IFA versus HL

fronty

Since going DIY I'm saving about 4K per annum in fees, that saving will increase as my portfolio grows. Can't comment on DIY vs IFA returns going forward as no idea what returns he will achieve in future, but historically he under-performed the market, which made me question why I was bothering with an IFA.

eskbanker

flopsy1973 said:

Not thinking I will do better than IFA but when I asked about returns they quoted the returns I have achieved with the mix of funds u have made just with less volatility.  Has anyone else experience  of using IFA versus diy  regarding fees and returns ? 

But at the risk of labouring the point about the role of the IFA, it's not about the size of the returns but their alignment with your requirements.  In other words, picking random figures and oversimplifying, if your objective was to achieve a pot of £x by a certain date, I'd expect the portfolio recommended/implemented by an IFA to get within (say) 10% of £x, whereas DIY might be plus or minus 50%.

flopsy1973

Hi 
I have been researching what people have been posting on here since my last post to make a more informed choice and waiting for another IFA to contact me. But of course in the meantime all this has happened to the market my portfolio is down around 40k. Is is worth still moving to different funds as has been suggested on here or continue to hold what I have now and wait for some recovery before moving ? Many thanks

dunstonh

 Is is worth still moving to different funds as has been suggested on here or continue to hold what I have now and wait for some recovery before moving ?

Apologies in advance for being blunt.    Does it matter what we say?   You seem to have a paralysis when it comes to making a decision.  5 months on from when you started and you still haven't decided.

I cannot actually remember what the "suggestions" were on this thread and with 8 pages, I am not going to look back and find out.  Maybe you could remind us?

fronty

flopsy1973 said:

Hi 
I have been researching what people have been posting on here since my last post to make a more informed choice and waiting for another IFA to contact me. But of course in the meantime all this has happened to the market my portfolio is down around 40k. Is is worth still moving to different funds as has been suggested on here or continue to hold what I have now and wait for some recovery before moving ? Many thanks

You say your portfolio is down around 40K, but what is that in terms of percentage?
Mine is currently down 13%, which is pretty good I reckon.
Personally, I think you've missed the boat now. If you move into different funds you will be crystallising your losses. I wouldn't do anything now without speaking to your IFA, situations like these are exactly why you need one.
It seems you have taken zero action yourself during these 8 pages of posts so I don't think you're suited to DIY investing. Give your IFA a call and chat through your options.

flopsy1973

Yes i possibly have been dithering with this but have a lot going on at moment and was researching some of the comments previously posted while waiting for the IFA i have seen to respond with his suggestions(still waiting) . Yes i realised if i moved into other funds now i would be making a loss but was unsure if moving to one of the multi asset funds suggested would still be a better option if the situation worsens.
the previous suggestions ranged from doing some research and taking more active ownership of the portfolio after selling  everything i had previously and starting from scratch and using some multi asset funds. I am struggling in my local area to find a IFA who is not under a other financial company eg Fairstones

flopsy1973

any suggestions here to either hold on to what i have and wait for upturn? or switch to less volatile funds regardless of crystallising the losses. Which funds would you get rid off given the current situation

OldMusicGuy

I'm getting rid of none because my investment choices are supporting my strategy very well and performing just as I hoped (I DIY by the way). The first thing you need to be clear about is what do you want to achieve in the long term. If you move to less volatile funds you may well reduce the impact of further falls. However, you will have crystallized your losses and you risk losing out on the recovery because the less volatile funds will not recover as quickly as the more volatile ones. So you will have lost out on the way down, and you risk losing out on the way back up.

This is very simplistic, but I see the basic choice as follows: do you reduce the impact of further losses now at the expense of losing out on future growth, or do you hold your nerve and hope to bounce back when there is a recovery? Only you can decide that, because it depends what your long term goals are and how they would be served by the choice you will make.

The big issue is how much more will markets fall? Perhaps they have fallen as far as they are going and will bounce around at current levels. Maybe there's another big drop coming. No-one knows. And I guarantee no-one knows when the upturn will be, what it will look like and how long it will take. So you will find it very hard to know when to switch back.

flopsy1973

I have decided to stay invested in the original portfolio for now as i would be making small losses on some of my funds and big ones on the individual shares i hold. So hopefully when things improve slightly i can at least get out without too much loss. I am in this for the long term and realise that it may take a long time to see some of these bounce back. I am looking to expand my knowledge so i am better informed to make the changes to this portfolio when the time is right. Does this sound a reasonable plan as suggested above.
Also below so if i did not get to pot £x by a certain date using IFA would they be liable for that ?

flopsy1973 said:

Not thinking I will do better than IFA but when I asked about returns they quoted the returns I have achieved with the mix of funds u have made just with less volatility.  Has anyone else experience  of using IFA versus diy  regarding fees and returns ? 

But at the risk of labouring the point about the role of the IFA, it's not about the size of the returns but their alignment with your requirements.  In other words, picking random figures and oversimplifying, if your objective was to achieve a pot of £x by a certain date, I'd expect the portfolio recommended/implemented by an IFA to get within (say) 10% of £x, whereas DIY might be plus or minus 50%.

 

OldMusicGuy

flopsy1973 said:

I have decided to stay invested in the original portfolio for now as i would be making small losses on some of my funds and big ones on the individual shares i hold. 
Also below so if i did not get to pot £x by a certain date using IFA would they be liable for that ? 

Hopefully this shows the reduction in risk of diversified holdings compared to individual shares. IMO holding individual shares is not a great idea for investors that are not experts in reading company reports and understanding market trends.

Regarding the IFA, they are liable for nothing if your pot does not do well. That's the beauty of their business model, they get paid regardless of what happens to your investments. That's one of the reasons that many people (like me) prefer to DIY.