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Views on Royal London Governed Portfolio

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  • SonOfSonOf Forumite
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    I assumed that if you had no IFA you would be "Self Investing" and so would have to pay the extra fees associated with that feature. If that's not the case then I apologise.

    When SIPPs became fashionable, RL felt the need to add on SIPP functionality. Not to be a full SIPP as such but just to allow someone to access a certain investment they may want. So, its a bolt on that is rather pointless and not often used. If the person sticks to the insured funds or GP range then the SIPP side doesnt get activated and no charges in that area apply.
    Are there any discounts that might be lost by not using the IFA? Also find out about any fees charged to move or access the pension.

    There is no cost difference if an adviser is involved ongoing or without. Personally, we tend to use RL for transactional advice clients for that very reason.
  • MordkoMordko Forumite
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    The costs are very important. In my book anything approaching 1% is way too much (including IFA, fund TER, etc). 1% doesn’t sound like much but it can easily come to 100s of thousands during a typical portfolio lifespan. Given that one can own the world for 0.1%, hard to justify a portfolio which is heavily concentrated in the UK and is underperforming its own benchmark year in year out.

    Having said this, an appropriate asset allocation is the number one priority. Someone buying this portfolio must be able to withstand 50% drawdowns.
  • bostonerimusbostonerimus Forumite
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    Mordko wrote: »
    The costs are very important. In my book anything approaching 1% is way too much (including IFA, fund TER, etc). 1% doesn’t sound like much but it can easily come to 100s of thousands during a typical portfolio lifespan. Given that one can own the world for 0.1%, hard to justify a portfolio which is heavily concentrated in the UK and is underperforming its own benchmark year in year out.

    Having said this, an appropriate asset allocation is the number one priority. Someone buying this portfolio must be able to withstand 50% drawdowns.

    There is a discount to the 1% of up to 0.65%, but most people will get about 0.5%. Then there is wording about "additional charges" and IFA charges etc etc. in the brochure. The upshot is that it all seems like a sales pitch designed to disguise what you actually pay in fees. My experience is that pension and insurance companies are seldom low cost, but RL could prove me wrong. Maybe someone with an RL pension can tell us exactly what they pay a year, or maybe they have no idea which would be a big problem IMO. Also I'd like to understand any transfer or withdrawal fees that might apply.

    I know SonOf says that DIY is possible with Royal London and if you stick to the governed portfolios there won't be any extra cost, but I just wonder how interested RL will be in dealing directly with the investor.
    Misanthrope in search of similar for mutual loathing
  • edited 9 October 2019 at 5:50AM
    JoeCrystalJoeCrystal Forumite
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    edited 9 October 2019 at 5:50AM
    There is a discount to the 1% of up to 0.65%, but most people will get about 0.5%. Then there is wording about "additional charges" and IFA charges etc etc. in the brochure. The upshot is that it all seems like a sales pitch designed to disguise what you actually pay in fees. My experience is that pension and insurance companies are seldom low cost, but RL could prove me wrong. Maybe someone with an RL pension can tell us exactly what they pay a year, or maybe they have no idea which would be a big problem IMO. Also I'd like to understand any transfer or withdrawal fees that might apply.

    I know SonOf says that DIY is possible with Royal London and if you stick to the governed portfolios there won't be any extra cost, but I just wonder how interested RL will be in dealing directly with the investor.

    I do have an RL pension which is invested in Governed Portfolio 4 fund instead.

    My last annual statement from RL says that I was charged £294.22, which is equivalent to 0.5% of the plan value in 2018, which is partly offset by £99.40 ProfitShare Award (About 0.33% of the plan overall). I do not pay any ongoing servicing with my IFA. As my plan value is now high enough to get 0.55% discount on 2019, I would be expecting to pay roughly £315 which equivalent to 0.45% of the plan value, again, partly offset by £115.46 ProfitShare Award (About 0.28% of the plan overall)

    I already said earlier on in another post on how RL CS doesn't seem to like to deal with the public directly. :)
  • edited 9 October 2019 at 6:37AM
    mcc100mcc100 Forumite
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    edited 9 October 2019 at 6:37AM
    Mick70 wrote: »
    How did you get RL down to 0.25%, I thought the lowest they would was 0.35?

    The exact words on the paperwork from my IFA are:

    A mutual fund discount is also on offer from Royal London and this will currently reduce the fund charge by a further 0.15% per annum to just 0.25%. It is Royal London's stated intention to maintain this discount in the range of 0.15% to 0.25% per annum.
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  • edited 9 October 2019 at 7:03AM
    MordkoMordko Forumite
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    edited 9 October 2019 at 7:03AM
    JoeCrystal wrote: »
    I do have an RL pension which is invested in Governed Portfolio 4 fund instead.

    My last annual statement from RL says that I was charged £294.22, which is equivalent to 0.5% of the plan value in 2018, which is partly offset by £99.40 ProfitShare Award (About 0.33% of the plan overall). I do not pay any ongoing servicing with my IFA. As my plan value is now high enough to get 0.55% discount on 2019, I would be expecting to pay roughly £315 which equivalent to 0.45% of the plan value, again, partly offset by £115.46 ProfitShare Award (About 0.28% of the plan overall)

    I already said earlier on in another post on how RL CS doesn't seem to like to deal with the public directly. :)

    Are the charges you are quoting inclusive of all costs, such as stamp duties and all the other costs of owning and periodic buying and selling of properties, commodities and stocks?

    They invest into commodities via derivatives. Do they report the costs? Do they account for the additional risk, e.g. contagion?
  • edited 9 October 2019 at 7:29AM
    MordkoMordko Forumite
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    edited 9 October 2019 at 7:29AM
    Royal London’s definition of “cautious”, “balanced” and aggressive” is beyond weird.

    For example, “cautious” Portfolio 1 has 77.5% in shares, commodity, property and junk bonds. It has just 15% in guilts and corporate bonds.

    Their adventurous portfolio 9 has 72.5% in highly volatile assets and almost 30% in quality bonds.

    https://adviser.royallondon.com/globalassets/docs/shared/investment/br5p10009-investing-with-us-adviser-guide.pdf

    What?

    They are also playing with options on bonds in every portfolio. That component is about 10% and is called “absolute return strategies”. For example, they are betting on future interest rates by shorting bonds. This is designed to get a steady return in exchange for taking up risk. Such strategies work very well. For a while. Until risk comes through and they crush to zero.

    Do their “cautious” investors know that they are taking bets like this?
  • edited 9 October 2019 at 7:32AM
    JoeCrystalJoeCrystal Forumite
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    edited 9 October 2019 at 7:32AM
    mcc100 wrote: »
    The exact words on the paperwork from my IFA are:

    A mutual fund discount is also on offer from Royal London, and this will currently reduce the fund charge by a further 0.15% per annum to just 0.25%. It is Royal London's stated intention to maintain this discount in the range of 0.15% to 0.25% per annum.

    That is interesting. That might be the ProfitShare Awards since each year, Royal London aims to award between 0.15% and 0.25% of the value of the plan unless I got the wrong end of the stick.
    Mordko wrote: »
    Are the charges you are quoting inclusive of all costs, such as stamp duties and all the other costs of owning and periodic buying and selling of properties, commodities and stocks?

    They invest into commodities via derivatives. Do they report the costs? Do they account for the additional risk, e.g. contagion?

    If you are referring to TER then as far as I can see, it matches the AMC. As for the rest of your questions, I have not got a clue, to be honest, and frankly, I got better things to worry about than in-depth charges which are not apparent in their fact sheets. :)

    If you want the answers to your specific questions, then I would suggest you ask the Royal London itself.
  • MordkoMordko Forumite
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    TER will be higher than AMC. Always is but in some cases it’s a lot higher, particularly for active funds, property funds, futures...
  • SonOfSonOf Forumite
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    Mordko wrote: »
    TER will be higher than AMC. Always is but in some cases it’s a lot higher, particularly for active funds, property funds, futures...

    Not with pension funds and life funds it isnt as there is no TER or OCF with these. The AMC calculation is on par with TER.
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