IFA Visit - Costs- Market Outlook - True Potential Platform

green_man

SonOf wrote: »

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.



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?



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.

This is a local family based firm that has been around For 30 years, definitely sells itself as ‘Independent’, I have little doubt that they are independent they have a good local reputation.

So it does concern me that they put 75% on a platform at 0.4% when as you say platforms under 0.2% are available. To be fair they did say part of their initial transfer work would be reviewing my needs to identify the best platform, so maybe I wouldn’t end up on this platform. (It could be that a lot of their clients have under £100k in investments so maybe this platform works from a cost perspective then?).

Yeh your last paragraph matches up with what they said broadly. The comments made were a general sentiment comment but obviously varies client to client. I guess the thought is that trackers can be a problem in bad times? Is this true?

They did seem to be proud of calling the 2008 crash and the 2015 blip. What they did not tell me was how often they have advised people out of the market with no subsequent dip. Obviously calling a big crash could have a huge positive impact on your portfolio.

I was hoping someone actually had some direct experience with the True Potential platform, maybe if it really is great I can keep this option open, otherwise I am inclined to dismiss this option.

Another interesting thing they say was that I was in the top 5% of aggressive investors that would be on their books! I don’t particularly consider myself that cavalier, I did show them my income portfolio (that I wasn’t asking them to manage) and this seemed way beyond their typical normal risk profile.

Seabee42

The problem is that given the charges of the true potential platform it is not something any regular readers would choose.


The tracker/active argument is that an active manager can avoid the dogs in a downturn whilst a tracker fund has to hold them. This would be fine if an active manager could reliably spot all the dogs and avoid them. Clearly there are some who can for a while whether its luck or judgement but very few do over longer periods and there are a lot who don't and yet charge more so your worse off.

SonOf

So it does concern me that they put 75% on a platform at 0.4% when as you say platforms under 0.2% are available. To be fair they did say part of their initial transfer work would be reviewing my needs to identify the best platform, so maybe I wouldn’t end up on this platform. (It could be that a lot of their clients have under £100k in investments so maybe this platform works from a cost perspective then?).

Using multiple platforms/providers for different things is what you would expect from an IFA. Smaller amounts may favour one platform compared to another.

I would say around 50% of what we currently place goes on one platform and around 40% on another and the rest in other places. It is inevitable that IFAs will not have a very wide provider mix, like in the past, as whole of market platforms all offering the same funds and often using the same software mean that costs are often the main differentiator. However, you expect to move platforms periodically. The platforms that were best 15 years ago are not the best ones today.

The other thing to note is that IFAs frequently get different platform terms to the published default. So, until the IFA confirms the platform charge, it may not actually be the published generic figure. They may have better terms with TP then default.

They did seem to be proud of calling the 2008 crash and the 2015 blip. What they did not tell me was how often they have advised people out of the market with no subsequent dip. Obviously calling a big crash could have a huge positive impact on your portfolio.

I would take that with a pinch of salt. In fact it would concern me more that they are claiming that. Nobody can time the market. That said, asset allocations models that are fluid do take market data into account and some adjustments in some sectors will take place due to long term pricing data. However, that is tweaking within a range. Not wholesale movements.

I was hoping someone actually had some direct experience with the True Potential platform, maybe if it really is great I can keep this option open, otherwise I am inclined to dismiss this option.

Nowadays, the modern platforms are much the muchness. There are two major software suppliers for platforms (recently three but FNZ is buying the third). They are responsible for over half of platforms. Then you have those with in-house software. True Potential used to use SEI but a couple of years ago made the decision to go with in-house software instead. I don't know what stage they are at on that but I also read that TP was put up for sale in 2018 and still hasn't been bought but there are reports of interest from asset houses that have no real provider level presence in the UK.

Let the IFA explain to you why think TP is better than other platforms charging 0.2x%. They may have good reason. You may spot a BS reason.

I guess the thought is that trackers can be a problem in bad times? Is this true?

No. It is anecdotal. The old theory was that managed funds manage downside better than trackers. However, there isn't much to back that up. However, managed funds usually have different objectives to trackers. e.g. if you went into a low risk Japanese equity fund then you would expect it to go down less than a Japenese index tracker. However, you would expect it to go up by less as well. The biggest trend with advisers currently is hybrid styles. e.g. tracker used as default unless a managed fund is considered viable as an alternative. So, you end up with a managed and passive spread. Even the DFMs (discretionary fund managers) have been using hybrid more.

Albermarle

The problem is that given the charges of the true potential platform it is not something any regular readers would choose.

If the 0.4% is an all in charge , with no other charges for drawdown , withdrawals etc it is not wildly out of line .
There are people on this forum using and recommending Hargreaves Lansdown - platform charge 0.45%.
Although the forum users with the bigger pots are not usually amongst them .

I guess the thought is that trackers can be a problem in bad times? Is this true?

Trackers by their nature will follow the share markets. So if shares drop40% the tracker will drop 40%.
An investments fund that was not 100% linked to share markets would normally drop less .

ianthy

ZingPowZing wrote: »

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.

I had the same experience, TP were efficient in managing my pension transfer on to TP platform. I found they were constantly fiddling with my funds each month - just small tweaks but I felt generated more fees and little benefit to me. I cashed in the funds and transferred out - I now manage my own SIPP.

[Deleted User]

Well, I wonder how many clients are like ianthe and bother to check. It's not like firms are upfront about such charges. For example, this is the drill for the firm True Potential:

After logging in to your client site you are automatically taken to the “Overview” page.

From here click the navy blue button indicating “True Potential Investments” or click the link on the purple horizontal menu at the top of the page called “Investments”. Both these instructions will take you to the same page.

From here you will need to click where it says "**** **** Personal Pension” which is towards the bottom of the page

On this page immediately above the graph there is a tab that says “Fund allocation” - please click this link.

On this page you will see each fund that you are invested in and how many units of each fund as well as other data.
If look towards the bottom of the page you will see a list of funds that you are invested in -
if you click the icon which looks a bit like a magnifying glass with a cross in it then you will cause that fund to be the only displayed on the graph above
if you click the icon that looks like an eye with a dot within it then you will cause that particular fund to be removed from the graph above.
or if you click where the fund description is written then you will be taken to a graph of that fund as well as any transactions that have taken place regarding that particular fund within your portfolio."


No doubt the firm's obligations to MiFIDII are thereby discharged but my guess is that the overwhelming majority of their clients are not even aware of these charges. The only figure they will see is the overall value of the investment.


"Most switches incur no charges nowadays." SonOf

Great. Get your IFA to check.

cfw1994

green_man wrote: »

(snip)

They did seem to be proud of calling the 2008 crash and the 2015 blip. What they did not tell me was how often they have advised people out of the market with no subsequent dip. Obviously calling a big crash could have a huge positive impact on your portfolio.

(snip)

I would not necessarily use SonOf’s pinch of salt, I think I would call total BS....unless they have some VERY firm external evidence of their actions, this sounds like a ridiculous claim...they might call it a “sales puff”, I’d use stronger words!

As you say: if they really managed that, can they also prove they haven’t taken people out of a rising market.....as it continues upwards?!

Your call, of course, but they sound pretty iffy to me!

bostonerimus

cfw1994 wrote: »

I would not necessarily use SonOf’s pinch of salt, I think I would call total BS....unless they have some VERY firm external evidence of their actions, this sounds like a ridiculous claim...they might call it a “sales puff”, I’d use stronger words!

As you say: if they really managed that, can they also prove they haven’t taken people out of a rising market.....as it continues upwards?!

Your call, of course, but they sound pretty iffy to me!

I agree, it's BS. Selling people of the ability to time the market successfully is a scoundrel's tactic. I missed the crashes of 1987, 2000, 2008 and 2011 and did perfectly fine. Of course investing for income might require you to keep a bigger cash buffer to survive down turns and you might want to put a bit more emphasis on dividends, but asset allocation and income drawdown management are required for drawdown success, not market timing. Run a mile form these folks.

green_man

cfw1994 wrote: »

I would not necessarily use SonOf’s pinch of salt, I think I would call total BS....unless they have some VERY firm external evidence of their actions, this sounds like a ridiculous claim...they might call it a “sales puff”, I’d use stronger words!

As you say: if they really managed that, can they also prove they haven’t taken people out of a rising market.....as it continues upwards?!

Your call, of course, but they sound pretty iffy to me!

As I said earlier they didn’t indicate how often they may have advised people out of the market with no subsequent dip. No worries I’m immune to this type of ‘persuasion’.

Interestingly another dodgy (in my opinion) strategy they used was to heavily imply that their insurance protected me from poor performance. I did press them on this but they insisted that underperformance might be an insurance matter!

Seabee42

Statistically for US equities the investment loss if you get out early is about the same as the loss from a crash on average.