What is the best investment option for 87 year old?

steve99

Hi,

My mother is 87 and for a few years now has had around £80,000 invested in an Stocks & Shares ISA - FEI Hybrid Risk Level 3 Medium. This is managed by her IFA and I have just seen her recent statements and was surprised/annoyed to see that each month she is being charged 1)  £19.20 to the wealth management service,  2) £46.89 to the Advisor and 3) £21.43 in Discretionary Fund Manager Charges. Am I wrong in thinking that this fund and these charges are not appropriate for someone of her age?  

She is likely to want to drawdown 5% - 10%  of this fund from next year and I wondered what (other than a savings account) would be the lowest cost & safest investment option?

TIA

Steve

   

Thrugelmir

At her age why not hold more cash? 

steve99

I agree - the latest statement says that only £1,381 is cash

ZeroSum

At her age, I'd drawdown the lot & either enjoy it while you can, or give a sizable chunk to grandkids.
Could lose the lot if need to go into care

talexuser

As far as the charges are concerned that is around £87 a month, or £1050 a year. On 80 grand works out around 1.3%. if that is for active fund charges and platform, not a bad deal at all, if passive funds maybe a bit high. The allocation of assets is another matter, at 87 I would not have a lot in equities that could fall 50% tomorrow.

dunstonh

 I have just seen her recent statements and was surprised/annoyed to see that each month she is being charged 1)  £19.20 to the wealth management service,  2) £46.89 to the Advisor and 3) £21.43 in Discretionary Fund Manager Charges. Am I wrong in thinking that this fund and these charges are not appropriate for someone of her age?  

Yes you are wrong.  The charges seem reasonable.    Although there is some confusion in your charges.  There is no wealth management service with FEI Hybrid portfolios.  Maybe you are misreading something.  You would expect 

a platform charge, adviser charge, DFM charge and OCF of the funds (and to comply with the EU directive MiFIDII you would also have TC and IC but most people ignore those)

Why are you annoyed or surprised at something completely normal?

On 80 grand works out around 1.3%. if that is for active fund charges and platform, not a bad deal at all, if passive funds maybe a bit high.

The FEI Hybrid portfolio is a quarterly rebalanced portfolio with fluid asset allocation (i.e. it is updated quarterly and not just back to a rigid allocation) and is made up of passive and active funds.   The medium bit indicates that the weightings are not on a long term basis but medium term (7-15 years range) and risk 3 would put it around 60% equities.

The allocation of assets is another matter, at 87 I would not have a lot in equities that could fall 50% tomorrow.

When it comes it age, it is really down to the individual.   An investor for many decades would likely continue investing up to date of death.  Whereas a cash saver who has never invested money shouldn't be going near investments at age 87.   Ability to understand, past experience, health and more can come into play.   

She is likely to want to drawdown 5% - 10%  of this fund from next year and I wondered what (other than a savings account) would be the lowest cost & safest investment option?

There is no safe option with her objective.   

Albermarle

Overall there does not seem to be much of a problem - you are being charged for a service . If you did it yourself ( without an IFA) but with a similar fund you probably would not be far off 1 %.
She might want to talk to her IFA about reducing the risk level now she is 87 .

Stubod

..at that age I would forget about any investments, withdraw all the money and put it into the best savings account you can find and then draw it down to suit their needs...

dunstonh

Stubod said:

..at that age I would forget about any investments, withdraw all the money and put it into the best savings account you can find and then draw it down to suit their needs...

But around half of 87 year olds will make 94.  So, you could well be kissing goodbye to a lot of capital.
This is the problem with trying to give the OP an answer as there is insufficient information to go on.  Plus, you have people with different views that may or may not be suitable for the scenario that the OP has not given us.

Stubod

dunstonh said:

Stubod said:

..at that age I would forget about any investments, withdraw all the money and put it into the best savings account you can find and then draw it down to suit their needs...

But around half of 87 year olds will make 94.  So, you could well be kissing goodbye to a lot of capital.
This is the problem with trying to give the OP an answer as there is insufficient information to go on.  Plus, you have people with different views that may or may not be suitable for the scenario that the OP has not given us.

..still think that 7 years (in the current climate) is too short a term to be thinking about investments...but that's just MHO and I accept that other people have a lot more experience in this field.... and I suppose it depends on how good you (or your IFA's) are at investing?

Grumpy_chap

At the age of 87, it should be "spend, spend, spend".
Does she have income in addition to the lump sum.