IFA fees to manage Pension - worth it?

coyrls

Prism said:

coyrls said:

Prism said:

coyrls said:

Prism said:

coyrls said:

Prism said:

coyrls said:

Prism said:

Interesting article here from last year comparing St James Place, widely known to have very high fees for a FA managed service, and Hargreaves Lansdown, the UKs most popular DIY platform and pretty cheap if you select the right funds. It seems that St James place easily beats the average DIY investor probably on investor behaviour alone.

SJP vs Hargreaves: Which offers more bang for clients’ bucks? - Citywire

I think the comparisons are a bit flawed but the general point holds true - many (not all) people mess up their own investments and would be better with an advisor. It seems that people don't do what is suggested, but in fact buy the wrong stuff and the wrong time, regardless of how much free information is out their.

Btw, I am not remotely suggesting people should use SJP.

The whole paper is dubious.  They do a comparison of "theoretical" returns of ishares UK Equity Index and Blackrock Consensus 85, neither of which have been around for 10 years.  It's difficult to check their theoretical returns for the Blackrock fund but the iShares one is an FTSE All Share tracker, a terrible choice for 100% of your pension.  Nevertheless, Trustnet tells me that the 10 year Annualised Return of the FTSE All Share Index is 6.2% with dividends reinvested.  The report doesn't calculate an annualised return but an average of the annual returns, which is a pretty meaningless statistic but the figure they report is 3.4%, which they compare with an average annual return from SJP of 3.9% (HL's figure from their managed funds I think is 2.9%).  So how do they get to an average annual return from the iShares UK Equity Index of 3.4%, when the actual annualised return over the same period for the index that the fund is tracking is 6.2%?

Both of those funds were launched in 2005. I don't think there is anything wrong with the figures - they date range used was Jun 2010 to Jun 2020 by the look of the charts so may explain their lower figures.

I don't think it's the dates, it looks like the index return over the 10 years from June 2010 to June 2020 is about 82% which equates to an annualised return of about 6.17%.  It's hard to compare that to their claimed average annual return of 3.4% for the fund because theirs is a nonsense calculation.  Also it's a ridiculous comparison because it's not a realistic DIY benchmark to assume a 100% investment in the FTSE All Share Index.

Your original post implies that they were using actual average returns of HL's SIPP investors, which they are not.  I don't believe for a second that HL make those figures available.

In the article it states that the annualized returns for iShares UK equity index over the time period was 6.1% and Consensus 85 was 6.9%. I am not sure where you get 3.4% from.

From the table that they use to justify their statement that SJP out performs where they state: SJP Average Return: 3.9%, iShares Average Return 3.4% (Table 3 Returns of SJP vs HL Pension Clients vs "no brainer" passive options via HL).

That would be the table that calculates the average 6 monthly return rather than the yearly figures.
You have clearly decided you don't believe the report and the numbers have been pulled out of thin air. Shrug, thats up to you. I personally think they are likely pretty accurate but still wouldn't recommend SJP.

That's the only table that compares the returns.  Can you find any other comparison?  There are no annualised return figure given for the SJP funds.  I could equally say that you've decided to agree with the report becasue you haven't addressed any of the issues that I've raised.  As you've said, you have no idea where the figures come from.

How about all of the other tables in the report like the one on page six that tells us the annualised 10 years figures of each of the portfolios which is also summarised in the text.

Ok I shouldn't have said that I have no idea because I do - it is information that both HL and SJP give out every six months in their company reports. I just haven't done the maths myself to prove what the research company has done for me. I not 'that' interested in trying to prove it wrong since both HL and SJP clearly have no issue with the report.

I missed that.  Well, it's shocking performance if the data is correct.  It doesn't reflect my own DIY SIPP returns over the same period thankfully, although I am not with HL.

Prism

coyrls said:

Prism said:

coyrls said:

Prism said:

coyrls said:

Prism said:

coyrls said:

Prism said:

coyrls said:

Prism said:

Interesting article here from last year comparing St James Place, widely known to have very high fees for a FA managed service, and Hargreaves Lansdown, the UKs most popular DIY platform and pretty cheap if you select the right funds. It seems that St James place easily beats the average DIY investor probably on investor behaviour alone.

SJP vs Hargreaves: Which offers more bang for clients’ bucks? - Citywire

I think the comparisons are a bit flawed but the general point holds true - many (not all) people mess up their own investments and would be better with an advisor. It seems that people don't do what is suggested, but in fact buy the wrong stuff and the wrong time, regardless of how much free information is out their.

Btw, I am not remotely suggesting people should use SJP.

The whole paper is dubious.  They do a comparison of "theoretical" returns of ishares UK Equity Index and Blackrock Consensus 85, neither of which have been around for 10 years.  It's difficult to check their theoretical returns for the Blackrock fund but the iShares one is an FTSE All Share tracker, a terrible choice for 100% of your pension.  Nevertheless, Trustnet tells me that the 10 year Annualised Return of the FTSE All Share Index is 6.2% with dividends reinvested.  The report doesn't calculate an annualised return but an average of the annual returns, which is a pretty meaningless statistic but the figure they report is 3.4%, which they compare with an average annual return from SJP of 3.9% (HL's figure from their managed funds I think is 2.9%).  So how do they get to an average annual return from the iShares UK Equity Index of 3.4%, when the actual annualised return over the same period for the index that the fund is tracking is 6.2%?

Both of those funds were launched in 2005. I don't think there is anything wrong with the figures - they date range used was Jun 2010 to Jun 2020 by the look of the charts so may explain their lower figures.

I don't think it's the dates, it looks like the index return over the 10 years from June 2010 to June 2020 is about 82% which equates to an annualised return of about 6.17%.  It's hard to compare that to their claimed average annual return of 3.4% for the fund because theirs is a nonsense calculation.  Also it's a ridiculous comparison because it's not a realistic DIY benchmark to assume a 100% investment in the FTSE All Share Index.

Your original post implies that they were using actual average returns of HL's SIPP investors, which they are not.  I don't believe for a second that HL make those figures available.

In the article it states that the annualized returns for iShares UK equity index over the time period was 6.1% and Consensus 85 was 6.9%. I am not sure where you get 3.4% from.

From the table that they use to justify their statement that SJP out performs where they state: SJP Average Return: 3.9%, iShares Average Return 3.4% (Table 3 Returns of SJP vs HL Pension Clients vs "no brainer" passive options via HL).

That would be the table that calculates the average 6 monthly return rather than the yearly figures.
You have clearly decided you don't believe the report and the numbers have been pulled out of thin air. Shrug, thats up to you. I personally think they are likely pretty accurate but still wouldn't recommend SJP.

That's the only table that compares the returns.  Can you find any other comparison?  There are no annualised return figure given for the SJP funds.  I could equally say that you've decided to agree with the report becasue you haven't addressed any of the issues that I've raised.  As you've said, you have no idea where the figures come from.

How about all of the other tables in the report like the one on page six that tells us the annualised 10 years figures of each of the portfolios which is also summarised in the text.

Ok I shouldn't have said that I have no idea because I do - it is information that both HL and SJP give out every six months in their company reports. I just haven't done the maths myself to prove what the research company has done for me. I not 'that' interested in trying to prove it wrong since both HL and SJP clearly have no issue with the report.

I missed that.  Well, it's shocking performance if the data is correct.  It doesn't reflect my own DIY SIPP returns over the same period thankfully, although I am not with HL.

It certainly does seem surprisingly bad but I think we sometimes forget the real world of investors out there who make poor decisions. I guess the hints are the fact that the expensive 'default' HL funds are so popular and the fact that so many people seem to dabble in individual shares. It certainly doesn't represent my returns either but I am with Youinvest and I bet their performance is no better as a whole.

[Deleted User]

Prism said:

Deleted_User said:

Prism said:

Deleted_User said:

Prism said:

Interesting article here from last year comparing St James Place, widely known to have very high fees for a FA managed service, and Hargreaves Lansdown, the UKs most popular DIY platform and pretty cheap if you select the right funds. It seems that St James place easily beats the average DIY investor probably on investor behaviour alone.

SJP vs Hargreaves: Which offers more bang for clients’ bucks? - Citywire

I think the comparisons are a bit flawed but the general point holds true - many (not all) people mess up their own investments and would be better with an advisor. It seems that people don't do what is suggested, but in fact buy the wrong stuff and the wrong time, regardless of how much free information is out their.

Btw, I am not remotely suggesting people should use SJP.

This is authored by an anonymous “Wealth Management Team”.  And the “news” is “sponsored”.  And untraceable.  

Comparing returns can be done right but its very easy to do it wrong, particularly if your business is “wealth management”.  Getting it wrong is very easy.  For example, half of SJ Palace reviews are terrible.  How is the the stats accounting for people who quit?  

And returns for Hargreaves are pathetic, given that its over a 10 year period which saw extra fast growth for stocks and bonds and pound devaluation.  Where did they get these data? I can’t find HL DIY return data on the web.  Where did the “wealth management team

This might be an example document https://www.hl.co.uk/__data/assets/pdf_file/0010/16063831/Results-2020-Data-Pack.pdf

Well, it can’t be a document like this. This one reports total assets, not just DIY or SIPP.  Some of them are in tax-paying accounts.  

Yes I don't know exactly which data they are using but that document does break down SIPP, ISA and GIA from page 9 onwards. I don't know if elsewhere they break down DIY from managed but I don't believe HL do much in the way of managed. So we can see that their SIPP returned a total of -0.4% for the 12 months ending 30th June 2020. 

Yes, you are right.  Assuming we are reading it correctly.  

This link shows what investments HL SIPP customers picked in 2015. https://www.hl.co.uk/news/articles/archive/what-are-the-most-popular-sipp-investments

 Selections are dominated by high cost active funds. Woodford is in the third place.  And their platform charges are very high.  Perhaps the kind of investor that goes for HL is someone who would sell at the bottom.