Making charges more transparent

Froggitt

Thank you all for your responses.

Don't get me wrong, I know you don't get something for nothing. What I would like is to get something similar that costs a lot less.

So for example, reducing fund management charges by going to a cautious tracker(s) (e.g. 1% to 0.2%), removing adviser fees by DIY, removing percentage based platform fees by moving to a flat rate platform.

So charges down from £2k to a few hundred quid, and a move from active to passive. Is this sheer stupidity? Please say yes if you think so.

Alexland

Froggitt wrote: »

So charges down from £2k to a few hundred quid, and a move from active to passive. Is this sheer stupidity? Please say yes if you think so.

It's not stupid and completely possible investing in ETF(s) with the £45 capped platform fee (for ETFs, Shares or ITs but not funds) with the Fidelity SIPP. The challenge is determining a suitable asset allocation, choosing suitable ETFs and forward thinking a strategy to minimise trade fees.

Alex

cattie

Not stupidity to my mind. It's only recently that I realised just how much I was paying in fees for my isa held on the Aegon platform. I set it up many years ago via an ifa, but on a non advised basis. The ruling on transparecy brought home how much I was unncessarily paying in fees, especially to the ifa & how it reduced any possible profit.

Anyway after research & some advice from posters here, I decided to switch my funds to iweb, meaning I'll save hundreds of £'s on fees. :j My current holdings are in the same region as your mother holds. I also have decided that most funds held will be swopped in favour of a multi asset one, which as a pretty non experienced investor will suit me far better.

Albermarle

So for example, reducing fund management charges by going to a cautious tracker(s) (e.g. 1% to 0.2%), removing adviser fees by DIY, removing percentage based platform fees by moving to a flat rate platform.

Even if you take an easier route and just have multi asset funds @ 0.25% on a platform that charges 0.25% , then you wlll have still made a saving of well over 50%.

dunstonh

What I would like is to get something similar that costs a lot less.

Until you know what it is invested in, you cannot really say whether it is value or not.

So for example, reducing fund management charges by going to a cautious tracker(s) (e.g. 1% to 0.2%),

But what if the current one is performing better? Reducing returns to pay less in charges is not ideal. If what she is can be bettered then fair enough.

So charges down from £2k to a few hundred quid, and a move from active to passive. Is this sheer stupidity?

Is she able to run a portfolio of single sector funds and review and rebalance them at least annuall? Or would multi-asset be better?

Is she happy to have ETFs without FSCS protection instead of UT/OEICs with FSCS protection?

Malthusian

dunstonh wrote: »

Is she able to run a portfolio of single sector funds and review and rebalance them at least annuall? Or would multi-asset be better?

And if she is, why is she not the one posting?

Does she have Lasting Powers of Attorney in place if the OP is actually going to be the one running her portfolio, and are they happy with the legal liability of DIYing someone else's portfolio if so?

There should be special red blinking lights on any thread which begins "My mother has..." where the OP is not an attorney, as the one thing more risky than advice down the pub is advice down the pub passed on second-hand.

Thrugelmir

Froggitt wrote: »

So charges down from £2k to a few hundred quid, and a move from active to passive. Is this sheer stupidity? Please say yes if you think so.

Who is going to choose the investments? Passive is simply one investment option. Buying something because everyone else is , is little more than speculation. That may well disappoint in the longer term. Average investing will return average results.

Crabby

Thrugelmir wrote: »

Who is going to choose the investments?

I'm in a similar situation to the OP's mum, I've just realised that I'm paying Aegon nearly £2k a year, (I'll find out what I pay my IFA next week), on around £100k.
"My" investments have made nothing in the last 2years, but I've paid over £4k for the privilege. I think if I'd just followed the herd it would have been cheaper with better results.
I've stuck with this IFA and followed his advice for over 11 years, so he's had a good run, but he's only managed to average 1% a year growth over that time. Time for a rethink and a change.
The next question now is, how to divorce your IFA?

Thrugelmir

Crabby wrote: »

I think if I'd just followed the herd it would have been cheaper with better results.

Perhaps the herd is paying over the odds? The Dot Com boom is a classic example of the Herd Instinct in practice.

To quote Charlie Munger (Buffet's right hand man).

“A great business at a fair price is superior to a fair business at a great price.”

AnotherJoe

Froggitt wrote: »

Thank you all for your responses.

Don't get me wrong, I know you don't get something for nothing. What I would like is to get something similar that costs a lot less.

As said since no one's here knows what she's got, no one knows if that exists. Do you ? Does your mum?

So charges down from £2k to a few hundred quid, and a move from active to passive. Is this sheer stupidity? Please say yes if you think so.

It could be a really good idea or a really terrible one. Don't make any knee jerk moves.
Try reading Monevator and The Escape Artist on passive investing.
Next consider the "no good deed goes unpunished" side effect. You advise your mum to buy BlackRock Balanced60% or whatever and it falls 10% whilst the funds she was in rise by 10%. Will she cut you out of her will?
But essentially since no one knows what she's invested in and what your and her abilities are at selecting appropriate funds and at not panicking when there's a decline it hard to comment.
Care to publish the portfolio with % of each investment ?