Decision on going DIY

archie17

We are in a very fortunate situation

I am 68 with the following incomes

Additional state pension £14,200
Section 32 pension £4500.

My wife is 64 retired (carer getting NI credits)
Getting LG pension of £1200.
Expecting the full State pension late 2020.
Contributing £2880 to SIPP
Contributing £3600 to ISA Vanguard 80

MIL lives with us and contributes to household.
We live very well but do not take holidays due to caring for MIL
We are house owners with no mortgage or other debts.
Have a cash buffer of 6 to 9 months.
Have will and both have LPA.

I have a DC pension with Old Mutual. When I finished work I had two DC work pensions. We consulted a IFA and he advised that we transfer to Old Mutual using 18 funds. The pot is worth £310k. One of the funds is the suspended Woodford funds.
For the near future we do not need to access this, when MIL passes, we will take some holiday and might draw down £5k pa. We see this pot as a legacy for our three children.
We have some shares and we have been selling these and passing onto children.

About a year ago the IFA became a FA, he did not have the courtesy to inform us of this.
Early this year we asked him to advise us on a low cost tracker rather than 18 funds.
He recommended a Cirilium Moderate Passive fund.

I have been researching going DIY and think Interactive Investor would be suitable.
The reasons for going DIY is I want to take my business away from the current FA and I do not want to pay up to 3% of my fund to get advise from another IFA. Secondly I want to reduce my charges.

My problem is deciding on funds
Thinking of
Vangaurd 60 or 80 - 50%
HSBC Global Strategy fund - 50%

The reasoning for these choices is for a simple life.
When we discussed our risk capacity with our (I)FA we were 5 out of 7.

Thankyou for reading this far, any comments or suggestions?

Linton

IFAs are most useful when one has a specific objective to meet. In your case if you dont really need the money except for the relatively small drawdown and the occasional lump sum, some volatility would not matter, and you have no great wish to spend time and money maximising the legacy for your children your approach seems reasonable to me.



As long as you only use the sort of investments you have suggested rather than dabbling in something exciting you should be fine. I would not spend too much time agonising over which particular well diversified fund within your risk acceptance to use as the long term differences should not be great, and in your circumstances would appear not to matter much to you.


I use ii for a significant part of my investments and find them fine.

SonOf

About a year ago the IFA became a FA, he did not have the courtesy to inform us of this.
Early this year we asked him to advise us on a low cost tracker rather than 18 funds.
He recommended a Cirilium Moderate Passive fund.

Cirilium and Old Mutual Wealth and Intrinsic (you dont mention intrinsic but if you check your adviser's letterhead you will probably see them mentioned in the compliance message at the bottom) are all part of the same group. They are creating a vertically integrated firm like SJP. But have been doing it in stages. Effectively, your FA has sold out for his own benefit (the more restricted you are, the cheaper it is to be an adviser)

Are you sure he only went restricted about a year ago. Intrinsic have been pushing their advisers to restricted basis since 2014ish. Some have been holding out but most went restricted but whole of market years ago and then gradually more restricted over the years.

HSBC Global Strategy fund - 50%

Which one?

When we discussed our risk capacity with our (I)FA we were 5 out of 7.

Risk scales are not all equal. Some have 1 = cash. Some have 0 = cash. At the upper end, some stop at the highest risk mainstream option. Others include non-mainstream extremee risks. So, without knowing the context, where you are doesnt really help.

Risk is about how much you can tolerate when it goes down but also how capacity for loss you may have if it never recovers. So to keep things very simple, how much could you afford for it to go down / tolerate for it to go down before you pull out?

The reasons for going DIY is I want to take my business away from the current FA and I do not want to pay up to 3% of my fund to get advise from another IFA.

On your value, you would expect 1% or less as the target IFA fee. There would be some priced higher though. Although that is irrelevant if you are going to DIY (and the fund choice is typical of a simple DIY option)

bostonerimus

If your pensions cover your income needs then I would go with an equity heavy portfolio with a cash and very short term bond or saving component for cash flow and emergencies. I'd use a global equity tracker as the core. My preference would be to keep it simple and would probably not add much to that, but you might add a few other trackers or active funds in regions and sectors that you fancy.

archie17

Thank you for your replies.

We have spoken to our FA and raised our concerns.

Re Woodford, he said that it is not uncommon for funds to be suspended but could only give an example of one in the last three years!
Re not informing us of going from IFA to FA - he said we were getting a better service due to the tie up with Cirrilium. Basically he did a lot of talking but avoided answering questions.
Re Cirilium Moderate Passive fund he told us that the OCR cost for this has now been reduced from 0.6% to 0.45%. When we told him this we thought this was expensive for a passive fund, he spoke of the expertise in the management team blaa blaa blaa.
He then said he would make a proposal for a lower cost fund next week.
After the discussion we are seriously considering going DIY

Our risk profile from the risk questionnaire was provided by Moody's Analytics : designed by Dr Alistair Byrne and Dr David Blake.
We were seen as Moderate Investors.
I know the markets can be very volatile but if you are well diversified you are in a large group of people where we are all on the same roller coaster. So the thought of 30% losses are not too worrying.

The funds we are considering are

HSBC Global Strategy Balanced Portfolio Accumulation - 50%
Vanguard life strategy 60 - 50%

I assume our Woodford fund would be transferred into the SIPP. We could then use this to speculate on some adventurous funds, when it starts trading. Assuming it will have some value. Any thoughts on what the losses will be when it back on the market. I expect 50% will be lost but I am not losing any sleep over it.

Platform to be Interactive Investor or Fidelity for me.
Fidelity for my wife, maybe only use Vanguard 60 or 80 fund

Any comments/suggestions?

SeniorSam

You sem to have a hand on the Tiller, so go DIY and look after your own funds. Have a look at Lindsell Train Global Equity compared to HSBC I believe they are better and I am very pleased with the return they are producing for me. The Vanguard is good as it has such a wide selection. You could think about a couple more to spread the load, but the two should be OK.

How long ago did your FA suggest Woodford? It has been a very poor fund for some time and would seem to be bad advice. Your FA also has a duty to advise you of his change from IFA as you were continuing in the knowledge that he was INDEPENDENT, which was not so. I would be careful of someone who is so dishonest.

Linton

SeniorSam wrote: »

You sem to have a hand on the Tiller, so go DIY and look after your own funds. Have a look at Lindsell Train Global Equity compared to HSBC I believe they are better and I am very pleased with the return they are producing for me. The Vanguard is good as it has such a wide selection. You could think about a couple more to spread the load, but the two should be OK.

.......

Your implication that LTGE is a suitable substitute for HSBC Global Strategy Balanced Portfolio seems somewhat surprising:
- LTGE 100% equity, HGSBP 65%.
- LTGE: US 35%, GB 35%, Japan 20%, everything else 10%. HGSBP follows global market
- LTGE: 85% invested in top 3 sectors, HGSBP: 44% invested in top 3 sectors so more diversified
- LTGE is far more volatile than HGSBP.
These really are very different funds and dont seem to me to make sense together. Why would someone happy with the excitement of LTGE feel the need for the 40% bonds of VLS60?

The HSBC fund is similar to VLS60, I dont see the point in having both. But if the OP is happier spliiting the money between managers then fine.

archie17

Thanks Linton
I was looking too early in the morning
[STRIKE]HSBC Global Strategy Balanced Portfolio Accumulation[/STRIKE]

I was looking at a HSBC Global Strategy fund similar too the Vanguard one.
The lesson learnt that there are so many different funds from the same supplier with very similar names.

Linton

Which HSBC fund are you considering?....The HSBC Global Strategy Balanced Portfolio Fund is similar to VLS60, its 65% equity.

SonOf

Re Woodford, he said that it is not uncommon for funds to be suspended but could only give an example of one in the last three years!

it is extremely rare for a mainstream unit-linked fund investing in equities to be suspended. Is it the ones investing in illiquid assets, like physical property, where it is more common.

Re not informing us of going from IFA to FA - he said we were getting a better service due to the tie up with Cirrilium.

He is getting a better service as Intrinsic are paying most of his bills now. Although technically, if the adviser left you in woodford when a number of the IFA research companies were warning about woodford in 2017, then perhaps what he means is that you would get a better service than he previously gave.

Re Cirilium Moderate Passive fund he told us that the OCR cost for this has now been reduced from 0.6% to 0.45%. When we told him this we thought this was expensive for a passive fund, he spoke of the expertise in the management team blaa blaa blaa.

If you went to an IFA and asked for a multi-asset fund with underlying passives you would end up with Vanguard, HSBC or the others at half that price. Or if you went with a servicing portfolio with the IFA on trackers only then it would be under 0.1%.