What's your drawdown percentage and how much of that do you spend on financial fees?

JohnWinder

ManMadeWays said:

...I plan to draw down circa 1.5%, (wife has DB as well) , so paying 0.6% means the IFA gets nearly half what I take out to live on , I could boost my income by 50% by DIY .....

'My investments put two children through private schooling, my advisor's'. I don't know who said that, but it could have been many of us.

MK62

Drawdown is variable......but last one was 3% of total.

Fees average out at around 0.4% overall......but that varies a little with the changing pot valuations.

I currently do not use an IFA though, so the fees would obviously increase if I did.

Most of the fees are fund charges, taken directly from the funds by the relevant manager - I never see them as a deduction from my accounts, apart from my wife's SIPP with HL and a small one I have with Vanguard.

ISAs are with iWeb, so no platform charge......but I pay some transaction charges through the tax year depending on what I'm up to......so that's a bit of an estimate.

I no longer have much in a GIA....most has been ISA'd over the years.

Prism

I won't worry too much about fees when working out my initial SWR as the whole concept is very subjective in the first place. The variable mechanisms that kick in in the following years are based on factors like performance and inflation and fee's will have a small impact on that. If the desired asset allocation I want has slightly higher fees then so be it. For example I hold a couple of infrastructure trusts and REITs that have fees between 1-2%.

I try and keep the platform fees low but also find a balance of functionality vs cost more preferable.

Thrugelmir

Deleted_User said:

In the US brokerages have been offering no-commission trading for quite some time.  In August one of Canadian brokerages has joined them.  There is no “fee” for having the “platform” either.  https://www.nbc.ca/en/about-us/news/news-room/press-releases/2021/20210823-Premiere-canadienne-BNCD-annonce-sa-nouvelle-tarification-0-de-commission.html

Maybe a free U.k offering in a couple of years? 

Commissions and “platform fees” don’t cost a lot unless you are a frequent trader, but I find there are additional cost impacts.  X-O SIPP charges me 6 quid per trade.  I refuse to pay more than a fraction of 1% of the trade value which means dividends only get reinvested once a year.  Not a huge deal but the resulting losses do add up.

Payment for order flow is illegal in the UK fortunately.  A review conducted some years ago in the UK quantified the fact that investors do overwhemingly receive a better market price as a consequence. An experienced investor would have no hesitation in questioning a "free lunch".  As nothing in the world of investment is every truly free. Someone pays the cost of the service and generates a profit for the provider. 

As a rule now I trade a minimum of £5k of stock. That's a maximum 0.119% transaction charge excluding stamp duty (where applicable). 

Fermion

Age 73
Retired 5 years
Self Managed Drawdown with HL - no IFA
HL Fees 0.28%
Taking Natural Yield - until Covid-19 was 3.7%, last year 2.9%
(invested in income funds and shares so can easily monitor actual cash received)

[Deleted User]

Thrugelmir said:

Deleted_User said:

In the US brokerages have been offering no-commission trading for quite some time.  In August one of Canadian brokerages has joined them.  There is no “fee” for having the “platform” either.  https://www.nbc.ca/en/about-us/news/news-room/press-releases/2021/20210823-Premiere-canadienne-BNCD-annonce-sa-nouvelle-tarification-0-de-commission.html

Maybe a free U.k offering in a couple of years? 

Commissions and “platform fees” don’t cost a lot unless you are a frequent trader, but I find there are additional cost impacts.  X-O SIPP charges me 6 quid per trade.  I refuse to pay more than a fraction of 1% of the trade value which means dividends only get reinvested once a year.  Not a huge deal but the resulting losses do add up.

Payment for order flow is illegal in the UK fortunately.  

And in Canada. No stamp duty either. I can see the spreads on both Canadian and UK platforms. Overall, trading in Canada is cheaper.  Brokerages make money on cross selling services, be it banking, robo-advisors, currency exchange or lending.  Once you set up a platform the costs of supporting it are extremely low.  UK brokerages still seem to have a lot of fat and are running a little behind on adoption of low cost solutions. X-O is a much more basic and dated platform than what my Canadian and US brokerages have to offer. A lot less can be done without having to contact a human. Mind you, I still like their price offering for an over 100k portfolio vs UK competition. 

 I think Canada is benefiting from having a massive and highly competitive financial market next door.  Although ETFs were invented in Canada. 

And no-commission trading provides meaningful advantages for a passive investors in not having to wait for the trade to be large enough, so helping to stay 100% invested.  The other side of the coin is that it can incentivize frequent trading and dumb money but its not my problem. 

Albermarle

Fermion said:

Age 73
Retired 5 years
Self Managed Drawdown with HL - no IFA
HL Fees 0.28%
Taking Natural Yield - until Covid-19 was 3.7%, last year 2.9%
(invested in income funds and shares so can easily monitor actual cash received)

The Fees seem very low ?
HL platform fee is 0.45% (but this can be reduced if you have a big pot /do not just invest in funds)
Income funds would have a charge as well 

NedS

Albermarle said:

Fermion said:

Age 73
Retired 5 years
Self Managed Drawdown with HL - no IFA
HL Fees 0.28%
Taking Natural Yield - until Covid-19 was 3.7%, last year 2.9%
(invested in income funds and shares so can easily monitor actual cash received)

The Fees seem very low ?
HL platform fee is 0.45% (but this can be reduced if you have a big pot /do not just invest in funds)
Income funds would have a charge as well 

If the OP is using only shares/ITs/ETFs capped at £200pa, a pot of around £70,000 would yield fees of 0.28% when capped at £200

Ibrahim5

I was thinking about it today. Dunstonh is always saying that DIY investors often invest at higher risk than IFAs would do. If you use an IFA a downturn is always worse because the adviser's fee is fixed. In a bad year the IFAs fees make it worse than it would otherwise have been. So when you sit down with your IFA he says "Oh dear the stock market has crashed so you have lost £50K. I have still taken £5K out for my new car". The customer may not be too happy and consider his options.

Fermion

Albermarle said:

Fermion said:

Age 73
Retired 5 years
Self Managed Drawdown with HL - no IFA
HL Fees 0.28%
Taking Natural Yield - until Covid-19 was 3.7%, last year 2.9%
(invested in income funds and shares so can easily monitor actual cash received)

The Fees seem very low ?
HL platform fee is 0.45% (but this can be reduced if you have a big pot /do not just invest in funds)
Income funds would have a charge as well 

It is a large pot, with 12% shares and 15 months cash float