Financial Advise draw down pension fees

BritishInvestor

zagfles said:

BritishInvestor said:

zagfles said:

BritishInvestor said:

zagfles said:

BritishInvestor said:

bostonerimus said:

Right now people just retiring into falling markets are having to pay financial services fees are in nasty position as sequence of returns risk is going to be compounded by the drag of the fees.

Anyone whose retirement plan is challenged by sequence of returns risk in the current market doesn't have a robust plan - whether they pay x pa to an adviser or DIY.

A bigger drag for some is that some of their funds are down 20-50% YTD. Financial services fees are a rounding error in comparison.

Anyone whose fund is down 50% YTD isn't an investor, they're a gambler. May as well include people in the local bookies as "DIY investors" if it helps your point.

Top 10 most-popular investment funds: February 2021

 https://www.ii.co.uk/analysis-commentary/top-10-most-popular-investment-funds-february-2021-ii515290

1	Baillie Gifford American

And? Anyone invested 100% in that fund is a gambler. I doubt many have though, it's not the most popular fund held, it's the most popular fund bought that month. Those who have boring old passives like VLS or HSBC All World tend to hold long term so won't register at all as they're not buying anything that month. Those who switch funds every month to the flavour of the month will make up most of the buy stats, but they're probably a tiny minority. And even they're unlikley to be 100% in a single highly volatile narrow fund.

It was an example of a 50% faller. Many others have fallen 20%+. In the real world, many DIY investors do not have an understanding of risk, diversification nor when someone is selling them a story too good to be true. It's a shame.

Good job there are so many products eg multi-asset funds, workplace pensions, robo pensions which mean they don't have to. Individually tailored advice isn't the only solution. It's probably the most expensive though. 

You are confusing the investment with the investor.

bostonerimus

lisyloo said:

bostonerimus said:

BritishInvestor said:

bostonerimus said:

Right now people just retiring into falling markets are having to pay financial services fees are in nasty position as sequence of returns risk is going to be compounded by the drag of the fees.

Anyone whose retirement plan is challenged by sequence of returns risk in the current market doesn't have a robust plan - whether they pay x pa to an adviser or DIY.

A bigger drag for some is that some of their funds are down 20-50% YTD. Financial services fees are a rounding error in comparison.

The bad bit is having to pay the fees when the markets are down. The markets will hopefully recover, but the extra amount paid in fees at the worst possible time will affect your portfolio and income for many years.

But the advice may mean you are not as far down as you could be without advice.

...and it might mean you are further down after 1m, 1Year, 5 years etc. But return is only one way to measure your portfolio.

MK62

Probably no way to know either way though, so you just have to do what you think is right for your own circumstances and situation......

bostonerimus

lisyloo said:

bostonerimus said:

lisyloo said:

bostonerimus said:

lisyloo said:

bostonerimus said:

Right now people just retiring into falling markets are having to pay financial services fees are in nasty position as sequence of returns risk is going to be compounded by the drag of the fees.

yes but as you just saw with real figures mine is reducing my losses.

So as I said before I agree with the charges being a line item 
but lets also have the benefits as a line item

The most recent comparison we've just done shows I'm 2.6% up and that's after charges.
obviously that's one single ad-hoc anecdote, but the point is we need to include both the benefits of the advice/fund management as well as the costs.

What is your basis of comparison? It's fiendishly difficult to assess the value of advice because you don't have a control for comparison. So what does the "2.6% up" refer to?
Over what time scale and what is your asset allocation? Maybe you should be up more...

It was albermarle YTD compared to mine.
Why is it fiendishly difficult to compare one portfolio with another? (I'm seriously genuinely interested in that)
2.6% is the difference after the IFA fees.

I don't believe that I personally could do better (I'm not saying someone else couldn't do better).

Are you saying advice is NEVER of value.

What if a professional advises someone to transfer a DB pensions at the right time and the transfer value doubles?
Is that worthwhile advice?

OK so it's YTD. It is easy to compare portfolios, it's difficult to compare them sensibly and tease out the actual value of advice or active management. I'm down 15% this year, but I have a high equity percentage in my invested portfolio, I'm assuming that with a 2.6% gain you do not. So the value your IFA might have provided is in a low risk portfolio matched to your requirements. I can see that as good if you don't feel comfortable DIYing, but I'm less convinced that ongoing fees provide value if the initial strategic set up was good. Has your IFA done anything tactical in the current market?

I am not 2.6% up, I have 2.6% lower losses than the one I’m comparing with.
I’m aggressively invested (rated 7/10 FWIW).

No, I haven’t seen anything “tactical” recently but the asset allocation and geo political/economic situation does get reviewed.

the on-going fees have covered the transfer of 2 employer pensions and retirement planning advice as well as discussion on de-risking some of our investments.
we didn’t de-risk due to a cash windfall but we may well have done otherwise.
we were also provided with free advice on a care fees annuity (that we decided not to take up).
we’ve also had advice on LPAs which we haven’t acted on (but have EPA).

so these aren’t the guys who take the money and do nothing for it.

maybe the people who don’t require ongoing advice have their wills, LPAs, inheritance all sorted? Yeah right.

So what is your YTD loss after fees? and what is your asset allocation? You might be 2.6% ahead of some other portfolio, but are the portfolios similar enough to make the comparison sensible and you need to look at things over extended periods to draw any useful conclusions. 

I don't pay for financial advice because I have guaranteed income and just stay aggressively invested in a fairly simple passive indexing portfolio that minimizes fees and has worked well for me over the last 35 years.. However, paying for advice is sometimes warranted. I just paid an estate lawyer $2.5k to do some estate planning as it involved setting up a trust and power of attorney to compliment the will and I wanted to get that right. But that's a single charge, no ongoing fees.

cfw1994

I do find these threads amusing.  84 replies and over 1.7k views, yet the OP has gone AWOL 🤪

When a new poster drops in a question that generates 9 pages of replies, yet they haven’t replied (or perhaps even ‘liked’) once🤷‍♂️

I know everyone starts somewhere on any forum as a newbie…but if they don’t remain interested in their own thread pretty quickly, I have a rule to not bother engaging…..it screams ‘troll’ 😉

Summary: DIY if you feel competent enough, use an IFA if you don’t.  The latter will certainly take their pound of flesh, even when your funds go down, but if you are the sort who might put it all on black, then IFA all the way!
Live your best life 😎👍

Ibrahim5

That means people lacking in self confidence always use an IFA and lose out. I have always felt sorry for people lacking confidence. It's really disabling.

JOHNBOY42

Been following with interest....... I am a novice to the pension world but reading on here and other forums about pension loss with the current situation... he is my stance.......... took financial advice and moved my pot to RL with advisors recommendation and now paying for ongoing advice and fund fees I am down roughly 3.5% which is good in comparison to other peoples situation.. hate to think how much I would be down if done it myself

ComicGeek

Ibrahim5 said:

That means people lacking in self confidence always use an IFA and lose out. I have always felt sorry for people lacking confidence. It's really disabling.

Self confidence doesn't automatically transfer into ability. The most self confident people I work with confidently get most things wrong, and their self confidence prevents them from learning from mistakes.

Dazed_and_C0nfused

ComicGeek said:

Ibrahim5 said:

That means people lacking in self confidence always use an IFA and lose out. I have always felt sorry for people lacking confidence. It's really disabling.

Self confidence doesn't automatically transfer into ability. The most self confident people I work with confidently get most things wrong, and their self confidence prevents them from learning from mistakes.

Are you based in Downing Street 😄

dunstonh

JOHNBOY42 said:

Been following with interest....... I am a novice to the pension world but reading on here and other forums about pension loss with the current situation... he is my stance.......... took financial advice and moved my pot to RL with advisors recommendation and now paying for ongoing advice and fund fees I am down roughly 3.5% which is good in comparison to other peoples situation.. hate to think how much I would be down if done it myself

Royal London's Governed portfolios were well positioned on the defensive assets and have done much better than market averages during this negative period.    They didn't so as well during the Coronvirus falls but that was mostly growth assets that fell.     In this period, both growth and defensive assets have fallen and it's the defensive assets where they have done better.   This is almost certainly why you are seeing less downside than most.