Knowledge acquisition

Sunnylifeover50plan

Evening - I have a SIPP, am curious and wouldn't mind taking a more hands on approach to my investments and wonder if there are any recognised learning and development pathways I could follow?

[Deleted User]

Books to read:

1. DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning Kindle Edition
by John Edwards (Author). This is extremely simple; good to start with.

2. Investing for adults by Bernstein (a series of 4)

3. Random walk down the Wall Street

4. Personal accounts about investing in the 30s and 70’s.

There is more but this should be enough to go it alone.

If you look at the curriculum of a typical IFA course, most of what they learn is focused on rules and best practices for selling and would be irrelevant.

cfw1994

Not to mention perusing this forum, particularly for posts that sound like people in a similar position.......hive mind, it can be useful, albeit you need positive affirmation of any tricky or esoteric points.

I would add that your fees sound very reasonable to me: less than (or around?) 0.25% ?

I am a firm advocate of DIY *if* you have the interest and understanding....but equally, *if* your IFA is helping you make the progress you are after, then that fee sounds a very fair price to pay: IFAs are not a charity organisation :rotfl:

Bravepants

I agree with cfw1994, your IFA's fees look very good. One of the cheaper DIY platforms is Vanguard Investor and they charge 0.15% platform fee and 0.22% per annum for something like their Lifestrategy funds, so would be 0.37% per annum in total. So I doubt you can beat your IFA's fees by DIY.

DIY'ers should expect/aim to drawdown from their investments at a Safe Withdrawal Rate somewhere between 3% and 4% per annum. So if you are paying 0.25% fees AND you are able to drawdown at least 3% per year AND your remaining capital is increasing in value better than inflation each year, AND you are able to sleep at night, then you are already doing very well.

Albermarle

I agree with cfw1994, your IFA's fees look very good. One of the cheaper DIY platforms is Vanguard Investor and they charge 0.15% platform fee and 0.22% per annum for something like their Lifestrategy funds, so would be 0.37% per annum in total. So I doubt you can beat your IFA's fees by DIY.

The OP says they are paying an IFA - 0.25% to manage the investments . Presumably SIPP platform fees and fund fees will be on top of that , so the total cost will be higher, maybe significantly higher .

Bravepants

Albermarle wrote: »

The OP says they are paying an IFA - 0.25% to manage the investments . Presumably SIPP platform fees and fund fees will be on top of that , so the total cost will be higher, maybe significantly higher .

Yes, of course. I think the OP should find out what those fees are, if he doesn't already know. They are likely to be deducted by selling down investments.



If he's paying upward of 1.5% platform and fund fees on top of the IFA fees then sure it's significant, but there is the "sleeping at night" factor to consider too!

SonOf

If you look at the curriculum of a typical IFA course, most of what they learn is focused on rules and best practices for selling and would be irrelevant.

That is incorrect.

The OP says they are paying an IFA - 0.25% to manage the investments . Presumably SIPP platform fees and fund fees will be on top of that , so the total cost will be higher, maybe significantly higher .

Or possibly lower. For example, if the OP was using HL as an alternative and the IFA platform has a fee in the 0.1x-0.20% range.

I think I also misunderstood a little how the SIPP would work as with my SIPP provider and funds (Pru and Fidelity trustee funds) I am only able to request valuations via my IFA which seems a bit steam driven, all roads pass through my IFA who is authorised to request valuations or extract them from a web portal which leaves me feeling a little impotent at times.

Many advisers have a client portal for valuations and most platforms have a client valuation service too.

One of the funds is also a kind of white label offering from my firm of advisors which sits on the fidelity platform and which I assume brings in another income stream for them in addition to the monetised £1250 pa fee I pay them.

That is an incorrect presumption as it is not allowed. Some fund houses have superclean share classes available for very large adviser firms. Most dont but Fidelity are one that do this. They put the adviser initials or similar in the fund name text when they do that. Or it could be that yours is not an IFA but an FA and is using own brand funds.

The Advisor company fund which sits on the Fidelity platform is 1.10% pa (of which 0.3% is passed onto the investment manager) c. £269k currently

It sounds like a discretionary investment management service is being used (0.3%). That will be not be an investment fund.

Does it look as if my costs to invest are about right? I am still invested in the funds I was placed in originally so there is very little going on apart from an annual review and valuations requested/ provided.

The prufund requires no work. However, if it is a discretionary investment that is being utilised then the work is being done within that and they do not need to run changes by you first. With an advisory IFA, they have to tell you what they want to change and you need to agree it. With a discretionary IFA the changes can be made without you being involved.

Albermarle

Does it look as if my costs to invest are about right?

The SIPP fee could be less with another platform but its not excessive .
The fund fees are also what you would expect for a managed investment like this . A passive investment would be cheaper.

The performance of the funds is not great , but it depends to some extent what you asked for in terms of risk etc

SonOf

Sunnylifeover50plan wrote: »

Thanks. My IFA assessed my risk rating of 3 and I am now 4.5 years away from wanting to draw c. £15-17k pa. from it.

Is that on a 0-5 scale? 0-7 scale or 0-10 scale?

If its risk 3 on a 1-10 scale then its no wonder the performance is lower than what many of the contributers here would like as you tend to find the posters on this site would be up around 8 to 10 on that risk scale.

PruFund cautious is a more expensive fund as it is a niche option aimed at defensive investors who want to pay for some degree of capital security. Experienced investors would not typically use this option as they would accept the investment volatility that goes with conventional investment options.

When you build a portfolio of funds, you frequently build them with some above, at and below your risk profile but average out to match your risk profile. So, a difference in returns would be expected and having periods when one appears to be better or worse than the others is all quite normal.

Audaxer

Sunnylifeover50plan wrote: »

3 out of 5, moderate appetite for risk.

Do you know what percentage of equities are in your SIPP?

Regardless of fees, I wouldn't be happy sticking with an IFA who is dismissive when you ask questions about the performance of your investments.

SonOf

3 out of 5, moderate appetite for risk.

Interesting as the Pru fund wouldnt fit risk 3 with that risk profile. Which suggests at least one of the alternatives would have to be higher risk to average it out. I would thhen question what you are doing with the Prufund in the first place if that is the case.

A 5 scale would typically see risk 3 having around 50-60% equities.