long term.
MSEers should not be paying for poor advice costing so much.
That's the point of MSE in my opinion, to advise people against throwing their money away.

Before the deluge of IFA tell me I am stupid AGAIN. I am aware that good financial advise is valuable.

Personally I would be happy to pay someone 100 pounds an hour for sound advice.

Not happy for an IFA to cost me a lot more. Nor should anyone be !

So let me get this right. You believe that its impossible for anyone (DIY or IFA) to beat the market? You think that DIY investors get market returns and IFAs get market returns minus their fee? Do you think it likely that DIY investors actually get nowhere near market returns?

[Deleted User]

Prism wrote: »

So let me get this right. You believe that its impossible for anyone (DIY or IFA) to beat the market? You think that DIY investors get market returns and IFAs get market returns minus their fee? Do you think it likely that DIY investors actually get nowhere near market returns?

Nope. It is possible to beat the market. Buffett does it. Active funds do it over relatively short periods of time - typically under 10 years. It’s extremely rare over significant periods of time, and impossible to predict up front which fund will be “the winner”.

Individual active investors buying stocks, not burdened by fees can do it. Again, very rare. They are competing against professionals (and I don’t mean IFAs) and people with insider information. Takes a lot of time and very particular psychological make up but can be done.

DIY investors who stick to cheap plain vanilla ETFs and do not divert from a written IPS do very well. Markets have done great, and that’s what we get. Takes very little effort, is not as exciting as trading but far more profitable for the vast majority of people.

Expensive advisors buying expensive funds (like OP) have no chance to outperform disciplined index investors. Their clients are running with over 2%/yr disadvantage before they even start. Advisors themselves on the other hand do just fine.

[Deleted User]

Prism wrote: »

What makes you think IFA's are buying expensive funds? What makes you think that DIY investors are not buying expensive funds? What has this got to do with active vs passive? I know of no analysis that says that DIY investors out perform IFAs. I don't think you do either.

OP sure got this treatment. I checked his European fund. Charges over 1% (plus 1% advisor fee). One can get European ETFs for less than one tenth of this cost.

Are there dumb DIY investors who did not spend any time to educate themselves? Of course. They are wasting their own money though rather than ripping off naive clients.

beamyup

Prism wrote: »

So let me get this right. You believe that its impossible for anyone (DIY or IFA) to beat the market? You think that DIY investors get market returns and IFAs get market returns minus their fee? Do you think it likely that DIY investors actually get nowhere near market returns?

I did not say this, let me spell it out.

I AM SAYING:
Generally, an IFA is not going to be good at beating the market at any risk level. and then on top they are charging half a percent or more PA which is very significant in terms of the final value of the fund.

I AM NOT SAYING:

• That nobody can beat the market after charges or that YOU cannot beat the market after charges.
• That people should not use an IFA for planning/strategy/advice.
• That person A cannot get better performance than person B.

Prism

beamyup wrote: »

I did not say this, let me spell it out.

You pretty miuch said exactly that. You said that IFAs have NO CHANCE of beating the market by 0.5%. Now you seem to be agreeing that some people can.

Here is an idea. Most people can't beat the market. In fact most people can't even get a half decent result from investing. Most people don't read up on investing or don't know what investing is. Most people don't know how to assess their own attitude to risk and get it wrong if they think they do. Most people who invest make bad decisions (mainly because they don't understand risk). Most people significantly underperform the market and seemingly take more risk while doing it. Most people don't want to learn to learn about this stuff or haven't got the time.

Some people realise this and chose to pay an IFA a fee to help them out. Some people chose to do it themselves and do well (others mess it up completely)

I would absolutely recomment an IFA to most of my friends and family if they wanted to make the most out of their ISA/Pension/Investments. Personally I DIY but it doesn't stop me from seeing it from someone elses perspective.

Thrugelmir

Deleted_User wrote: »

Nope. It is possible to beat the market. Buffett does it. Active funds do it over relatively short periods of time - typically under 10 years. It’s extremely rare over significant periods of time, and impossible to predict up front which fund will be “the winner”.

Which index though? Even when choosing an index that tracks a particular market there's different variants there of...........

Buffett isn't an average investor either. Having the assets of insurance companies to play with was something of an advantage. You become the market by virtue of the value of stock you trade in.

beamyup

Prism wrote: »

You pretty miuch said exactly that. You said that IFAs have NO CHANCE of beating the market by 0.5%. Now you seem to be agreeing that some people can.

Here is an idea. Most people can't beat the market. In fact most people can't even get a half decent result from investing. Most people don't read up on investing or don't know what investing is. Most people don't know how to assess their own attitude to risk and get it wrong if they think they do. Most people who invest make bad decisions (mainly because they don't understand risk). Most people significantly underperform the market and seemingly take more risk while doing it. Most people don't want to learn to learn about this stuff or haven't got the time.

Some people realise this and chose to pay an IFA a fee to help them out. Some people chose to do it themselves and do well (others mess it up completely)

I would absolutely recomment an IFA to most of my friends and family if they wanted to make the most out of their ISA/Pension/Investments. Personally I DIY but it doesn't stop me from seeing it from someone elses perspective.

I AM ONLY SAYING 1 THING:
Generally, an IFA is not going to be good at beating the market at any risk level. and then on top they are charging half a percent or more PA which is very significant in terms of the final value of the fund.

You are saying that you disagree with this statement I think?

If so, please tell me how an IFA can do this. I mean - regularly beat the market year after year by e,g, 0.5% (on average) without taking any extra risk. What exactly do they invest in to make this happen? specific sectors? Value? Commodities? Good managed funds? IPOs? Derivatives? Forex? what?

Of course, I am aware some managed funds APPEAR to do this, but all the analysis shows that these funds come and go and you cannot reliably pick ones that will outperform in future.