Financial adviser retiring - Would like to manage money directly now

fred246

I always imagine a horse race. You're not sure who will win but the tipsters are sometimes helpful if you pay them. But you don't know which tipster to use. A geezer will help you choose which tipster to use if you pay him. So you have to pay the geezer and the tipster. You're actually better off just putting a bit on each horse. I don't think it actually works in reality though (depending on the odds).

1234John

fred246 said:

SonOf said:

 I am confident enough to monitor my investments on a yearly/monthly basis and determine if they are performing.
Performance is just one bit of it.   Suitability, due diligence and risk are the other issues.   For example, we get a monthly governance report on investments that may pull funds for a reason.   Sometimes there are special bulletins on things that cannot wait.    Whenever we get a bulletin that turns a fund to a "sell" rating, we check who is on our ongoing servicing list and who has that fund and go to them to discuss the changes that need to be made.     Two relatively recent removals involved funds that have been performing very well but have issues coming up.   Waiting for the fund to drop off in performance may be too late.   So, you cant just wait until performance drops off.  

If you invest in potentially dodgy funds like Woodford's then potentially this sort of information may POSSIBLY be of benefit although I really doubt it. If you invest in products like Lifestrategy you just invest and forget about it because it invests in thousands of companies around the world. No panic buying and selling. Some of my active funds are performing slightly better than my passive but I find they cause me much greater anxiety than the passives and are probably best avoided.

Thanks for all the information Fred! I am going to research Lifestrategy.... If this is a passive fund that I can DIY then it sounds a very good fit for me!! 

AlanP_2

1234John said:

fred246 said:

SonOf said:

 I am confident enough to monitor my investments on a yearly/monthly basis and determine if they are performing.
Performance is just one bit of it.   Suitability, due diligence and risk are the other issues.   For example, we get a monthly governance report on investments that may pull funds for a reason.   Sometimes there are special bulletins on things that cannot wait.    Whenever we get a bulletin that turns a fund to a "sell" rating, we check who is on our ongoing servicing list and who has that fund and go to them to discuss the changes that need to be made.     Two relatively recent removals involved funds that have been performing very well but have issues coming up.   Waiting for the fund to drop off in performance may be too late.   So, you cant just wait until performance drops off.  

If you invest in potentially dodgy funds like Woodford's then potentially this sort of information may POSSIBLY be of benefit although I really doubt it. If you invest in products like Lifestrategy you just invest and forget about it because it invests in thousands of companies around the world. No panic buying and selling. Some of my active funds are performing slightly better than my passive but I find they cause me much greater anxiety than the passives and are probably best avoided.

Thanks for all the information Fred! I am going to research Lifestrategy.... If this is a passive fund that I can DIY then it sounds a very good fit for me!! 

It is a passive option and can be used for DIY investing.

Just be aware that NONE of the LS funds guarantee a return each and every year or even over 10 years. You can reasonably expect a return greater than inflation over 10 years as markets generally go up in the longer term but there are many zigs and zags along the way.

This is no different to the expectations from the investments your IFA managed for you, but the last 10/12 years have been exceptional in terms of growth from the lows following the 2008 crash, the next 10/12 years are unlikely to see a repeat of that.

How much "must" you get a year on that £100k to live off?

If you have no cash buffer and only that £100k of investments you could face some years where you shouldn't take any money out of the £100K as it has fallen in value and any withdrawal would reduce the upside potential when markets recover. What I mean is say your £100k allows you to take your £4k a year income and the invested amount remains consistent:

Year 1 - £100k, 4% return and £4k withdrawn
Year 2 - £100k, 4% return and £4k withdrawn
Year 3 - £100k,  10% drop and £4k withdrawn
Year 4 - £86k invested, no growth and £4k withdrawn
Year 5 - £82k invested, 15% return and £4k withdrawn
Year 6 - £90,300 invested and so on

If you can avoid taking the £4k out in down / flat years you can maintain a larger pot to benefit from the 15% growth in Year 5 and broadly maintain the £100k invested for life. One way to reduce this risk to your longer term investments is to keep 1-3 years cash requirement in bank accounts etc. at 2%'ish to use in the bad years and give you some breathing space for markets to recover.

Your overall return on Cash + Investments will be lower but the risk you face is alse lowered.

NOTE - All returns etc. are purely hypothetical

fred246

I was looking at my cash buffer recently. I have got money in Marcus for immediate needs, regular savers and I have a 3 year bond ladder. It averaged out at 2.24% which I thought was quite good considering current low rates. My sister pays an IFA hundreds of pounds a year to manage her finances. I asked her about her cash savings. It's all in a savings account she took out when she was a student. Probably paying 0.1% or less. Has the IFA not even suggested Marcus? Of course not. He couldn't charge any fees for doing that!

NeilCr

fred246 said:

I was looking at my cash buffer recently. I have got money in Marcus for immediate needs, regular savers and I have a 3 year bond ladder. It averaged out at 2.24% which I thought was quite good considering current low rates. My sister pays an IFA hundreds of pounds a year to manage her finances. I asked her about her cash savings. It's all in a savings account she took out when she was a student. Probably paying 0.1% or less. Has the IFA not even suggested Marcus? Of course not. He couldn't charge any fees for doing that!

My buffer (if is the same thing we are talking about) is 2.38 against a benchmark of 2.24

I use an IFA - presumably you would think that they are doing okay then!

There are going to be good IFAs and bad IFAs - equally there are going to be good DIYers and bad DIYers. I don't really think - as said earlier - this "all IFAs are evil" narrative is helping anyone on this forum. Balanced debate is far better

Disclaimer. I am not - and never have been - an IFA. 

fred246

Balanced debate is fine. They post on here too.

time_and_again

fred246 said:

I was looking at my cash buffer recently. I have got money in Marcus for immediate needs, regular savers and I have a 3 year bond ladder. It averaged out at 2.24% which I thought was quite good considering current low rates. My sister pays an IFA hundreds of pounds a year to manage her finances. I asked her about her cash savings. It's all in a savings account she took out when she was a student. Probably paying 0.1% or less. Has the IFA not even suggested Marcus? Of course not. He couldn't charge any fees for doing that!

What I want to know is: why haven't you suggested Marcus to your sister before? By your logic, it can only be because you couldn't charge her any fees

fred246

I am not my sister's financial adviser. I do not conduct an annual review of her finances.

NeilCr

fred246 said:

I am not my sister's financial adviser. I do not conduct an annual review of her finances.

Perhaps the thing to do is for you to take on the running of your sister's finances, You can get her cash sorted out, get her into Marcus and save her the fees. Win, win, win surely

bowlhead99

NeilCr said:

fred246 said:

I am not my sister's financial adviser. I do not conduct an annual review of her finances.

Perhaps the thing to do is for you to take on the running of your sister's finances, You can get her cash sorted out, get her into Marcus and save her the fees. Win, win, win surely

Presumably as the sister is only paying a few hundred pounds a year for the advice, there isn't a huge saving to be made for the hassle of teaching her to do her own investing or taking on the mantle of investment selector and getting the flack when inevitably some years are in negative territory.