Financial Advisors

Malthusian

sparky0138 wrote: »

Would she lose a lot of money if she found an IFA and they advised her to move the investment? I have a feeling I know what you're going to say.

If an IFA advised her to move the investment there's a decent chance she'd lose money by not doing so. By continuing to pay higher charges year on year. FA solutions tend to be more expensive. This is an inherent property of being a tied adviser; some of the options they ignore may be lower-cost.

If 1% per year is for advice alone (with platform charges and fund charges on top) that's the very top end. In other words it is virtually impossible for her to pay more for advice. 1% is the top end, anything above 1% would be downright obscene.

sparky0138

In answer to some of the questions...

The fund she's currently invested in is Quilter Investors Cirilium Conservative Port -U. The product charge is 0.4% for the first £25,000 and 0.2% for the rest.

The summary provided by the advisor said that the total costs and charges (including his) will reduce the fund growth by a net 2.7% per annum.

Here are links to the fund's performance over the past few years and a projection of what effect the charges could have:

Fund

Projection

Over the past few years she's been making voluntary contributions to top up her state pension. By the time she retires she'll be just one year short and they forecast she'll get £158.96 per week.

The only pension she's contributed to is auto-enrolment through work and that only kicked in last summer so she has an annual projection of around £600 (from March's statement) and is paying in £50 per month until 2021.

She's read through the wonderful feedback on this thread (thank you so much!) and doesn't think she's capable of doing it herself. I don't think I am either as I'd be too worried about advising her and losing her money!

I keep seeing people recommending Vanguard LifeStrategy all over the place. It looks "simple" on the website and the past performances look great but I guess it's not as easy as just transferring all the money into one fund (depending on risk level of course) and letting it do the work otherwise everyone would be doing it. What I'm saying is, this still needs hours of research, right? It's not a simple way of avoiding paying for a FA?

She hasn't had a yearly review yet. It took a while for all the pensions (there were five in total) to be transferred so although she first saw the advisor in October, it wasn't until April this year that all the money went in. So I'm guessing the first review will be in April. Ironically, the advisor she saw is retiring next month so it won't be him she sees.

xylophone

The amount of money in the pot is modest.

She might consider selling the existing investment and transferring the cash to a SIPP ( the new provider would deal with the transfer) and choosing the Acc version of a multi asset fund. See post 5.

She could check on line how it was performing - since she doesn't want to draw down there would be no administration to speak of.

https://monevator.com/low-cost-index-trackers/

She could transfer in the workplace pension once she retires.

SonOf

The fund she's currently invested in is Quilter Investors Cirilium Conservative Port -U. The product charge is 0.4% for the first £25,000 and 0.2% for the rest.

That fund is used by FAs. Let me guess..... The Cirillium fund is held on the Old Mutual Wealth Platform? and if you look at the adviser letterhead, it will say they are an appointed representative of intrinsic on the bottom? (all three bits part of the same group).

I keep seeing people recommending Vanguard LifeStrategy all over the place. It looks "simple" on the website and the past performances look great but I guess it's not as easy as just transferring all the money into one fund (depending on risk level of course) and letting it do the work otherwise everyone would be doing it. What I'm saying is, this still needs hours of research, right? It's not a simple way of avoiding paying for a FA?

The VLS funds are available on the OMW platform, assuming that is the one it is held on. OMW do not charge on fund switches.

You can request OMW turn off the ongoing fee to the adviser and request they do the fund switch without the adviser being involved.

Audaxer

sparky0138 wrote: »

In answer to some of the questions...

The fund she's currently invested in is Quilter Investors Cirilium Conservative Port -U. The product charge is 0.4% for the first £25,000 and 0.2% for the rest.

The summary provided by the advisor said that the total costs and charges (including his) will reduce the fund growth by a net 2.7% per annum.

Here are links to the fund's performance over the past few years and a projection of what effect the charges could have:

Fund

Projection

The projection page figures show a very low projected growth before charges of around £400 a year on the initial £58,110. That is a average growth rate before charges of only 0.69% a year. These figures surely must be overly pessimistic. If after charges the initial £58,110 was to become £45,800 after 13 years, there is absolutely no point in having it invested in that fund. Surely it would be better to have the money in a SIPP, even if the money was invested in a low risk Vanguard LifeStrategy fund, like the VLS20 or VLS40 fund. Even if either of those funds had a very low average growth rate over the next 13 years, with the much lower charges, you would be very unlikely for your investment after charges to be worth less than your initial £58,110.

sparky0138

SonOf wrote: »

That fund is used by FAs. Let me guess..... The Cirillium fund is held on the Old Mutual Wealth Platform? and if you look at the adviser letterhead, it will say they are an appointed representative of intrinsic on the bottom? (all three bits part of the same group).

Yes and yes!

The VLS funds are available on the OMW platform, assuming that is the one it is held on. OMW do not charge on fund switches.

If the switch was done through the Vanguard site, would it still be free? Or if it was done through OMW, would she then be able to view it through VG?

You can request OMW turn off the ongoing fee to the adviser and request they do the fund switch without the adviser being involved.

How would that request be made? And would she have to inform the FA before or after? I've had a quick look through the paperwork and can't see any fees for leaving the FA but will have a look in more detail.

SonOf

If the switch was done through the Vanguard site, would it still be free? Or if it was done through OMW, would she then be able to view it through VG?

The Vanguard site is only if you hold the Vanguard ISA. The switch needs to be done via OMW. OMW are shortly moving to new platform software run by FNZ. That software does have a client login.

How would that request be made?

A simple one line letter. Please turn off ongoing remuneration as we are no longer using the adviser.

And would she have to inform the FA before or after?

Some people do. Some people dont.

I've had a quick look through the paperwork and can't see any fees for leaving the FA but will have a look in more detail.

There should not be any unless it is within the first 12 months.

sparky0138

Audaxer wrote: »

The projection page figures show a very low projected growth before charges of around £400 a year on the initial £58,110. That is a average growth rate before charges of only 0.69% a year. These figures surely must be overly pessimistic. If after charges the initial £58,110 was to become £45,800 after 13 years, there is absolutely no point in having it invested in that fund. Surely it would be better to have the money in a SIPP, even if the money was invested in a low risk Vanguard LifeStrategy fund, like the VLS20 or VLS40 fund. Even if either of those funds had a very low average growth rate over the next 13 years, with the much lower charges, you would be very unlikely for your investment after charges to be worth less than your initial £58,110.

That's why I asked if she could do without the FA. It makes no sense but of course at the meeting, he didn't go into detail about projection figures after charges.

Is the money not in a SIPP already? That's what we were led to believe.

Would there be any tax implications to transferring the money into one of the VG funds? And when she's ready to start taking money from it, would there be any issues then?

I'm thinking it might be best for her to see a few IFA's and maybe pay a one-off fee for one of them to set this up for her.

sparky0138

SonOf wrote: »

There should not be any unless it is within the first 12 months.

Ah. It's within the first 12 months. So would you recommend waiting until after the first review?

I was also wondering if this is a good time to be moving funds with Brexit just around the corner. I know the impact it will have is unknown but would people advise against it right now and wait to see what happens short-term?

SonOf

Is the money not in a SIPP already? That's what we were led to believe.

No. The OMW pension is a personal pension. Not a SIPP. However, that is a non-issue as the OMW pension invests in UT/OEICs.

Ah. It's within the first 12 months. So would you recommend waiting until after the first review?

No. Just check the adviser contract to make sure there is no deferred fees. The majority will not but Intrinsic are getting closer to SJP all the time and you never know.

I was also wondering if this is a good time to be moving funds with Brexit just around the corner.

Brexit is largely an irrelevance as far as global markets go. Plus, she is already invested. All you are doing is tweaking.