Am I being unreasonable

jcfd55

In 2018 I got my company pension and it was a good amount of money. Rather than take an annuity (the company was taken over by an agressive  American firm and I was scared of them damaging the funds).  I took out a sipp via a Scottish based IFA  company that was recommended and they 3 years later moved my account to a new specialist team (including the MD) for higher level accounts.

In the meantime I took out my 25% tax free amount and did various things with it including paying of debts and opening my own share ISA for a speculative experience (which has gone well)

I continued working tho and everything seemed to be going well with the SIPP.

At the last statement the fund had regrown  from my 25% withdrawel and had passed the original figure in the four years Growing by an average of just under £35k per year...... marvelous.

So marvelous I thought, that I decided to finally retire this summer and live off my sipp and DWP pension combined

That was until today.  When I got a statement 2 months late which shows my fund has shrunk by over 15% since last July.

I'm spitting feathers at the moment, especially as that figure also includes charges of just over £6,000 for managing it.  When its split between  Ballie Gifford, Brewin Dolphin and Tatton Tracker; like its not hard for the special account team I was transferred to manage a few funds.

Yes I appreciate there are risks in investing but a 15% cockup when I'm paying an IFA to managed it I'm finding is unacceptable    I have a phone call with the MD of the IFA in the next week or so.  So should I chew his head off??  At this rate I will be broke in 4 years

Am I being unreasonable?
Was this to be expected? How have other people go on over the past year?

I'm really unsure in the current environment what my expectations should be.  Should I just shut up and await recovery for Ballie Gifford and Brewin dolphin etc as they are massive funds    Or should I cut and run and is xferring to another potential IFA shark costly

Any opinions or advice/experience would be appreciated.   I do appreciate its down to me what I do at the end of the day.  But am I being impatient/unreasonable?

MK62

Most people's SIPPs are down this year to varying degrees  - if you mean July 2021, then 15% down is in the ball park tbh.
The £6k in charges won't have helped, but I suppose it depends on the size of your pot and what they are doing to earn that......having said that though, even DIY investing isn't free.

eskbanker

jcfd55 said:

Yes I appreciate there are risks in investing but a 15% cockup when I'm paying an IFA to managed it I'm finding is unacceptable

It's not "a 15% cockup", it's markets that have been dropping significantly over the last year.  If you've avoided that in your own S&S ISA investments then well done you, but that doesn't mean that the IFA is being negligent or incompetent if that's your inference or interpretation....

Easyjet77

jcfd55 said:

In 2018 I got my company pension and it was a good amount of money. Rather than take an annuity (the company was taken over by an agressive  American firm and I was scared of them damaging the funds).  I took out a sipp via a Scottish based IFA  company that was recommended and they 3 years later moved my account to a new specialist team (including the MD) for higher level accounts.

In the meantime I took out my 25% tax free amount and did various things with it including paying of debts and opening my own share ISA for a speculative experience (which has gone well)

I continued working tho and everything seemed to be going well with the SIPP.

At the last statement the fund had regrown  from my 25% withdrawel and had passed the original figure in the four years Growing by an average of just under £35k per year...... marvelous.

So marvelous I thought, that I decided to finally retire this summer and live off my sipp and DWP pension combined

That was until today.  When I got a statement 2 months late which shows my fund has shrunk by over 15% since last July.

I'm spitting feathers at the moment, especially as that figure also includes charges of just over £6,000 for managing it.  When its split between  Ballie Gifford, Brewin Dolphin and Tatton Tracker; like its not hard for the special account team I was transferred to manage a few funds.

Yes I appreciate there are risks in investing but a 15% cockup when I'm paying an IFA to managed it I'm finding is unacceptable    I have a phone call with the MD of the IFA in the next week or so.  So should I chew his head off??  At this rate I will be broke in 4 years

Am I being unreasonable?
Was this to be expected? How have other people go on over the past year?

I'm really unsure in the current environment what my expectations should be.  Should I just shut up and await recovery for Ballie Gifford and Brewin dolphin etc as they are massive funds    Or should I cut and run and is xferring to another potential IFA shark costly

Any opinions or advice/experience would be appreciated.   I do appreciate its down to me what I do at the end of the day.  But am I being impatient/unreasonable?

Yes. Impatient and unreasonable.

Pablo7474

Yes, what did you expect during these times? Have you heard about Ukraine, global shortages, inflation, energy crisis etc etc?

moedeeb

Pension investments are long term, your loss is nothing out of the ordinary and is part of the cycle involved in long term investments. Some people have lost more ( up to 35%) in supposedly safe or low risk gilts as their funds have switched to different investments years before retirement dates. You will get fairly blunt replies on here but all are meant to help you understand the risks of investing. Pensions are just investments in a pension wrapper and advisors / managers charge for their advice as well as the fund charges themselves. A passive diversified global index tracker often does as well or better than active managed funds but you can’t blame others as charges are transparent and everyone knows you can get less than you put in!

Albermarle

I am afraid that however upmarket and expensive the financial advisor is, they can not really buck the markets.
Surely they must have warned you that investments can go down as well as up?
However 15% drop since July this year would be pretty bad, if that is the case.

So marvelous I thought, that I decided to finally retire this summer and live off my sipp and DWP pension combined
If you are living off income from a SIPP with drawdown, then you can expect your fund to go up and down on a regular basis, during your (hopefully) long retirement. Just because it has gone down now, does not mean the whole drawdown plan is in tatters

At this rate I will be broke in 4 years
If you are invested in normal mainstream investments, the chance of them continuing to decline to zero is not credible.

 I have a phone call with the MD of the IFA in the next week or so.  So should I chew his head off??
Maybe, but not because of the recent drop, but because it seems like they have not explained to you very well how investing works, and seem to have given you an overoptimistic outlook on the subject.

gm0

We live in difficult times.  Bonds have done the 5% of the time thing where they underperform equities rather than "dampen" the swings (95% of the time).

People with "low risk" (80% bonds, 20% equities) are coming on here >20% down depending on dates of purchase and comparison.

VLS60 has lost 12% during this year (shorter period from feb) due to the 40% bonds alongside equity market short term movements down. VLS80 lost less maybe 9% because 20% less bonds.    The general long term view on risk of asset classes and equities and bonds hasn't been swept away by a single year.  So the idea that recommending say 40% or 60% equities is now retrospectively an error by an IFA which can get compo for bond returns (losses) is fanciful.

All the VLS fund examples are simple long term investment choices with different amounts of speculative risk around equity markets that suit different objectives and people.  Unsophisticated compared to IFA portfolios or rolling your own with individual funds.  But the "low risk ones" have been hurt more these past months than the "moderately aggressive" ones.  Not what usually happens on the upside or the downside. Interest rate reversal and rise and the inflation burst signalling more has been part of the conditions in bond markets.

Bias to UK has been hurting people as well.  It's all well and good (perhaps) reducing the currency FX risks you face by holding more UK investments and fewer USD ones.  But UK markets FTSE100,250 delivered a worse than global developed markets thumping this year.  My best DIY portfolio fund is passive index tracker Developed World ex UK. 
My worst is a global multi-asset with bonds. And a UK equities fund which colours in the gap in the World ex UK.

The actual problem here is that you have in some way misunderstood what an IFA or FA actually does. 
And does not do.   Quite possibly based on being given a load of fine sounding blather and then given small print to sign which is the contract and describes what they actually do and commit to.

All they in fact do is a "fact find" - create an audit trail (for their insurer and the FCA) and suggest to you (for you to decide on and accept - it is still *your* investment decision based on their recommendation) - a "suitable" for you (risk capacity, appetite, income goals, pot value) - an investment portfolio.   The definition of "suitable" is broad.  Actual future performance doesn't form part of the recommendation or contract.

Proving that something was unsuitable for you on the basis of losses alone isn't going to happen. 

Proving it's unsuitable - based on what was declared and captured in the fact find - can work as a complaint (direct and then ombudsman) but that's a difficult road and requires that they actually erred and recommended something extreme which genuinely *is* unsuitable based on what you declared (document trail) especially around what money was needed and when and relationships to risk.  High bar.

It being unsuitable because of something you didn't tell them but now wish you had which isn't on the fact find is on you (unless it is something core they should have asked which was negligently missed).

What else ?

If there is an equities market re-valuation and global markets chew off 50%.  The IFA still shrugs.  It's not his problem.  It's yours.
He only gets 0.5% of half the value the following year so he's not pleased either - but I doubt that's any consolation.

They *NEVER* guarantee anything about how well or badly a suitable for you recommended portfolio or individual funds in it perform.  Relative to others, or absolute.  Just not available as a retail service.

If you DIY (as I do) then the SIPP platform provides me a shelf of funds to chose from and it's my decision.  They do what they do.  Hopefully I am not daft about what products I take off the shelf.

You used a personal shopper to assist in finding goods on the shelf.  But it's still your basket at the checkout, your goods, your investments and risk. Que sera sera.

IFA portfolio reviews are not active daily trading and stop losses on your behalf.  They are measured in years.  And lag.  They don't save you.  They are meant to help you position better for the business cycle or because funds are dying and closing and it is better that you move. Or a tax change.  Or something which is part of "monitoring" (so you don't have to do it).

All this may be *deeply* unwelcome though it is not meant unkindly. Just a description of retail financial services advice.

Marcon

jcfd55 said:

That was until today.  When I got a statement 2 months late which shows my fund has shrunk by over 15% since last July.

I'm spitting feathers at the moment, especially as that figure also includes charges of just over £6,000 for managing it.  When its split between  Ballie Gifford, Brewin Dolphin and Tatton Tracker; like its not hard for the special account team I was transferred to manage a few funds.

Yes I appreciate there are risks in investing but a 15% cockup when I'm paying an IFA to managed it I'm finding is unacceptable    I have a phone call with the MD of the IFA in the next week or so.  So should I chew his head off??  At this rate I will be broke in 4 years

Am I being unreasonable?
Was this to be expected? How have other people go on over the past year?
But am I being impatient/unreasonable?

There has been no '15% cockup'. You seem incredibly naive about how financial markets operate; they don't invariably go up!
Chew the MD's head off for what, exactly?
Yes, you are being unreasonable.
Yes, it was to be expected (which is not the same thing as 'predicted') by anyone with even a fraction of an eye on what the markets have been doing.
Other people will have seen similar falls if they held similar investments, and difference fund performances if they hold different funds.
Yes, you are being impatient and unreasonable.

dunstonh

That was until today.  When I got a statement 2 months late which shows my fund has shrunk by over 15% since last July.

That is in line with expectation.

Yes I appreciate there are risks in investing but a 15% cockup when I'm paying an IFA to managed it I'm finding is unacceptable    I have a phone call with the MD of the IFA in the next week or so.  So should I chew his head off??  At this rate I will be broke in 4 years

How is the IFA responsible for that and why is it a cockup?
2022 is just another negative year. Something that happens regularly.
The IFA cannot change the fact that Russia invaded Ukraine or that the consequences of QE following the credit crunch have come home to roost or how the markets have trounced the Government and all the other economic events that have occurred.

You suffered a bigger loss period in 2020.  Were you spitting feathers then?
You suffered a similar loss period in 2018.  Were you spitting feathers then?
You suffered a similar loss period in 2015/16.  Were you spitting feathers then?
You suffered a bigger loss period in 2008.  Were you spitting feathers then?
You suffered a bigger loss period in 2000-2002.  Were you spitting feathers then?

Am I being unreasonable?

Yes. 

Was this to be expected? How have other people go on over the past year?

Yes.  It is both expected and there will be more.  Over the long term, it will average out around 1 in 5 years being a negative year, 1 in 5 years being a nothing year and 3 years being growth years.   You never know the order and when they will come.  You just know they are coming.

Or should I cut and run and is xferring to another potential IFA shark costly

I think you should end the relationship with the IFA as you don't trust them and possibly haven't listened to what they have said.  The IFA hasn't done anything wrong but you are paying them but not engaging with them.  That is a waste of money.    Most IFAs help their clients understand loss periods.  So, alternatively, you can engage with your IFA and learn more about it.

An IFA is not an investment manager.  They can buy data and research and position your investments with the primary objective being suitability for you and your objectives.   They do not have a crystal ball and do not have the power to manipulate markets so you can get positive returns in negative periods.