How is a smallish DC pot managed without an IFA

Thrugelmir

OldMusicGuy said:

Thrugelmir said:

I'd not recommend DIY for someone who has retired and has no previous experience. Unless they've no concerns with regards to permanent loss of capital. To the uninitiated the choice of investments is totally bewildering and confusing. That's before one even starts to comprehend the worlds of business, economics and political events that influence market behaviour. Plenty of low cost options are available for those who are looking for actively managed passive investments. 

I take a different view. There's different types of DIY. I manage a fund significantly in excess of the OP's and I have no prior experience. It is my only retirement fund. It need not be complicated unless you want to try to build a multi-sector portfolio like an IFA might. You don't need experience but you do need to educate yourself, which is why books like the John Edwards one are very helpful, as are sites like Monevator and Pensioncraft.

Not suggesting that investing is complicated. It's little different to picking a winner for the Grand National after studying the form guide in the Sporting Life for a few hours. Then staking your money. To quote Warren Buffet. "If past history was all there was to the game, the richest people would be librarians".  

Behavioral finance studies are an interesting read. Biases such as overconfidence, recency, confirmation and hindsight become very apparent as markets mature. Then there's herd mentality as people get sucked into the trends. Having the benefit of experience allows one to recognise and control ones own behaviour. 

As for my personal experience I'm fortunate to have started learning at a young age. On Saturday mornings attempting to comprehend the then multiple back pages of the pink paper when in my late fathers office in the City.  My fascination has never died, it never will. 

cfw1994

Thrugelmir said:

OldMusicGuy said:

Thrugelmir said:

I'd not recommend DIY for someone who has retired and has no previous experience. Unless they've no concerns with regards to permanent loss of capital. To the uninitiated the choice of investments is totally bewildering and confusing. That's before one even starts to comprehend the worlds of business, economics and political events that influence market behaviour. Plenty of low cost options are available for those who are looking for actively managed passive investments. 

I take a different view. There's different types of DIY. I manage a fund significantly in excess of the OP's and I have no prior experience. It is my only retirement fund. It need not be complicated unless you want to try to build a multi-sector portfolio like an IFA might. You don't need experience but you do need to educate yourself, which is why books like the John Edwards one are very helpful, as are sites like Monevator and Pensioncraft.

Not suggesting that investing is complicated. It's little different to picking a winner for the Grand National after studying the form guide in the Sporting Life for a few hours. Then staking your money. To quote Warren Buffet. "If past history was all there was to the game, the richest people would be librarians".  

Behavioral finance studies are an interesting read. Biases such as overconfidence, recency, confirmation and hindsight become very apparent as markets mature. Then there's herd mentality as people get sucked into the trends. Having the benefit of experience allows one to recognise and control ones own behaviour. 

As for my personal experience I'm fortunate to have started learning at a young age. On Saturday mornings attempting to comprehend the then multiple back pages of the pink paper when in my late fathers office in the City.  My fascination has never died, it never will. 

Your comments make it sound like you have to “pick the winner”.  Also that they need to become as skilled as you clearly are, requiring perhaps decades of experience.

I would argue that picking the average is good enough!

OP, maybe also have a listen to Lars Kroijer videos, on a well known video sharing service or at https://www.kroijer.com. Zero cost to listen, might also give you some ideas!

Taggy135

Yes I don't think we would feel comfortable managing this completely ourselves, but on the other hand paying 1% per year to an IFA seems to be overkill. I was hoping their would be something in-between.
The pension is currently invested in 14 different funds plus cash - with between 5 to 8 % in each fund - growth rates varying between 3.41% to -1.95%. Looks very complicated to manage.
So perhaps Aegon would have one multi asset fund  (for which we would be charged less than the 1% IFA charge) which we could move all to and manage the withdrawals from there? They didn't mention this when called, but also said there was no charge for doing UFPLS and I think that is unlikely to be correct. 
 

Albermarle

For a pot of £60K , this number of funds is excessively complicated in my opinion .
Each fund will have its own charge , regardless of whether it is managed by an IFA or not .
I would think one simple multi asset fund is not going to cost more than the average of the current funds , probably less.
1% per year to an IFA seems to be overkill. I was hoping their would be something in-between.
Currently there is nothing inbetween, something that is being looked at though, especially where the amounts involved are not huge . The problem is that the advice from an IFA  has a specific meaning . They are heavily regulated and they are legally responsible that the advice is suitable for the client. Anything else is just guidance , with no comeback . That is why you will find that the people at Aegon will not make specific recommendations in case it is construed as personal advice .
If you look at this list , specifically the lowest cost ones at the top , are these available for you ?
+Digital – Fund Centre (feprecisionplus.com)
Of course I am not actually recommending you invest in  them, as I am not a financial advisor and I do not know your full circumstances .

OldMusicGuy

Thrugelmir said:

Not suggesting that investing is complicated. It's little different to picking a winner for the Grand National after studying the form guide in the Sporting Life for a few hours. Then staking your money. To quote Warren Buffet. "If past history was all there was to the game, the richest people would be librarians".  

Like cfw1994 I'll take a different view. For me, it's not about picking winners, it's about picking "adequate" to achieve my objectives at an appropriate risk level. It's about using diversified, low cost funds to achieve acceptable levels of return rather than chasing maximum returns or fads. But I will agree that is a lesson I had to learn. 

OldMusicGuy

Taggy135 said:

Yes I don't think we would feel comfortable managing this completely ourselves, but on the other hand paying 1% per year to an IFA seems to be overkill. I was hoping their would be something in-between.
The pension is currently invested in 14 different funds plus cash - with between 5 to 8 % in each fund - growth rates varying between 3.41% to -1.95%. Looks very complicated to manage.
So perhaps Aegon would have one multi asset fund  (for which we would be charged less than the 1% IFA charge) which we could move all to and manage the withdrawals from there? They didn't mention this when called, but also said there was no charge for doing UFPLS and I think that is unlikely to be correct. 
 

You have the classic multi-sector portfolio that many IFAs love because it looks clever (and helps justify what many, like me, think are excessive fees). It needn't be that complicated, like you are hinting. 

Also, make sure you understand how the Aegon platform works. You may not need an IFA at all, it may allow you to make the investment choices. You might be able to cut the IFA out completely and leave everything where it is in those 14 funds. You need to understand better what your options are before you rush into anything. And do read some of the resources mentioned on this thread, they will help you understand your choices.

Like others said, there is no "alternative". You either pay the IFA fees or you do it yourself. 

jamesd

Taggy135 said:

Yes I don't think we would feel comfortable managing this completely ourselves, but on the other hand paying 1% per year to an IFA seems to be overkill. I was hoping their would be something in-between.
The pension is currently invested in 14 different funds plus cash - with between 5 to 8 % in each fund - growth rates varying between 3.41% to -1.95%. Looks very complicated to manage.

Something like the Vanguard Lifestrategy range of funds is well suited to your situation. You pick the percentage of equities - shares - from forty to one hundred percent depending on how big the ups and downs that you can tolerate are. Equity around 40% drop potential, bonds around 5-10%. So 100% equity means 40% potential drop while 40% equity means (0.4*40 + 0.6*10) = 22% drop potential.

Cash or money market fund is the right choice for money you plan to take out in the next year or two.

cfw1994

jamesd said:

Taggy135 said:

Yes I don't think we would feel comfortable managing this completely ourselves, but on the other hand paying 1% per year to an IFA seems to be overkill. I was hoping their would be something in-between.
The pension is currently invested in 14 different funds plus cash - with between 5 to 8 % in each fund - growth rates varying between 3.41% to -1.95%. Looks very complicated to manage.

Something like the Vanguard Lifestrategy range of funds is well suited to your situation. You pick the percentage of equities - shares - from forty to one hundred percent depending on how big the ups and downs that you can tolerate are. Equity around 40% drop potential, bonds around 5-10%. So 100% equity means 40% potential drop while 40% equity means (0.4*40 + 0.6*10) = 22% drop potential.

Cash or money market fund is the right choice for money you plan to take out in the next year or two.

Wise words here.
Taggy, when you say "growth rates varying between 3.41% to -1.95%" - what period does that reflect, the latest 12 months to date?
Many funds have done far better than that (eg LS60 to LS80, as jamesd suggested).
Also agree with OldMusicGuy said:

You have the classic multi-sector portfolio that many IFAs love because it looks clever (and helps justify what many, like me, think are excessive fees). It needn't be that complicated, like you are hinting. 

Simplification isn't all bad....but yes, do check how Aegon work, you may be able to leave it there (if you want to).
Lower fees plus better performance would be a very decent outcome if it turns out that way.

Thrugelmir

cfw1994 said:

Thrugelmir said:

OldMusicGuy said:

Thrugelmir said:

I'd not recommend DIY for someone who has retired and has no previous experience. Unless they've no concerns with regards to permanent loss of capital. To the uninitiated the choice of investments is totally bewildering and confusing. That's before one even starts to comprehend the worlds of business, economics and political events that influence market behaviour. Plenty of low cost options are available for those who are looking for actively managed passive investments. 

I take a different view. There's different types of DIY. I manage a fund significantly in excess of the OP's and I have no prior experience. It is my only retirement fund. It need not be complicated unless you want to try to build a multi-sector portfolio like an IFA might. You don't need experience but you do need to educate yourself, which is why books like the John Edwards one are very helpful, as are sites like Monevator and Pensioncraft.

Not suggesting that investing is complicated. It's little different to picking a winner for the Grand National after studying the form guide in the Sporting Life for a few hours. Then staking your money. To quote Warren Buffet. "If past history was all there was to the game, the richest people would be librarians".  

Behavioral finance studies are an interesting read. Biases such as overconfidence, recency, confirmation and hindsight become very apparent as markets mature. Then there's herd mentality as people get sucked into the trends. Having the benefit of experience allows one to recognise and control ones own behaviour. 

As for my personal experience I'm fortunate to have started learning at a young age. On Saturday mornings attempting to comprehend the then multiple back pages of the pink paper when in my late fathers office in the City.  My fascination has never died, it never will. 

Your comments make it sound like you have to “pick the winner”.  Also that they need to become as skilled as you clearly are, requiring perhaps decades of experience.

I would argue that picking the average is good enough!

OP, maybe also have a listen to Lars Kroijer videos, on a well known video sharing service or at https://www.kroijer.com. Zero cost to listen, might also give you some ideas!

 I referenced horse racing for good reason. People generally err on the side of caution and follow the money , herd betting. Doesn't make the outcome anymore certain, simply narrows the odds of a decent return. The fact that you reference a book a written a decade ago for the US investor says it all. In a similar vain the "Intelligent Investor" was written decades earlier. Contains pearls of wisdom but doesn't make it a bible that should be followed religiously. 


I'm not a skilled investor. Just a pragmatic one.  Made plenty of poor decisions over the years. Just makes me chuckle when people celebrate the fact that they think they've found the holy grail of investing. That's a clear sign of inexperience. 

JohnWinder

Thrugelmir said:

...Just makes me chuckle when people celebrate the fact that they think they've found the holy grail of investing. That's a clear sign of inexperience. 

Some experienced people think they have too.

If the holy grail of investing is an elusive object or goal sought after for its great significance then perhaps we have found it:

Start early to get the benefit of compound interest; save as much as you can; keep some ready funds for a rainy day; invest the rest in a mix of assets to suit your risk capacity; diversify broadly within those assets; keep costs down; use cap weighted indexing for stocks; match your assets to your liabilities. New theories may develop, the world may change dramatically, but until then…… I’ll drink from that.