What pension planning advice do I need?

LV_426

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.  

I think the IFAs know that. Hence the eye watering up front £3k costs for initial advice.

dunstonh

ajfielden said:

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.  

I think the IFAs know that. Hence the eye watering up front £3k costs for initial advice.

Not really.  Most general practitioner firms do a mix of transactional and ongoing.   And many never get near £3000 on their initial fees.

And many use the cheap low cost multi-asset funds with their transactional clients but their portfolio service with the ongoing servicing clients.  Some people appear not to like it that the performance on those, net of charges, can be fairly consistently better than the low cost options.      There are also plenty of DIY investors that run their own portfolios on a similar basis that get that sort of performance as well.  Some people DIY very well.  Some make a right pig's ear of it.       Returns are never guaranteed but some people are born pessimists and some born optimists.   

[Deleted User]

“Some people appear not to like it that the performance on those, net of charges, can be fairly consistently better than the low cost options.”

Key words: “can be”.  Another good example of the kinds of statements that should trigger an “escape” signal.  Very similar to Tom’s second example: “You’re definitely paying too much if you’re told, “It doesn’t matter, it’s all about returns.”

LV_426

dunstonh said:

ajfielden said:

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.  

I think the IFAs know that. Hence the eye watering up front £3k costs for initial advice.

Not really.  Most general practitioner firms do a mix of transactional and ongoing.   And many never get near £3000 on their initial fees.

Yeah really. I've just been sent a brochure by an IFA outlining their fees, and that's the initial charge. They're having a laugh.

OldMusicGuy

The most important thing is IMO to have clear objectives, not to just chase returns. For me, it's about achieving modest growth at lower levels of volatility, but then I have a good size SIPP already and am retired. That's why for me just getting average market returns is fine, I don't need to impress anyone or justify my fees.

If your objective is aggressive growth maybe in a shorter time frame, then my approach probably wouldn't be appropriate.

gm0

My 2p is that the arguments about advice and DIY as means to an end are a bit of a sideshow albeit a well attended one on the forum whenever it comes up.

The original poster needs a clear point of view on whether they have the time and inclination for:

- Self education to be a well informed customer who has thought about their situation and goals to get the best from advice.

- The larger amount of work to get ready to confidently DIY and manage investments with arrangements in place for family. 

The 2nd choice overlaps but is a bigger ask. Some people are interested to learn what may be a new skillset around investments. Some are not.  The questions the IFA will ask you require you to think about many of the same income need, housing, heirs, risk attitude topics that feed into DIY planning.  It could not be otherwise.

I wrote down my DC drawdown retirement planning process to keep track as dipping in and out it's easy to forget and lose traction or the logic of what question leads to the next. Digging it back out - it was around 30 steps each addressing a key question or a needed decision.  Doubtless sounds like overkill to some.  For me as a bit of a detail checking hound it was an intermittent evenings/weekends thing over a couple of years

JohnWinder

ajfielden said:

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

Yes, but you're not paying for returns. If you were, the returns would be promised or even guaranteed. You're paying for analysts' salaries/bonuses, Bloomberg terminals, data sources and second houses in the south of France (just not yours - see below).

The more you pay the less nett return you're likely to get, after fees. It's contrary to our common experience that the more you pay the better the product, but there it is.  To quote: '
Overall, there does not appear to be a clear linear relationship between fund charges and the gross performance generated by the fund manager.'  source: Asset Management Market Study  Final Report: Annex 4 – Assessing the relationship between the price and performance of retail equity funds in the UK  June 2017

' The expense ratio is the most proven predictor of future fund returns. We find that it is a dependable predictor when we run the data. That's also what academics, fund companies, and, of course, Jack Bogle, find when they run the data.

But it's been a couple of years since I provided the proof statement, so we have updated the data to show just how strong and dependable fees are as a predictor of future success. That's not to say investors should use them in isolation. There are many other things to consider, but investors should make expense ratios their first or second screen.' https://www.morningstar.com/articles/752485/fund-fees-predict-future-success-or-failure

South of France: 'As part of its report, the Financial Conduct Authority (pdf) said that the asset-management sector boasts a hefty average profit margin of 36%. That’s better than just about every other industry in the country, from oil to software to pharma companies. '

dunstonh

Deleted_User said:

“Some people appear not to like it that the performance on those, net of charges, can be fairly consistently better than the low cost options.”

Key words: “can be”.  Another good example of the kinds of statements that should trigger an “escape” signal.  Very similar to Tom’s second example: “You’re definitely paying too much if you’re told, “It doesn’t matter, it’s all about returns.”

What a load of BS.  That would pretty much eliminate any discussion on any investment.     Investment returns are always unknown.    You have to use the word "can" or similar because you do not know what the future holds. 

Yeah really. I've just been sent a brochure by an IFA outlining their fees, and that's the initial charge. They're having a laugh.

That is their initial charge.  Not the initial charge.  Every firm has its own charging structure.  And like most professions and services you will find the greedy and the fair.

The more you pay the less nett return you're likely to get, after fees. 

So, effectively, sticking it in a savings account that has no fees is the best option if you follow that guide.

LV_426

dunstonh said:

Yeah really. I've just been sent a brochure by an IFA outlining their fees, and that's the initial charge. They're having a laugh.

That is their initial charge.  Not the initial charge.  Every firm has its own charging structure.  And like most professions and services you will find the greedy and the fair.

Yes of course. Just underlines the need for shopping around. 
But in any case, I think my knowledge is building, and I have a definite plan. What I would honestly like, is to run the plan by an advisor. But they don't seem to operate like that. Their way of working is to sign you up for an ongoing service, which I don't want to do.
And I seriously doubt that £3000 is a fair price to review my proposed plan. That's nearly a month's net salary for me!

JohnWinder

dunstonh said:

The more you pay the less nett return you're likely to get, after fees. 

So, effectively, sticking it in a savings account that has no fees is the best option if you follow that guide.

No, I don't think we should conclude that. Reading on, just a couple of lines, and we get the source of that quote: Assessing the relationship between the price and performance of retail equity funds in the UK  June 2017

dunstonh said:

And many use the cheap low cost multi-asset funds with their transactional clients but their portfolio service with the ongoing servicing clients.  Some people appear not to like it that the performance on those (portfolio service assets??), net of charges, can be fairly consistently better than the low cost (multi-asset fund??) options.   

Not knowing any of those 'some people', I'm wondering if they are straw men. But that aside, some assets can outperform others, despite that not being their long term nature; and we always should keep in mind to compare risk levels when comparing 'performance' unless the performance is a Sharpe ratio or similar.