FCA investment pathways

Coco's_mum

I believe these are coming into existence as of 1st February (i.e. in two weeks), and I wondered if anyone had a "take" on them.

squirrelpie

I confess I wasn't even aware of them before now! I just looked at https://www.ftadviser.com/pensions/2020/09/09/what-the-fca-s-rules-on-investment-pathways-mean-for-clients/ and they seem like a reasonable idea. The proof of the pudding is in the eating, of course, so I'll be interested to see what kind of performance the various schemes have over the next year or so.

dunstonh

Many providers have had the equivalent for many years.  The track records on them isn't great in terms of investment returns (not bad. not best.  Pretty consistent around the average)   Pathways just forces those that haven't to offer a solution that avoids people ending up in cash.

If you have an adviser then you won't use them in most cases (although possible on transactional advice).  If you DIY on your investments and have a bit of knowledge then you wont use them.  If you have low knowledge in investing and CBA then they are perfect for you.

zagfles

They're a good idea, similar to workplace pensions where there's usually a default pathway or selection of a few defaults (based on risk, intention etc) during accumulation and increasingly during drawdown. Most peoples' requirements in retirement are likely to be similar to large groups of others, so individually tailored retirement plans for many will be unnecessary, a sensible selection of investment "pathways" may be more appropriate. 

LHW99

Pity they haven't put a charge cap on. May encourage some suppliers to put more profit in their charges than is perhaps strictly justified. Those who are more likely to use the options are probably less likely to shop around.

EdSwippet

LHW99 said:

Pity they haven't put a charge cap on. May encourage some suppliers to put more profit in their charges than is perhaps strictly justified. ...

... or, simply recommend only their own fee-padded in-house funds:

Savers will be offered four simple ways to invest and draw on pension pots

AJ Bell Youinvest

AJ Bell has gone down the route of recommending its in-house funds.

And yet, from Andy Bell just a few months ago:

Andy Bell Writes to New FCA Boss Over ‘Fundamentally Flawed’ Investment Pathways

Investment pathways risk funnelling people into investments that do not suit their needs or retirement priorities and are a mandate for pension providers to line their pockets by peddling their own in-house funds with little or no control on fund charges.

Quite a case of cognitive dissonance there!

garmeg

EdSwippet said:

LHW99 said:

Pity they haven't put a charge cap on. May encourage some suppliers to put more profit in their charges than is perhaps strictly justified. ...

... or, simply recommend only their own fee-padded in-house funds:

Savers will be offered four simple ways to invest and draw on pension pots

AJ Bell Youinvest

AJ Bell has gone down the route of recommending its in-house funds.

And yet, from Andy Bell just a few months ago:

Andy Bell Writes to New FCA Boss Over ‘Fundamentally Flawed’ Investment Pathways

Investment pathways risk funnelling people into investments that do not suit their needs or retirement priorities and are a mandate for pension providers to line their pockets by peddling their own in-house funds with little or no control on fund charges.

Quite a case of cognitive dissonance there!

Their in house funds are reasonable value though. Not a rip off. Unlike some.

EdSwippet

garmeg said:

Their in house funds are reasonable value though. Not a rip off. Unlike some.

Meh. From https://www.youinvest.co.uk/investment-ideas/ajbell-funds

Low cost – there’s no dealing charge to buy a fund. The annual ongoing charge is capped at 0.35% for the growth funds, and 1.00% for the income funds and our custody charge is just 0.25%.

For fund charges, a 1% OCF is pretty much the top end of things these days. The 0.35% is slightly better. (But note that these exclude the added 0.25% Youinvest platform charge). A considerable hike on the 0.07-0.24% charges shown for Interactive Investor's selection of pathway funds.

garmeg

EdSwippet said:

garmeg said:

Their in house funds are reasonable value though. Not a rip off. Unlike some.

Meh. From https://www.youinvest.co.uk/investment-ideas/ajbell-funds

Low cost – there’s no dealing charge to buy a fund. The annual ongoing charge is capped at 0.35% for the growth funds, and 1.00% for the income funds and our custody charge is just 0.25%.

For fund charges, a 1% OCF is pretty much the top end of things these days. The 0.35% is slightly better. (But note that these exclude the added 0.25% Youinvest platform charge). A considerable hike on the 0.07-0.24% charges shown for Interactive Investor's selection of pathway funds.

Do you have a list of Interactive Investor's funds at all?

EdSwippet

garmeg said:

Do you have a list of Interactive Investor's funds at all?

Indicated in the This is Money article, as linked in the previous thread:

A couple of DIY online brokers have previewed what funds they will be using for each 'pathway' and why they think they are suitable.
...

garmeg

EdSwippet said:

garmeg said:

Do you have a list of Interactive Investor's funds at all?

Indicated in the This is Money article, as linked in the previous thread:

A couple of DIY online brokers have previewed what funds they will be using for each 'pathway' and why they think they are suitable.
...

Thanks. A lot cheaper than AJ Bell's choices.