What pension planning advice do I need?

OldMusicGuy

ajfielden said:

Thanks for the clarification. I notice in that video he does talk about selecting equivalent funds to replicate what the Lifestrategy plan does, but at a lower cost. That would put the onus on you to more actively manage it (rebalance as he puts it).

Yes. Although funds like Lifestrategy aren't fully "actively" managed, they are managed to a degree - the funds have to be "rebalanced" to maintain the relative percentages defined by the management committee as the underlying fund values change. You would have to do this yourself if you set up your version of it using the cheaper funds. Typically you would do it maybe once a year.  

Linton

cfw1994 said:

I would agree that OMG speaks sense here, and it is worth remembering that dunstonh is a (very helpful and active!) IFA here, so each have their perspectives and viewpoints.

& you have rightly identified that a few here are firmly in the DIY camp, through perhaps some years of experience.   
It isn't rocket science, and you do have time to learn a bit more to make you more confident to take control IF you want.   
If not, well, IFAs exist to service a portion of people who want or need that help!

As you are learning, much of this is opinion: there is no right or wrong.    Some will happily pop it all in a low-cost Vanguard LifeStrategy fund (eg LS60 or LS80) & be done.   Others like to have a bit more control, and perhaps even a bit of a 'gamble' with a few % of their funds.  Neither is right or wrong.

An IFA will try to gauge your attitude to risk and advise accordingly. 
From my perspective, I always feel it is in their best interests to support a 'low risk' approach.  It is far less likely for clients/customers to be upset if markets crash and they were invested in less volatile products....& questions on 'risk' invariably make people feel more cautious: "how would you feel if you faced a drop of 50% in your funds?"

If they have you drawing down only 2-3% of a DC pot, they there is very little chance it will ever run out: happy days!   

Equally, if the IFAs are taking a % against the funds under their management, perhaps they make a bit more money from you for a bit longer    

A slightly cynical perspective?    Maybe, but I'd challenge anyone to prove that to be inaccurate!

If you are reasonable with spreadsheets, I am happy to share one I have shared a few times: it can help share your own understanding of what you have coming in at different times (DB pensions, DC pots, State pensions).   

I have witnessed several family/friends cases where people have more money than they needed once they reach 70-75, and less energy or poorer health to take advantage of it!
Equally, I have attended too many funerals of friends and workmates who never got the chance to enjoy a retirement for various reasons.   Until proven wrong, we appear to only pass this way once: no pockets in shrouds!

You would expecct most people to have more money than they need at 70-75.  It makes sense to plan cautiously -It could be a disaster if you have less money than you need when you reach 70-75.  The past 10 years have provided returns far higher than anyone could have reasonably expected,  planning on the asssumption of what turned ouit to be actual returns 10 years ago would have been very foolish.

The skill in retirement planning is to strike the right balance when planning and to manage your changing financial situation during retirement.  If you can do that yourself it should provide a satisfying use of your time, if you cant, pay for advice.

MX5huggy

ajfielden said:

Albermarle said:

ajfielden said:

Liking the Edwards book so far. Consolidating some of my pension pots into a SIPP looking possible. Vanguard Lifestrategy?

VanGuard Life strategy is an investment , not a SIPP .

I am sure you understand that but it is a common mistake to mix up the pension , which is an administrative vehicle to handle the investments, payments , tax issues etc and where your actual money is invested within the pension.
Probably does not  help that some fund providers like Vanguard also offer a SIPP but you should keep them separate in your mind . 
For info here is a comparison of low cost multi asset funds .
https://monevator.com/passive-fund-of-funds-the-rivals/

Thanks for the clarification. I notice in that video he does talk about selecting equivalent funds to replicate what the Lifestrategy plan does, but at a lower cost. That would put the onus on you to more actively manage it (rebalance as he puts it).

Yes here’s his video on a 2 fund portfolio  https://youtu.be/tHvlU1WGjpU

I’ve started do this I hold 75% in FTSE All world fee is 0.23 and 25% in bonds https://www.vanguardinvestor.co.uk/investments/vanguard-global-bond-index-fund-gbp-hedged-acc/overview?intcmpgn=fixedincomeglobal_globalbondindexfund_fund_link which is 0.15 fee so my average fee is less than 0.22 of Life Strategy but I also don’t have the UK over weight of LS. 

I rebalance whenever I pay in so this month my £1000 was split £740 stocks £260 Bonds (because it’s been a good month for stocks) if required I would move assets from the bonds to the stocks or the other way to maintain the 75/25 split.  I’m only playing with low total value BTW. 

You can then build your own FTSE All World even cheaper by buying ETF’s for each region but you would have to rebalance between each region. But then HSBC’s All World is available for 0.13 I think. 

dunstonh

ajfielden said:

Albermarle said:

ajfielden said:

Liking the Edwards book so far. Consolidating some of my pension pots into a SIPP looking possible. Vanguard Lifestrategy?

VanGuard Life strategy is an investment , not a SIPP .

I am sure you understand that but it is a common mistake to mix up the pension , which is an administrative vehicle to handle the investments, payments , tax issues etc and where your actual money is invested within the pension.
Probably does not  help that some fund providers like Vanguard also offer a SIPP but you should keep them separate in your mind . 
For info here is a comparison of low cost multi asset funds .
https://monevator.com/passive-fund-of-funds-the-rivals/

Thanks for the clarification. I notice in that video he does talk about selecting equivalent funds to replicate what the Lifestrategy plan does, but at a lower cost. That would put the onus on you to more actively manage it (rebalance as he puts it).

VLS is actively managed in that respect as well.  As are all of the multi-asset funds similar to VLS.   Some degree of active management is required in every portfolio.  e.g.  how much too put in xyz sector/country?   how much to put in small, medium or large cap in that country?   Do you keep static allocations or fluid?  How often do you rebalance?   Do you use own brand funnds or whole of market?

Albermarle

MX5huggy said:

ajfielden said:

Albermarle said:

ajfielden said:

Liking the Edwards book so far. Consolidating some of my pension pots into a SIPP looking possible. Vanguard Lifestrategy?

VanGuard Life strategy is an investment , not a SIPP .

I am sure you understand that but it is a common mistake to mix up the pension , which is an administrative vehicle to handle the investments, payments , tax issues etc and where your actual money is invested within the pension.
Probably does not  help that some fund providers like Vanguard also offer a SIPP but you should keep them separate in your mind . 
For info here is a comparison of low cost multi asset funds .
https://monevator.com/passive-fund-of-funds-the-rivals/

Thanks for the clarification. I notice in that video he does talk about selecting equivalent funds to replicate what the Lifestrategy plan does, but at a lower cost. That would put the onus on you to more actively manage it (rebalance as he puts it).

Yes here’s his video on a 2 fund portfolio  https://youtu.be/tHvlU1WGjpU

I’ve started do this I hold 75% in FTSE All world fee is 0.23 and 25% in bonds https://www.vanguardinvestor.co.uk/investments/vanguard-global-bond-index-fund-gbp-hedged-acc/overview?intcmpgn=fixedincomeglobal_globalbondindexfund_fund_link which is 0.15 fee so my average fee is less than 0.22 of Life Strategy but I also don’t have the UK over weight of LS. 

I rebalance whenever I pay in so this month my £1000 was split £740 stocks £260 Bonds (because it’s been a good month for stocks) if required I would move assets from the bonds to the stocks or the other way to maintain the 75/25 split.  I’m only playing with low total value BTW. 

You can then build your own FTSE All World even cheaper by buying ETF’s for each region but you would have to rebalance between each region. But then HSBC’s All World is available for 0.13 I think. 

On the other hand Blackrock mymap multi asset funds have a charge of only 0.17% and no rebalancing needed. Better if you like an easy life !

LV_426

Albermarle said:

On the other hand Blackrock mymap multi asset funds have a charge of only 0.17% and no rebalancing needed. Better if you like an easy life !

Sounds good to me!

dunstonh

ajfielden said:

Albermarle said:

On the other hand Blackrock mymap multi asset funds have a charge of only 0.17% and no rebalancing needed. Better if you like an easy life !

Sounds good to me!

Although the comparable risk version of another fund house with a similar fund has had better returns despite costing more.
So be wary of focusing on cost before investment potential.  Cost is important but its not the primary driver.

LV_426

dunstonh said:

ajfielden said:

Albermarle said:

On the other hand Blackrock mymap multi asset funds have a charge of only 0.17% and no rebalancing needed. Better if you like an easy life !

Sounds good to me!

Although the comparable risk version of another fund house with a similar fund has had better returns despite costing more.
So be wary of focusing on cost before investment potential.  Cost is important but its not the primary driver.

And the Blackrock funds don't have much of a track record do they? (Not that past performance is any guide to future... blah blah

I too am wary of going too cheap. You generally get what you pay for. Does this hold with investment funds?

AlanP_2

ajfielden said:

dunstonh said:

ajfielden said:

Albermarle said:

On the other hand Blackrock mymap multi asset funds have a charge of only 0.17% and no rebalancing needed. Better if you like an easy life !

Sounds good to me!

Although the comparable risk version of another fund house with a similar fund has had better returns despite costing more.
So be wary of focusing on cost before investment potential.  Cost is important but its not the primary driver.

And the Blackrock funds don't have much of a track record do they? (Not that past performance is any guide to future... blah blah

I too am wary of going too cheap. You generally get what you pay for. Does this hold with investment funds?

Yes and No.

Yes in as much as a cheap as chips tracker (or multi-asset of trackers) will deliver you market returns less the costs.

Active funds which tend to have higher fees are aiming to beat what a tracker will return, but they can't all beat the "market" as represented by a tracker(s) so some will return less.

As Dunston says it is return after costs that is important but nobody can forecast future returns.

The ones to definitely avoid are active funds that are closet trackers.

Imagine an active fund that invests in FTSE100 companies. If they owned 99 out of the 100 they wouldn't be a tracker but returns would be the same before their costs and lower after costs are taken out. In reality you need a lot less than 99% coverage to virtually mirror an index.

That's why I prefer conviction based active funds (where I use them) that may only invest in 1% say of the companies they could invest in. Take Fundsmith as an example - a concentrated, selected set of companies that they believe will do well.

[Deleted User]

This a helpful list of signs that you need to change an adviser.

https://www.steadyhand.com/national_post/2021/05/25/10-good-reasons-to-fire-your-financial-adviser/

We’ve seen several of these behaviours even in this chat room. 

In general, my view is that a one-off advice can be helpful when there is a major change in your circumstances but for routine ongoing investment management there are plenty of good books and instruments which make advisers redundant.