Pension Annual Review

GSP

My IFA will be constructing his report, advice and recommendations for me in the coming weeks.
My fund which I’m drawing down on is quite a bit lower than it was a year ago so I’m expecting a lot of caution from him, probably do you really need to take out money at this time!
Although a smaller proportion of my fund, there are some Bailie Gifford investments in there which have done badly compared to the rest. In the past at reviews  he has suggested getting rid of the two or so worst performers and bringing new ones in.
This time round however I think these investments have fallen so much it’s worth actually keeping them because how much further can they go?
I may even suggest the review or any changes are put on hold for the time being at this time?
It feels like the suggestions to sit through storms is relevant at this time, even for this review?
Through all the uncertainty, how can or what can an IFA do from here to try and improve any positions?

Steve_666_

Churn always cost money, and past performance is no guarantee of the future.

Marcon

GSP said:

My IFA will be constructing his report, advice and recommendations for me in the coming weeks.
My fund which I’m drawing down on is quite a bit lower than it was a year ago so I’m expecting a lot of caution from him, probably do you really need to take out money at this time!
Although a smaller proportion of my fund, there are some Bailie Gifford investments in there which have done badly compared to the rest. In the past at reviews  he has suggested getting rid of the two or so worst performers and bringing new ones in.
This time round however I think these investments have fallen so much it’s worth actually keeping them because how much further can they go?
I may even suggest the review or any changes are put on hold for the time being at this time?
It feels like the suggestions to sit through storms is relevant at this time, even for this review?
Through all the uncertainty, how can or what can an IFA do from here to try and improve any positions?

Offer you informed professional advice - but in the absence of a crystal ball, although they may have greater research on which to base recommendations, clients have to accept these are never going to be racing certainties. 

An IFA can also check whether your approach to risk has changed in the light of the changes in market conditions, and also whether you can change anything about the way in which you are approaching your own finances if your risk tolerance has diminished.

GSP said:

My IFA will be constructing his report, advice and recommendations for me in the coming weeks.
My fund which I’m drawing down on is quite a bit lower than it was a year ago so I’m expecting a lot of caution from him, probably do you really need to take out money at this time!
Although a smaller proportion of my fund, there are some Bailie Gifford investments in there which have done badly compared to the rest. In the past at reviews  he has suggested getting rid of the two or so worst performers and bringing new ones in.
This time round however I think these investments have fallen so much it’s worth actually keeping them because how much further can they go?
I may even suggest the review or any changes are put on hold for the time being at this time?
It feels like the suggestions to sit through storms is relevant at this time, even for this review?
Through all the uncertainty, how can or what can an IFA do from here to try and improve any positions?

From what you've said, you seem to have ignored his advice about BG investments; I wonder why you are paying for advice but then apparently ignoring it - or have I misunderstood what you've said? There is little point in taking personalised advice if you just want to follow folk wisdom, or aren't comfortable taking any action - but that's all part of your attitude to risk, which will be key to a successful review.

GSP

Marcon said:

From what you've said, you seem to have ignored his advice about BG investments; I wonder why you are paying for advice but then apparently ignoring it - or have I misunderstood what you've said? There is little point in taking personalised advice if you just want to follow folk wisdom, or aren't comfortable taking any action - but that's all part of your attitude to risk, which will be key to a successful review.

He hasn’t provided any advice yet, I’m only surmising what he might recommend or say.
It could be this time round the conversation is quite different.
But it’ll be ‘interesting’ if he suggests dropping the worst performing investments (BG) this time round as from my untrained eye they have fallen so far does he recommend to get rid of and I take the losses?

squirrelpie

GSP said:

He hasn’t provided any advice yet, I’m only surmising what he might recommend or say.
It could be this time round the conversation is quite different.

But previously you wrote:

GSP said:

In the past at reviews  he has suggested getting rid of the two or so worst performers and bringing new ones in.

Which sounds to me like advice already given, and is I expect what Marcon was referring to. If so, his question makes sense to me and you haven't answered it. If not, then we've both misunderstood what you wrote and would appreciate clarification.

GSP

squirrelpie said:

GSP said:

He hasn’t provided any advice yet, I’m only surmising what he might recommend or say.
It could be this time round the conversation is quite different.

But previously you wrote:

GSP said:

In the past at reviews  he has suggested getting rid of the two or so worst performers and bringing new ones in.

Which sounds to me like advice already given, and is I expect what Marcon was referring to. If so, his question makes sense to me and you haven't answered it. If not, then we've both misunderstood what you wrote and would appreciate clarification.

Sorry if I have.
I don’t know what to change what I’ve already written though. He usually recommends in past reviews to drop the two worst performing investments.
With this year however, I’m surmising but if he recommends the same, as the BG investments have fallen so much this time is it actually worth keeping hold of the worst performing investments, as this year these have fallen by a much greater % than previous years worse performing investments?
Hope that makes better sense?

dunstonh

I don’t know what to change what I’ve already written though. He usually recommends in past reviews to drop the two worst performing investments.

That is a strange way to do it.   Often the best funds in one period will be the best in the next.   

With this year however, I’m surmising but if he recommends the same, as the BG investments have fallen so much this time is it actually worth keeping hold of the worst performing investments, as this year these have fallen by a much greater % than previous years worse performing investments?

Or he may recommend removing them because BG funds tend to focus on growth rather than value and the cycle doesn't favour that at the moment an usually these things stay that way for several years (but no way to tell when it will changeover or for how long)

[Deleted User]

Its like changing lanes in a traffic jam.  We have zero idea which lane will over perform next based on the previous movements.  

Human brain is designed to look for patterns, eg “BG underperformed so it will outperform next” -  or the other way around. Its astrology.  Stock market does not have patterns. Stock market is a random walk.  

You should focus on asset allocation and keeping the costs down.  And then sticking with the plan. 

bostonerimus

Deleted_User said:

Its like changing lanes in a traffic jam.  We have zero idea which lane will over perform next based on the previous movements.  

Human brain is designed to look for patterns, eg “BG underperformed so it will outperform next” -  or the other way around. Its astrology.  Stock market does not have patterns. Stock market is a random walk.  

You should focus on asset allocation and keeping the costs down.  And then sticking with the plan. 

Well put. Many people fall into the dilemma of what to sell, what to buy and when, particularly when they see large losses from actively managed funds that had previously seen large gains. This is particularly dangerous early in drawdown as you can crystalize losses and find it hard to recover. By sticking to an more strategic asset allocation plan, that also includes a variable withdrawal rate strategy like Guyton Klinger, you can avoid short term reactions like selling all of a fund.

Albermarle

Its like changing lanes in a traffic jam.  We have zero idea which lane will over perform next based on the previous movements.

It is a great comparison. However some people think they know which lane moves the quickest, and no facts will persuade them otherwise.

Cus

Albermarle said:

Its like changing lanes in a traffic jam.  We have zero idea which lane will over perform next based on the previous movements.

It is a great comparison. However some people think they know which lane moves the quickest, and no facts will persuade them otherwise.

It's a poor analogy imo, as the fastest lane depends on the reasons for the traffic, merging lanes, closed lanes etc. Having more information quicker will allow you to choose the better lane before others, and then adapt quicker. Or you could just put your hands up, accept that many people are better informed than you, and stay in your lane.  But that doesn't mean that the fastest lane can't be determined.