Annual Review - Rebalancing and Changes to Investments Concerns

dunstonh

He is Chartered Financial Planner.

That is his qualification.  It isn't his status.  A CFP can be either an IFA or FA.

He is retiring soon I believe. I remember reading somewhere that retiring IFA’s were being sought by TP to put client’s books ‘their way’.

TP pay some of the highest money to retiring IFAs to move their clients on to the TP service. 8% of the value for each client.

GSP

dunstonh said:

He is Chartered Financial Planner.

That is his qualification.  It isn't his status.  A CFP can be either an IFA or FA.

He is retiring soon I believe. I remember reading somewhere that retiring IFA’s were being sought by TP to put client’s books ‘their way’.

TP pay some of the highest money to retiring IFAs to move their clients on to the TP service. 8% of the value for each client.

Thanks dunstonh.
Next to his name it has BA, ACA, APFS and under his company’s name says Independent Financial Advisors.

I can have a sceptical mind at times. I have just received his email with attachments for my annual review to look over and he has recommended 13 new funds this time, rather than the several worst performers he excludes and replaces each year.

This time round, rather than geographical or sectoral advice to any recommended changes in investments, all he has put that because many clients he looks after have many investments that basically do the same thing, he wants to centralise so we are all mostly on the same investments so there is less for him to look after.

I don’t know why I’m thinking like this. Is it possible he is making preparations to try to get us all to move over to TP when he retires by simplifying investments?

Again, I should not be thinking like this but funnier things have happened.

Linton

I do not see the connection between simplifying investments and moving to TP.  If the IFA was doing the reverse other forum members would say the portfolio was Bering deliberately made more complex for the same reason.

Is there any disadvantage to you in the same job being done by the sameinvestments across the client base? 

[Deleted User]

Linton said:

I do not see the connection between simplifying investments and moving to TP.  If the IFA was doing the reverse other forum members would say the portfolio was Bering deliberately made more complex for the same reason.

The IFA isn’t simplifying anything for the client. He is simplifying it for himself, having just secured an impressive rate of loss for his client.  He is always getting paid while sleeping peacefully, regardless of returns, but the letter suggests it was still too much like hard work.  

The question I would ask is “by how much my costs will reduce as a result of you simplifying your work?”

Ibrahim5

The most important thing to an IFA is their business. When they retire they seem to be particularly dangerous. Their only aim is to sell their business for as much as possible. Ongoing fees mean money for nothing so an IFA wants as much as possible "assets under management". It does sound as if your IFA is trying to do that with your pension. Why no cash buffer? Why do you have so many funds? So the IFA can make it look complicated. Why change them all? I don't know. I would imagine it's to make his business more saleable but I don't know.

dunstonh

I can have a sceptical mind at times. I have just received his email with attachments for my annual review to look over and he has recommended 13 new funds this time, rather than the several worst performers he excludes and replaces each year.

a change of 13 funds (ignoring any share class changes. e.g. INC to ACC) suggests a wholesale change of direction in the portfolio.  Possibly a new data supplier.    Many advisers have gone more focused on index trackers.  Some are still progressing on that.  So, a move from managed to passive would result in a lot of changes.  That wouldn't be a bad thing.  

Is the portfolio definitely advisory?  Or has there been any mention of discretionary fund management?

This time round, rather than geographical or sectoral advice to any recommended changes in investments, all he has put that because many clients he looks after have many investments that basically do the same thing, he wants to centralise so we are all mostly on the same investments so there is less for him to look after.

The regulator has been instrumental in this.    This is not a bad thing.  But it does mean the number of bespoke portfolios will drop.

I don’t know why I’m thinking like this. Is it possible he is making preparations to try to get us all to move over to TP when he retires by simplifying investments?

If he is recommending index trackers in the portfolio, then that is unlikely.  TP's platform charge is higher than most IFA platforms.  TP's portfolio charge is high.  So, moving people into trackers where the portfolio could be 0.1% would be difficult to explain if he wanted to later move it to TP where the charge could be 0.8%.

It is possible that he has another IFA firm in mind and is aligning the portfolios with their models in readiness to hand over.  Just a hypothetical scenario as handovers can often go through years of preparation.

bostonerimus

GSP said:

dunstonh said:

He is Chartered Financial Planner.

That is his qualification.  It isn't his status.  A CFP can be either an IFA or FA.

He is retiring soon I believe. I remember reading somewhere that retiring IFA’s were being sought by TP to put client’s books ‘their way’.

TP pay some of the highest money to retiring IFAs to move their clients on to the TP service. 8% of the value for each client.

Thanks dunstonh.
Next to his name it has BA, ACA, APFS and under his company’s name says Independent Financial Advisors.

I can have a sceptical mind at times. I have just received his email with attachments for my annual review to look over and he has recommended 13 new funds this time, rather than the several worst performers he excludes and replaces each year.

This time round, rather than geographical or sectoral advice to any recommended changes in investments, all he has put that because many clients he looks after have many investments that basically do the same thing, he wants to centralise so we are all mostly on the same investments so there is less for him to look after.

I don’t know why I’m thinking like this. Is it possible he is making preparations to try to get us all to move over to TP when he retires by simplifying investments?

Again, I should not be thinking like this but funnier things have happened.

Such a wholesale change seems to be more for you IFA's convenience that you benefit. You should have a portfolio that is matched to your strategic goals and such a radical change makes me worry that either wasn't or isn't the case.

Linton

bostonerimus said:

GSP said:

dunstonh said:

He is Chartered Financial Planner.

That is his qualification.  It isn't his status.  A CFP can be either an IFA or FA.

He is retiring soon I believe. I remember reading somewhere that retiring IFA’s were being sought by TP to put client’s books ‘their way’.

TP pay some of the highest money to retiring IFAs to move their clients on to the TP service. 8% of the value for each client.

Thanks dunstonh.
Next to his name it has BA, ACA, APFS and under his company’s name says Independent Financial Advisors.

I can have a sceptical mind at times. I have just received his email with attachments for my annual review to look over and he has recommended 13 new funds this time, rather than the several worst performers he excludes and replaces each year.

This time round, rather than geographical or sectoral advice to any recommended changes in investments, all he has put that because many clients he looks after have many investments that basically do the same thing, he wants to centralise so we are all mostly on the same investments so there is less for him to look after.

I don’t know why I’m thinking like this. Is it possible he is making preparations to try to get us all to move over to TP when he retires by simplifying investments?

Again, I should not be thinking like this but funnier things have happened.

Such a wholesale change seems to be more for you IFA's convenience that you benefit. You should have a portfolio that is matched to your strategic goals and such a radical change makes me worry that either wasn't or isn't the case.

Is it a wholesale change?  I read that according to the OP in a previous post the changes were little more than housekeeping keeping very close to the same funds.

See:

I’m still trawling through the 5 attachments sent in my annual review.

Observations for now: (He uses ‘we’, but thought he acted alone?).
In the first attachment a paragraph reads “ However, our core view remains that the best antidote to short-term volatility is a resolute focus on long-term outcomes. We believe inflation is spiking and will reduce over the next couple of years as the effects of Covid and the Ukraine war (hopefully then finished) and supply line issues work through the system. We see little to be gained by excessive portfolio changes in the current market environment”.

Then in the third attachment, and draw you to the third paragraph.
” We are rationalising our use of passive index trackers, such that we use a single preferred tracker fund in each of the major sectors. Whilst tracker funds track the index and their performance is extremely similar to one another, there are small differences in both performance and charges, and so we now recommend passive tracker funds in a similar manner to managed funds and may recommend a swap.

• We have for some time, for most clients, been favouring the use of accumulation funds (where distributions are automatically reinvested in that fund) rather than income funds (where distributions are paid into the account). Many fund managers provide both versions of their funds. We prefer to use accumulation “acc” funds (where available), since we are now better able to manage the level of cash in the account, negating the need for natural income to pay cash into the account to cover charges. This should have a small positive effect on portfolios over time. Thus, we might exchange an “inc” version of a fund with its “acc” equivalent.

• We have noticed that different clients with similar needs and risk profiles may still have different funds in their portfolios. In such cases the funds are typically very similar in make-up, performance and ratings to one another, but nevertheless we feel we should centralise such portfolio choices where possible. So we might recommend you exchange a fund for this reason. As before, we will also from time-to-time recommend that you exchange funds where performance has been below- benchmark for too long.

• Additionally, and as has always been the case, we may recommend that you reduce significantly or drop a fund that resides in a sector where we are reducing exposure for strategic reasons.

bostonerimus

Linton said:

bostonerimus said:

GSP said:

dunstonh said:

He is Chartered Financial Planner.

That is his qualification.  It isn't his status.  A CFP can be either an IFA or FA.

He is retiring soon I believe. I remember reading somewhere that retiring IFA’s were being sought by TP to put client’s books ‘their way’.

TP pay some of the highest money to retiring IFAs to move their clients on to the TP service. 8% of the value for each client.

Thanks dunstonh.
Next to his name it has BA, ACA, APFS and under his company’s name says Independent Financial Advisors.

I can have a sceptical mind at times. I have just received his email with attachments for my annual review to look over and he has recommended 13 new funds this time, rather than the several worst performers he excludes and replaces each year.

This time round, rather than geographical or sectoral advice to any recommended changes in investments, all he has put that because many clients he looks after have many investments that basically do the same thing, he wants to centralise so we are all mostly on the same investments so there is less for him to look after.

I don’t know why I’m thinking like this. Is it possible he is making preparations to try to get us all to move over to TP when he retires by simplifying investments?

Again, I should not be thinking like this but funnier things have happened.

Such a wholesale change seems to be more for you IFA's convenience that you benefit. You should have a portfolio that is matched to your strategic goals and such a radical change makes me worry that either wasn't or isn't the case.

Is it a wholesale change?  I read that according to the OP in a previous post the changes were little more than housekeeping keeping very close to the same funds.

See:

I’m still trawling through the 5 attachments sent in my annual review.

Observations for now: (He uses ‘we’, but thought he acted alone?).
In the first attachment a paragraph reads “ However, our core view remains that the best antidote to short-term volatility is a resolute focus on long-term outcomes. We believe inflation is spiking and will reduce over the next couple of years as the effects of Covid and the Ukraine war (hopefully then finished) and supply line issues work through the system. We see little to be gained by excessive portfolio changes in the current market environment”.

Then in the third attachment, and draw you to the third paragraph.
” We are rationalising our use of passive index trackers, such that we use a single preferred tracker fund in each of the major sectors. Whilst tracker funds track the index and their performance is extremely similar to one another, there are small differences in both performance and charges, and so we now recommend passive tracker funds in a similar manner to managed funds and may recommend a swap.

• We have for some time, for most clients, been favouring the use of accumulation funds (where distributions are automatically reinvested in that fund) rather than income funds (where distributions are paid into the account). Many fund managers provide both versions of their funds. We prefer to use accumulation “acc” funds (where available), since we are now better able to manage the level of cash in the account, negating the need for natural income to pay cash into the account to cover charges. This should have a small positive effect on portfolios over time. Thus, we might exchange an “inc” version of a fund with its “acc” equivalent.

• We have noticed that different clients with similar needs and risk profiles may still have different funds in their portfolios. In such cases the funds are typically very similar in make-up, performance and ratings to one another, but nevertheless we feel we should centralise such portfolio choices where possible. So we might recommend you exchange a fund for this reason. As before, we will also from time-to-time recommend that you exchange funds where performance has been below- benchmark for too long.

• Additionally, and as has always been the case, we may recommend that you reduce significantly or drop a fund that resides in a sector where we are reducing exposure for strategic reasons.

It seems like housekeeping for the IFA's benefit. That might, or might not, also be good for the client. That fact that these changes are "necessary" makes me think, "what was the IFA doing before"? It feels like a lot of words and, if it's for not much actual change, mostly a way to justify the fees. I just don't see the value in these portfolio tweaks for the client. When the IFA says we I think they are including the service he, and ultimately the client, is paying to generate the portfolios.

Linton

bostonerimus said:

Linton said:

bostonerimus said:

GSP said:

dunstonh said:

He is Chartered Financial Planner.

That is his qualification.  It isn't his status.  A CFP can be either an IFA or FA.

He is retiring soon I believe. I remember reading somewhere that retiring IFA’s were being sought by TP to put client’s books ‘their way’.

TP pay some of the highest money to retiring IFAs to move their clients on to the TP service. 8% of the value for each client.

Thanks dunstonh.
Next to his name it has BA, ACA, APFS and under his company’s name says Independent Financial Advisors.

I can have a sceptical mind at times. I have just received his email with attachments for my annual review to look over and he has recommended 13 new funds this time, rather than the several worst performers he excludes and replaces each year.

This time round, rather than geographical or sectoral advice to any recommended changes in investments, all he has put that because many clients he looks after have many investments that basically do the same thing, he wants to centralise so we are all mostly on the same investments so there is less for him to look after.

I don’t know why I’m thinking like this. Is it possible he is making preparations to try to get us all to move over to TP when he retires by simplifying investments?

Again, I should not be thinking like this but funnier things have happened.

Such a wholesale change seems to be more for you IFA's convenience that you benefit. You should have a portfolio that is matched to your strategic goals and such a radical change makes me worry that either wasn't or isn't the case.

Is it a wholesale change?  I read that according to the OP in a previous post the changes were little more than housekeeping keeping very close to the same funds.

See:

I’m still trawling through the 5 attachments sent in my annual review.

Observations for now: (He uses ‘we’, but thought he acted alone?).
In the first attachment a paragraph reads “ However, our core view remains that the best antidote to short-term volatility is a resolute focus on long-term outcomes. We believe inflation is spiking and will reduce over the next couple of years as the effects of Covid and the Ukraine war (hopefully then finished) and supply line issues work through the system. We see little to be gained by excessive portfolio changes in the current market environment”.

Then in the third attachment, and draw you to the third paragraph.
” We are rationalising our use of passive index trackers, such that we use a single preferred tracker fund in each of the major sectors. Whilst tracker funds track the index and their performance is extremely similar to one another, there are small differences in both performance and charges, and so we now recommend passive tracker funds in a similar manner to managed funds and may recommend a swap.

• We have for some time, for most clients, been favouring the use of accumulation funds (where distributions are automatically reinvested in that fund) rather than income funds (where distributions are paid into the account). Many fund managers provide both versions of their funds. We prefer to use accumulation “acc” funds (where available), since we are now better able to manage the level of cash in the account, negating the need for natural income to pay cash into the account to cover charges. This should have a small positive effect on portfolios over time. Thus, we might exchange an “inc” version of a fund with its “acc” equivalent.

• We have noticed that different clients with similar needs and risk profiles may still have different funds in their portfolios. In such cases the funds are typically very similar in make-up, performance and ratings to one another, but nevertheless we feel we should centralise such portfolio choices where possible. So we might recommend you exchange a fund for this reason. As before, we will also from time-to-time recommend that you exchange funds where performance has been below- benchmark for too long.

• Additionally, and as has always been the case, we may recommend that you reduce significantly or drop a fund that resides in a sector where we are reducing exposure for strategic reasons.

It seems like housekeeping for the IFA's benefit. That might, or might not, also be good for the client. That fact that these changes are "necessary" makes me think, "what was the IFA doing before"? It feels like a lot of words and, if it's for not much actual change, mostly a way to justify the fees. I just don't see the value in these portfolio tweaks for the client. When the IFA says we I think they are including the service he, and ultimately the client, is paying to generate the portfolios.

Sure, it is for the IFA's benefit, he effectively says so.  Companies often make internal efficiency changes which inconvenience customers.  These changes would not seem to adversely affect the customer at all.

How do the changes "justify the fees"?

Why do the fees need justifying now? The OP knew them and accepted them when engaging the IFA.  If there was some devious plan to justify fees surely some more substantial changes could be made with extensive verbiage on why it was in the customer's interest to do so.