IFA Visit - Costs- Market Outlook - True Potential Platform

green_man

I visited an IFA today to discuss transferring a DC pension pot to a flexible drawdown provider.

The platform that they suggested suited 75% of their clients was True Potential. It seems a number of people have had mixed experiences with True Potential Wealth Management, but here they are just suggesting it using the True Potential platform. It seems the platform has quite a good reputation but I am struggling to find any reviews by people actually using this platform, in particular using it for Pension drawdown. Has anyone any direct experience? It does seem relatively expensive at 0.4%.

For other fees they would charge 1.75% of pot to transfer and then 0.8% ongoing yearly charge for advice/management. These seem to be roughly par for the course as far as I can make out?


One other interesting comment that the advisor made was that they are moving most people into more cautious portfolios, and in particular moving away from trackers and overweight in cash due to the current market outlook. i.e. they are trying to ‘time the market’, do all IFAs do something similar ?

Seabee42

True potential usually are self referrals i.e. from a salesman (calling themselves advisors) not an Independent advisor.

green_man

Seabee42 wrote: »

True potential usually are self referrals i.e. from a salesman (calling themselves advisors) not an Independent advisor.

It’s definitely an IFA I am dealing with in this case, and we are just talking about using their platform, not their advice. The advice will be provided by the IFA company

[Deleted User]

My snap reaction is that your IFA must be, at best, complacent.

There are good reasons for avoiding TP, which I can expand upon if you wish. To quote a regular on these forums who works as an IFA : "No IFA goes to TP for the benefit of their customers. It is detrimental."

What are the rules for IFA's in these circumstances?

green_man

ZingPowZing wrote: »

My snap reaction is that your IFA must be, at best, complacent.

There are good reasons for avoiding TP, which I can expand upon if you wish. To quote a regular on these forums who works as an IFA : "No IFA goes to TP for the benefit of their customers. It is detrimental."

What are the rules for IFA's in these circumstances?

Well yes I’ve read similar things, but no such comments seem to be focussed on their platform, which as far as I can make out is pretty well regarded. The IFA is only suggesting the platform not any of their funds or wealth management products. If you have any knowledge of this or even 2nd hand feedback on such then please enlighten me.

[Deleted User]

I do not work in the financial services industry but from what I can gauge from their website, True Potential do not offer a platform whereby the investor makes his/her own decisions.

If my assertion is correct - and TP investors are put into one of their five silos - according to risk profile - I am happy to tell you why you should not.

cfw1994

green_man wrote: »

I visited an IFA today to discuss transferring a DC pension pot to a flexible drawdown provider.

The platform that they suggested suited 75% of their clients was True Potential. It seems a number of people have had mixed experiences with True Potential Wealth Management, but here they are just suggesting it using the True Potential platform. It seems the platform has quite a good reputation but I am struggling to find any reviews by people actually using this platform, in particular using it for Pension drawdown. Has anyone any direct experience? It does seem relatively expensive at 0.4%.

For other fees they would charge 1.75% of pot to transfer and then 0.8% ongoing yearly charge for advice/management. These seem to be roughly par for the course as far as I can make out?


One other interesting comment that the advisor made was that they are moving most people into more cautious portfolios, and in particular moving away from trackers and overweight in cash due to the current market outlook. i.e. they are trying to ‘time the market’, do all IFAs do something similar ?

I suspect their fees are indeed par for the course, although most wise heads here usually suggest you should aim for 0.5% ongoing fees - those are the ones that can massacre your returns over the long term!

Moving away from trackers though. Hmmm....I'd have thought trackers are relatively low risk. Certainly should also be low cost.....
I would be concerned at any IFA trying to "time the market". Are they an investment manager or an IFA?!

No experience with "True Potential Wealth Management", but anyone with "Wealth Management" in the title is enough to make me run the other way - it is generally THEIR wealth management they are interested in, as a rule of thumb!!

SonOf

The platform that they suggested suited 75% of their clients was True Potential.

True Potential is usually offered by sales reps rather than IFAs. They do accept business from IFAs but most IFAs will not go near it as TP require certain amounts of business and this effectively calls into question the independence of the adviser. Often you find it is IFAs that are transitioning to FA and intend to use TP that use this.

It is theoretically possible to use TP and still be classed as an IFA. However, the optics of doing so are not great.

It does seem relatively expensive at 0.4%.

And that is why you have to question the independence of the firm when they are putting 75% on that platform. The mainstream IFA platforms are typically in the 0.1x% to 0.2x% range nowadays. So, how does recommending a non-mainstream platform at nearly twice the cost sit with best advice?

One other interesting comment that the advisor made was that they are moving most people into more cautious portfolios, and in particular moving away from trackers and overweight in cash due to the current market outlook. i.e. they are trying to ‘time the market’, do all IFAs do something similar ?

You can get static asset allocation models and you can get fluid asset allocation models (that change over the economic cycle). The latter is the most common. Moving people around the risk scale can happen. However, most will remain at their current level. Sometimes people will reduce their risk after a sustained growth period as they have the value that they need and prefer to drop a notch or two on the scale to play it safe. However, its an individual thing that should be specific with the client and not something that a firm should be doing for everyone as it will not be right for everyone.

Albermarle

One other interesting comment that the advisor made was that they are moving most people into more cautious portfolios, and in particular moving away from trackers and overweight in cash due to the current market outlook. i.e. they are trying to ‘time the market’

Yes they are trying to time the market , which is normally not recommended for long term investors.
However it is in quite a modest/gradual way and considering the growth of the markets in recent years , then maybe more common sense than anything . As Son of says

Sometimes people will reduce their risk after a sustained growth period as they have the value that they need and prefer to drop a notch or two on the scale to play it safe.

[Deleted User]

SonOf wrote: »

You can get static asset allocation models and you can get fluid asset allocation models (that change over the economic cycle). The latter is the most common. Moving people around the risk scale can happen. However, most will remain at their current level. Sometimes people will reduce their risk after a sustained growth period as they have the value that they need and prefer to drop a notch or two on the scale to play it safe. However, its an individual thing that should be specific with the client and not something that a firm should be doing for everyone as it will not be right for everyone.

It is not that people are moving around the risk scale, it is that fixed holdings are constantly shuffling between different funds under the company aegis. For example, TP have five funds, in which their customers are silo'd according to risk-profile. Between these, fund managers are, "all the time, just adjusting the portfolio, like the sailing captain of a tiller."
And whenever they move a particular holding from one fund to another, charges apply to the clients of both. These are "below the line" charges that the customer does not see.
This practice is by no means uncharacteristic. It is a major money maker for companies with famous names.

SonOf

Between these, fund managers are, "all the time, just adjusting the portfolio, like the sailing captain of a tiller."

Sometimes you have to look past the marketing speak. Marketing speak is BS. It is there to turn a mundane routine boring activity into something exciting.

For example, our portfolios under advisory basis (not discretionary) are constantly monitored as we only use the funds that pass research criteria set by the investment committee. Monthly governance reports are issued and ad-hoc when needed (due to an unknown event). Currently, we have been pulling people out of Jupiter European fund. However, that has been our go to fund for Europe for a long time. So, "all the time" it was under review but passed every time until recently.

And whenever they move a particular holding from one fund to another, charges apply to the clients of both.

Most switches incur no charges nowadays.

These are "below the line" charges that the customer does not see.

Not possible post MiFIDII. (despite the flaws of MiFIDII).