Saint James's Place

SweatyBald

Aegis wrote: »

9% over 5 years is pretty terrible if you're in risky assets (I believe you mentioned 4 equity funds earlier).

Ok, so best thing I can do is a quick spreadsheet with the investments I made each year and here's what's I get:
Money I put in 5 years ago (single fund) +56%
Money I put in 4 years ago (single fund) +36%
Money I put in 3 years ago (managed portfolio) +13%
Money I put in 2 years ago (managed portfolio) +44%
Growth in whole portfolio over last 12 months 27%
If I add everything together and do a weighted average, it comes out at 31% over the 5 years.
Does that sound reasonable? It seems ok to me?

Aegis

SweatyBald wrote: »

Ok, so best thing I can do is a quick spreadsheet with the investments I made each year and here's what's I get:
Money I put in 5 years ago (single fund) +56%
Money I put in 4 years ago (single fund) +36%
Money I put in 3 years ago (managed portfolio) +13%
Money I put in 2 years ago (managed portfolio) +44%
Growth in whole portfolio over last 12 months 27%
If I add everything together and do a weighted average, it comes out at 31% over the 5 years.
Does that sound reasonable? It seems ok to me?

Not enough information to go by, I'm afraid. To work out whether it's reasonable, you need to look at a like for like investment based on the risk exposure you're currently exposed to. On that basis you can then tell whether you have had a good return for the given level or risk or not.

Alexland

Baldy it sounds like you are a customer who is willing to pay for advice and hopefully a good IFA would detail to you how they can provide a similar quality of service to SJP, a suitable asset allocation and a lower fee structure. At the end of the day everyone is investing in the same underlying markets which is where the wealth creating returns come from. It just takes a bit of time to meet the IFAs in your area and see if there are any you would feel equally comfortable with. If not then maybe you will decide that the SJP premium is worth paying for your situation.

Voyager2002

SweatyBald wrote: »

So what would happen if I take my reports, returns etc to an IFA and ask him to give me an opinion?

1. He/she is going to think I won't buy anything anyway so why would they give me time?
2. They would just give me a hard sell as well, and repeat a lot of the above to get my business.
Could I pay an IFA a fee to give me a unbiased view on the returns?
My current company has an IFA service and you get 1 hour's free advice if you want it. I could use that, although I doubt they would like it.

IFAs tend to charge a fixed fee for their time (although some charge a percentage of the amount of money that they manage for you). So if you are paying for a couple of hours work, they will use that time to do whatever you ask them. Since they are not allowed to charge commission now they are unlikely to give you "the hard sell", and if they want fees based on the amounts they manage for you, they would understand pretty quickly that the way to get that business would be to go through the numbers and so forth relating to your SJP investment.

As for the arrangement with your company, check whether this is your company paying for an hour (in which case you can use it as you like) or the IFA giving an hour in order to get more business. Above all, make absolutely certain that this is indeed an IFA rather than some kind of sales rep.

bowlhead99

SweatyBald wrote: »

Ok, so best thing I can do is a quick spreadsheet with the investments I made each year and here's what's I get:
Money I put in 5 years ago (single fund) +56%
Money I put in 4 years ago (single fund) +36%
Money I put in 3 years ago (managed portfolio) +13%
Money I put in 2 years ago (managed portfolio) +44%
Growth in whole portfolio over last 12 months 27%
If I add everything together and do a weighted average, it comes out at 31% over the 5 years.
Does that sound reasonable? It seems ok to me?

I'm not sure that the 'average' is telling you something meaningful.

For example, markets have been going up strongly for five years (especially foreign assets measured in pounds, in the Brexit referendum year), so you would expect a big performance when you have a lot of your money in regional equity funds. A bit of a blip last year probably, which has generally been recovered in recent months.

But you say the growth in your whole portfolio over last 12 months was 27%? Even with the blip in equity markets last autumn? And you say that it was 27% on the whole portfolio in just 12 months, while the weighted average was 31% over five years? So only 4% more over the entire five years than in the last 12 months of that five years?

This seems unlikely, so the figures may not have been cut a very sensible way. When you talk about weighted average coming out at x% over five years, do you mean that the proforma return over five years for the assets you held (some over only two or three years) would have been 31% with that weighted portfolio mix extrapolated back for five years? Or do you mean that the weighted average holding period was a lot less than five years (because some of the investments were only invested for 2, 3, or 4 years), so the returns of 31% achieved was not a five year return, and instead was the return of a much shorter effective time period? It is quite difficult to make comparisons with what else is available in the market if you are not comparing like with like

Also note that picking a weighted average period of a little over three years will flatter the returns because just over three years ago the pound devalued heavily against dollar and other currencies giving a tasty and perhaps temporary one off boost to the sterling value of your pot.

You could perhaps be expecting 60-100% growth on global equities over the last five years invested at the higher risk end of the scale, so your 56% return on the single fund bought five years ago does not seem so hot. I am just guessing it is an ex-UK equities focused fund as you talked about only understanding the main regions for blue chip equities and that's what you have most of your money in. If the fund was instead a mix of asset classes, you would not expect as high returns as if it had been a pure equity fund, although you don't mention it being your 'managed portfolio', so I am just guessing here.

The point is, you can't do like with like comparisons without comparable data. If your SJP fund does well in its sector (e.g. mixed assets 50-85% equities), perhaps that is because it is taking more risks than the average of the others (eg 80% instead of 65%) and so the fairer comparison is a fund taking broadly the same risks with lower charges, which may beat SJP even though SJP appeared to beat 'the competition' and get in the top half of a league table.

Likewise if the SJP fund you are looking at is a fully equities based fund but has gone for more growth stocks than average, it may appear to be doing great in a rising market but will fall much further than average when the market turns, unless they are actively managing it to entirely change its strategy based on global economics... while a slow and steady fund (with lower charges) could have been more suitable for you.

It is this "look at our top-half performance (but our funds are bespoke to us and our charging structure is a bit opaque to frustrate you making a like-with-like comparison with open market options)" that some people do not like about SJP. You can look at your numbers and see what you got after all costs. It might seem like a good number because it's many times the return of a high interest bank account. But can you easily see what other open-market advised options modelled to the same risk profile would have achieved instead?

Not really: SJP don't tell their customers that. Typically when the SJP customer goes to see an IFA, the IFA is able to illustrate it. But the SJP customer will not always be convinced because he knows what returns he actually got (because it happened), while he may be unconvinced that the IFA figures are genuine rather than being reverse engineered with hindsight to try to score points over the SJP offering.

Ultimately though if you are paying half a percent more than a real IFA to have a sales rep push you his own product, it will probably have an adverse effect on your wealth compared to what you could have had. But as Voyager said, just because you are not in the best product, doesn't mean you will have a terrible outcome.

If you go to Waitrose or M&S Simply Food for your groceries, you still get nutrition and probably won't get food poisoning, but the people buying their chicken fillets from Aldi or Asda can say the same and have more money in their pocket at the end of the month, even though the carrier bags don't have the same 'status' when they run into their friends & colleagues.

This is a money saving site after all, and SJP don't really save you money over independent advised options. No doubt they can save you money compared to DIYing badly, so if DIYing badly is a potential option, you're not stupid to stay with them. Just perhaps a little naive to not shop around for someone cheaper who would also remove the risk of you DIYing badly.

TBC15

27% over the last 12 months, are you sure about that one?

DrSyn

SweatyBald wrote: »

I spoke to three or four on the phone, but honestly was not that impressed, and I didn't get a good feeling. One of them (I can't remember the name, so I won't say) tried to fix a date and said "Remember to bring your cheque book" so my language got quite colourful at that point.

I went with SJ because they were put onto me by a friend. His investment policy (which is like my own) was to limit downside. This was back in 2013 and he was really happy with the way they had navigated the GFC with his funds. My position was medium risk, but with an emphasis on capital protection, and I felt they understood this with their advice. So after a few bad calls, and with time marching on, I took the decision to proceed.

While having heard of SJP before, I never bothered to look into them. I have just read the Yodelar & Which? reviews mentioned in this post.

They are not IFA's but FA's. Their charging structure is both expensive and complected. All three points are enough to prevent me from using them should I ever feel I require financial advice.

Had it been me I would have just kept looking for an an IFA who I could get get on with. Preferably one that used passive funds.

Take a look at the approach suggested below. Then ask your adviser why it is not a suitable approach in your particular circumstances. I only wish I was there to hear his explanation.

http://www.kroijer.com/

You do seem to be paying a large price just to have an FA be nice to you.

Good luck for the future.

DrSyn

SweatyBald wrote: »

My current company has an IFA service and you get 1 hour's free advice if you want it. I could use that, although I doubt they would like it.

If your current company is providing one hour of free advice from an IFA , why do you doubt they would like it?

If they do not like you using that free IFA service, why are are they providing it then?

SweatyBald

Thanks to everyone for comments.
Bowlhead - especially thanks to you for that long reply which probably took a lot of time.
Thing is, I'm good in my markets, which is why I'm making good money at the moment, but I know crap all about this stuff. My gut is to invest in companies that make money (dividends) for growth in good markets, and not much beyond. That means Shell, BP, Glaxo, BHP, RWE blah blah.

All I need is to know the stuff I'm putting away now, will still be there, and worth more (hopefully a lot more) than RPI+ or base rate (not hard) when I retire.

I did some more checking, and the top 4 funds I have all underperformed the industry benchmark, but not by that much. But they do rightly get bad press because of it. The US equity was high top quartile, even though all US funds have done well. I have 30% of my portfolio there because whatever you think of Trump we all knew he would pump the US back into it.

I am not the kind of guy that will sweat about only getting 9% when I could have have 11%. I like rock'n'roll, booze, motorcycles, guns and chicks... I hate money, despite apparently having quite a bit of it.

I'll probably die by 65 anyway.
I really do appreciate all the comments, I'm going to think more over it and try to decide if I'm a mug, or just someone that actually needs to pay fees so that someone else makes sure I have a decent retirement pot.
Cheers.

Ash_Pole

Seabee42 wrote: »

There were people happy to sail on the titanic despite her sister ship sinking

Sorry to go off on a tangent but what was the sister ship that sank before the Titanic?