Pensions. Is an IFA really worth it?

BritishInvestor

fred246 said:

If an IFA invests 100% in Vanguard Lifestrategy 60 and then charge 1% to check up on it a customer who reads the info is likely to be unhappy. The IFA constructs a complicated portfolio to make it look too complicated to look after it yourself.

"If an IFA invests 100% in Vanguard Lifestrategy 60 and then charge 1% to check up on it a customer who reads the info is likely to be unhappy."
There are many advisers out there that use the LS range and have very happy customers, but again, "managing money" isn't where they are concentrating their offering.

DT2001

How much time do people spend acquiring the knowledge to self manage?
I started using an IFA when I wanted to put a Directors Bonus into a pension. He saved me £4K by using salary sacrifice. IMO he was worth it.
Ongoing  I do not choose to use my time researching. This is probably influenced by the fact that having worked out my strategy with my IFA’s help, I am happy that in retirement I can do what I plan to.

So my answer to the original question is maybe, it depends on your particular circumstances. Do your own research and then decide if you have the inclination/aptitude/need to do it yourself.

fred246

DT2001 said:

Ongoing  I do not choose to use my time researching. This is probably influenced by the fact that having worked out my strategy with my IFA’s help, I am happy that in retirement I can do what I plan to.

OK so you've worked your strategy out. Do you continue to pay year after year after year? IFAs can cost more in the long run because they insist on taking part of your wealth indefinitely.

BritishInvestor

fred246 said:

DT2001 said:

Ongoing  I do not choose to use my time researching. This is probably influenced by the fact that having worked out my strategy with my IFA’s help, I am happy that in retirement I can do what I plan to.

OK so you've worked your strategy out. Do you continue to pay year after year after year? IFAs can cost more in the long run because they insist on taking part of your wealth indefinitely.

Cost more in the long run vs what? 

fred246

An IFA could put most people on a simple investment strategy that wouldn't involve the IFA 'servicing' it. But they won't do that. They have to take their money every year. These fees mount up. So the IFA may save you £4k but then charge you £20k over 10 years for 'servicing'.

JoeCrystal

Just do it on a transactional basis for one off fee. Sorted! That how I did it last two times I used an IFA.

BritishInvestor

fred246 said:

An IFA could put most people on a simple investment strategy that wouldn't involve the IFA 'servicing' it. But they won't do that. They have to take their money every year. These fees mount up. So the IFA may save you £4k but then charge you £20k over 10 years for 'servicing'.

I'm not defending the IFA model that "manages your money" and meets once a year to discuss fund performance (the postman service), but it goes back to my point I've made on other threads. If an IFA merely created a suitable, low cost, multi-asset portfolio and ensured you stuck with it through thick and thin, I'd be surprised if this didn't give a better outcome vs the "typical" DIY investor that buys the best performing funds (which don't forget sometimes cost between 0.5 and 1%) and focuses on what is working now (tech, US large cap stocks) rather than what has always worked (buy the world and ignore the news).

cfw1994

fred246 said:

An IFA could put most people on a simple investment strategy that wouldn't involve the IFA 'servicing' it. But they won't do that. They have to take their money every year. These fees mount up. So the IFA may save you £4k but then charge you £20k over 10 years for 'servicing'.

Any luck looking through your search history for the mythical comment you made earlier?    Which forum might that be on?   

cfw1994 said:

fred246 said:

I was doing some research a week or so ago. I came across a discussion on single funds in an IFAs forum. The question was could you get everything you need from a single fund. They all sort of agreed you could. One of them pointed out that it would be bad for their business. They then all agreed they would never recommend single funds because it would be bad for their businesses. I wish I had bookmarked it.

If it was a week or so ago....go to your internet history, and find it.   Then share the info

fred246

It's not rocket science. IFAs use their choice of funds as the 'mystique' that the customer thinks he has to pay a lot for.
Your Vanguard Lifestrategy is performing well. £2K please.
Instead they have to invest in numerous funds then they can write a load of blah blah blah and fiddle with it to justify their £2K.

Cus

Be great to see that chat forum you mentioned.  As discussed, it's just in your internet history.  Why don't you have a look?

I remember seeing on a passive investment fund manager forum how they have 100% proof that active investment always beats their passive funds but they didn't want anyone to find out and ruin their easy life. I don't have the link anymore 🙂