Should I engage a Financial Advisor?

zagfles

eskbanker said:

Albermarle said:

It is probably worth noting that having an advisor is probably less important when you are growing the pension, and still have some years to retirement. Mistakes or bad luck are less of an issue when you are still earning.

Not sure I'd agree with that - mistakes made early in life could also have substantial impact on retirement plans!

OP plumped for a 60/40 multi-asset fund and this would probably be unnecessarily cautious for someone under, say, 40 who's accumulating for retirement, in that it would in all likelihood deliver a significantly smaller pot than being 100% in equities....

But the problem is that advisors seem to ask the customer what their attitude to risk is and base their recommendations on that, rather than advising them what risk they ought to be taking. 

eskbanker

zagfles said:

eskbanker said:

Albermarle said:

It is probably worth noting that having an advisor is probably less important when you are growing the pension, and still have some years to retirement. Mistakes or bad luck are less of an issue when you are still earning.

Not sure I'd agree with that - mistakes made early in life could also have substantial impact on retirement plans!

OP plumped for a 60/40 multi-asset fund and this would probably be unnecessarily cautious for someone under, say, 40 who's accumulating for retirement, in that it would in all likelihood deliver a significantly smaller pot than being 100% in equities....

But the problem is that advisors seem to ask the customer what their attitude to risk is and base their recommendations on that, rather than advising them what risk they ought to be taking. 

Obviously risk forms a key part of any financial advice dialogue, but I'd expect the conversation to be more nuanced than 'tell me what your risk tolerance is', and would assume that competent advisers should be able to illustrate risks versus rewards in a meaningful way so as to discuss realistic choices.

zagfles

eskbanker said:

zagfles said:

eskbanker said:

Albermarle said:

It is probably worth noting that having an advisor is probably less important when you are growing the pension, and still have some years to retirement. Mistakes or bad luck are less of an issue when you are still earning.

Not sure I'd agree with that - mistakes made early in life could also have substantial impact on retirement plans!

OP plumped for a 60/40 multi-asset fund and this would probably be unnecessarily cautious for someone under, say, 40 who's accumulating for retirement, in that it would in all likelihood deliver a significantly smaller pot than being 100% in equities....

But the problem is that advisors seem to ask the customer what their attitude to risk is and base their recommendations on that, rather than advising them what risk they ought to be taking. 

Obviously risk forms a key part of any financial advice dialogue, but I'd expect the conversation to be more nuanced than 'tell me what your risk tolerance is', and would assume that competent advisers should be able to illustrate risks versus rewards in a meaningful way so as to discuss realistic choices.

There've been people here complaining that before they understood stuff properly and took over their own investments they were in far too low risk stuff based on "attitude to risk" conversations with their IFA. Persuading someone to take more risk than they originally wanted to is probably more likely to have adverse comeback than simply going along with the customer's attitude to risk. Then the customer gets the blame for underperformance ("well you said you wanted low risk") instead of the IFA ("you persuaded me to go for 100% equities and the market crashed...")

eskbanker

zagfles said:

eskbanker said:

zagfles said:

eskbanker said:

Albermarle said:

It is probably worth noting that having an advisor is probably less important when you are growing the pension, and still have some years to retirement. Mistakes or bad luck are less of an issue when you are still earning.

Not sure I'd agree with that - mistakes made early in life could also have substantial impact on retirement plans!

OP plumped for a 60/40 multi-asset fund and this would probably be unnecessarily cautious for someone under, say, 40 who's accumulating for retirement, in that it would in all likelihood deliver a significantly smaller pot than being 100% in equities....

But the problem is that advisors seem to ask the customer what their attitude to risk is and base their recommendations on that, rather than advising them what risk they ought to be taking. 

Obviously risk forms a key part of any financial advice dialogue, but I'd expect the conversation to be more nuanced than 'tell me what your risk tolerance is', and would assume that competent advisers should be able to illustrate risks versus rewards in a meaningful way so as to discuss realistic choices.

There've been people here complaining that before they understood stuff properly and took over their own investments they were in far too low risk stuff based on "attitude to risk" conversations with their IFA. Persuading someone to take more risk than they originally wanted to is probably more likely to have adverse comeback than simply going along with the customer's attitude to risk. Then the customer gets the blame for underperformance ("well you said you wanted low risk") instead of the IFA ("you persuaded me to go for 100% equities and the market crashed...")

But risk is only one factor in such conversations, and it's often stated that the optimal outcome from them is to achieve a defined objective while taking as little risk as possible, i.e. the latter should be secondary.  Anyway, we seem to be veering more towards quality and style of advice rather than the point I was making about its timing! 

Albermarle

eskbanker said:

Albermarle said:

It is probably worth noting that having an advisor is probably less important when you are growing the pension, and still have some years to retirement. Mistakes or bad luck are less of an issue when you are still earning.

Not sure I'd agree with that - mistakes made early in life could also have substantial impact on retirement plans!

OP plumped for a 60/40 multi-asset fund and this would probably be unnecessarily cautious for someone under, say, 40 who's accumulating for retirement, in that it would in all likelihood deliver a significantly smaller pot than being 100% in equities....

On the other hand, a 100% equity investment is not suitable for most people. Our resident IFA has said a few times that their popularity on these forums is not reflected in the more cautious’outside world’ 

winkowinko

IanManc said:

eskbanker said:

Redlander said:

Then I put all my savings into a very well known tracker fund - Vanguard Life Strategy 60.

At the risk of splitting hairs, Vanguard's LifeStrategy range aren't tracker funds!

They're multi-asset products, comprising a collection of underlying passive investments, many of which are trackers, but the products themselves don't track any index as such....

Eskie's right. Vanguard Lifestrategy is a tied managed multi-asset fund of funds. The makeup involves management decisions such as having 14.6% out of the 60% equity portion (i.e nearly a quarter) of the fund invested in UK equities, which you would never find in a market capital weighted index - for example, the FTSE Global All-Cap Equity Index has a 3.4% allocation to the UK.

If you were intending to invest in a tracker you certainly haven't met your objective by choosing VLS60.

As another newbie who has spent quite a bit of time looking on the Vanguard website recently, do they offer any funds where the UK proportion of equities is around 3.4%, but where the fund also includes bonds?

I was looking at the Global All Cap, but that's possibly too risky for my liking, and it doesn't include bonds. Whereas the Lifestratergy funds are to too UK weighted for my liking. Ideally I'm looking for something inbetween. 

Linton

winkowinko said:

IanManc said:

eskbanker said:

Redlander said:

Then I put all my savings into a very well known tracker fund - Vanguard Life Strategy 60.

At the risk of splitting hairs, Vanguard's LifeStrategy range aren't tracker funds!

They're multi-asset products, comprising a collection of underlying passive investments, many of which are trackers, but the products themselves don't track any index as such....

Eskie's right. Vanguard Lifestrategy is a tied managed multi-asset fund of funds. The makeup involves management decisions such as having 14.6% out of the 60% equity portion (i.e nearly a quarter) of the fund invested in UK equities, which you would never find in a market capital weighted index - for example, the FTSE Global All-Cap Equity Index has a 3.4% allocation to the UK.

If you were intending to invest in a tracker you certainly haven't met your objective by choosing VLS60.

As another newbie who has spent quite a bit of time looking on the Vanguard website recently, do they offer any funds where the UK proportion of equities is around 3.4%, but where the fund also includes bonds?

I was looking at the Global All Cap, but that's possibly too risky for my liking, and it doesn't include bonds. Whereas the Lifestratergy funds are to too UK weighted for my liking. Ideally I'm looking for something inbetween. 

Plenty of options beyond Vanguard.  There's  the HSBC Global Strategy series for example.

QrizB

winkowinko said:

As another newbie who has spent quite a bit of time looking on the Vanguard website recently, do they offer any funds where the UK proportion of equities is around 3.4%, but where the fund also includes bonds?
I was looking at the Global All Cap, but that's possibly too risky for my liking, and it doesn't include bonds. Whereas the Lifestratergy funds are to too UK weighted for my liking. Ideally I'm looking for something inbetween. 

You'd need to hold two funds.

So if you wanted an 80/20 split, you'd put 80% into a global tracker and 20% into a bond fund.

dunstonh

As another newbie who has spent quite a bit of time looking on the Vanguard website recently, do they offer any funds where the UK proportion of equities is around 3.4%, but where the fund also includes bonds?

Only via IFAs.     But remember that Vanguard is not the only game in town.

Eyeful

winkowinko said:

.

As another newbie who has spent quite a bit of time looking on the Vanguard website recently, do they offer any funds where the UK proportion of equities is around 3.4%, but where the fund also includes bonds?

I was looking at the Global All Cap, but that's possibly too risky for my liking, and it doesn't include bonds. Whereas the Lifestratergy funds are to too UK weighted for my liking. Ideally I'm looking for something inbetween. 

Read this:
https://monevator.com/passive-fund-of-funds-the-rivals/