Difference between a Robo SIPP and an Investment Pathway Pension?

zagfles

DaveO said:

BritishInvestor said:

Albermarle said:

I think a good IFA will actively monitor your portfolio and if the situation demands it, they will suggest changes, regardless of whether it is 'annual review time' or not.

A good IFA will set the correct portfolio at the outset and there should be very little need to tinker with it (other than periodic rebalancing).

https://www.mavenadviser.com/blogcontent/2017/3/7/why-its-important-to-practice-what-i-preach-97bj6

"2: Making very little changes with their portfolios.

Money is like a bar of soap - the more you touch it the less you have. Timing markets is a fool’s errand and predicting market swings is the preserve of the crazies. Misinformed clients emotionally may feel joy in an adviser continually tweaking their portfolio and what they’re invested in. The elite adviser knows the only sure indicators to long-term success (performance) are discipline, patience and costs. Frequently picking outperformers in advance is impossible. Our lack of ‘action’ may be perceived as a weakness but actually, it is one of our strengths.

This does make sense to me in years I have had a stocks and shares ISA and its all been in tracker funds in various markets, its done very well and I have hardly touched it.

However what constitutes periodic rebalancing of a portfolio from the “good IFA”?   There seems a contradiction here in that whenever they do that aren’t they going against what the IFA in that blog advocates unless this periodic rebalancing is done rarely?

I just had the documentation from the second IFA back and their wealth management option does a quarterly rebalancing of the portfolio and they say they contact you to see if you want to do it.   Now it may be some quarters they recommend no change but this definitely looks counter to what the IFA in that blog advocates.

Presumably the IFA in that blog thinks quarterly rebalancing is stupid. 

If so and there is now a wealth management industry which bases its high fees on regular “touching” of the portfolio which is detrimental, why hasn’t this industry been called out or come to the attention of the FCA as bad practice?  Are we heading for another mis-selling scandal here?

I suspect the more frequent rebalancing/tweaking is probably because the IFA wants to be seen to be "doing something" for the 0.5% of your entire portfolio they are taking as fees.

Albermarle

If so and there is now a wealth management industry which bases its high fees on regular “touching” of the portfolio which is detrimental, why hasn’t this industry been called out or come to the attention of the FCA as bad practice?  Are we heading for another mis-selling scandal here?

As above, it is more about selling/marketing/keeping the customer on board. If you charge 2% , you can afford to be in more regular contact with the customer, asking about the family, did you have a nice holiday etc . Then sending quarterly reports on glossy paper, and talking about regular rebalancing in response to market changes etc . Then maintaining a fancy office address in London, to give that feeling of wealth, security. professionalism etc
So the customer thinks paying 2% is worth it, and many do.

If you pay an IFA , say 1.2% all in, you will only get some of that, but probably the end result will be the same.

If you DIY , you can pay as little as 0.2% or as much as 2% . Typically probably 0.3% to 1%. So saving fees but taking more personal responsibility and hoping you get it right.

DaveO

Thanks to all who have replied.   Very interesting and educational.  It's certainly got me looking around at other alternatives.

For example I found even if I went the advised route with Vanguard for their personal pension (which isn't a SIPP because they select the funds...) even with their 0.79% ongoing yearly advisor fee where they seem to replicate the wealth management idea of regularly adjusting your investment given the size of my pot I'd pay just a bit less than 1% per year because their platform fee is capped and ongoing fund charge is low.

dunstonh

DaveO said:

Thanks to all who have replied.   Very interesting and educational.  It's certainly got me looking around at other alternatives.

For example I found even if I went the advised route with Vanguard for their personal pension (which isn't a SIPP because they select the funds...) even with their 0.79% ongoing yearly advisor fee where they seem to replicate the wealth management idea of regularly adjusting your investment given the size of my pot I'd pay just a bit less than 1% per year because their platform fee is capped and ongoing fund charge is low.

The Vanguard advice service costs the same as most IFAs (apart from perhaps on smaller values).     It is not a full advice service.  It is closer to a robo but with a bit more consumer protection and advice than a robo but not on par with full advice.

zagfles

DaveO said:

Thanks to all who have replied.   Very interesting and educational.  It's certainly got me looking around at other alternatives.

For example I found even if I went the advised route with Vanguard for their personal pension (which isn't a SIPP because they select the funds...) even with their 0.79% ongoing yearly advisor fee where they seem to replicate the wealth management idea of regularly adjusting your investment given the size of my pot I'd pay just a bit less than 1% per year because their platform fee is capped and ongoing fund charge is low.

Under 1% total is probably what you should be aiming at. Most IFA managed portfolios posted here seem to be well over 1%, sometimes closer to 2%. So under 1% with advice sounds reasonable.