Sacking our IFA

Ibrahim5

That bit is ok. 

Money for nothing for IFAs. That's a rip off I approve of because I am an IFA.

Cus

BarbaraG2000 said:

Cus said:

How much do you pay the discretionary portfolio manager?

1% +VAT per annum, charged quarterly. No transaction fees.

IFA was taking 0.5% inc VAT.

IFA phoned me this morning - “a courtesy call” - 3 months too late.  I thought he would try to persuade me to change my mind, but he didn’t.  It transpires that they were not receiving trail commission on the pensions anyway - must have been a one-off charge when they set them up - and that’s over half our total pot.

I’ve also just noted that the consolidated portfolio summary the IFA sent excludes the ISA’s from which we are currently drawing income - which they set up and on which they have been receiving commission/advice fees as well.  So our pot is bigger than I thought!

Thanks. Not sure what the IFA was doing for their 0.5% considering you are paying a DFM 1%. The VAT is actually a sign that it is a truly specific portfolio for you and not some batch job, I'm my understanding.

BarbaraG2000

squirrelpie said:

ISAs or cash are useful as an immediate source of money, but form part of your estate.

These days access to drawdown from a pension can be nearly as quick and pensions are outside your estate, but DC pensions can still be inherited effectively.

So people advise running down ISAs before using DC pensions. Inheritance taxation may or may not matter to you.

That is in essence what the last-but-one IFA said - reduce the size of your estate - even though it means not using our personal allowances until the DB and SP’s are in payment.

We don’t really care about inheritance tax, tbh, because we don’t have children. Our estate will eventually go to our nephews and nieces, but it will be a bonus for them - hopefully when they are well into middle age - and not something they will be counting on.

What we care about is having sufficient income to enjoy our retirement while we’re well, and pay for whatever care we need should that be necessary.  With the DB’s and SP’s as secure income, we’re good for both of us needing residential care for more than a decade after my husband turns 80.  And that was without selling the house.  It’s highly unlikely that we would both start to need care together on that exact date, AND that both of us would still be alive more than 10 years later. Whichever one goes first, the other will inherit the lot.

BarbaraG2000

Pat38493 said:

Out of interest have you done this analysis yourself over a long period or is this what the IFA or portfolio manager is telling you?  Also does it include any and all charges and costs?  From a later post it looks like you have been paying a total of 1.5% - the investments must be outperforming index trackers by a large amount to compensate for such high charges.

I just took that figure off the latest annual summary - so it’s only over one year.  I think it includes all charges, but would need to check that.
But it is a truly bespoke portfolio, not an off-the-shelf one.

I guess of course there are other advantages like having someone else doing a lot of the admin and legwork for you.

Yes, absolutely that - particularly when we were working in a stressful and time-consuming (and not particularly lucrative) sector. There wasn’t the time or energy to do the research to be confident we were making good decisions, or all the paperwork either.

Now that we are retired, you could make a case for us having the time to manage it more ourselves. Maybe sacking the IFA is the first step! Many years ago - like, 25 - I belonged to a share club and also had a small self-managed portfolio via an online trading platform. We are talking £25/month into the share club and my own portfolio of a few hundred pounds. What I learned was that I don’t know enough to make a ton of money, and can’t sustain the interest. Again, I was into peer to peer lending for a while, and veered between being obsessively interested and ignoring it for months on end. Likewise - interest rates on cash savings account. You get a good one, turn your back, and they have reduced it to 0.1% and opened a new one offering far more.

You have to keep on top of it and keep everything under regular review. And I’m not sure that’s what I want to spend my retirement doing.

squirrelpie

BarbaraG2000 said:

We don’t really care about inheritance tax, tbh, because we don’t have children. Our estate will eventually go to our nephews and nieces, but it will be a bonus for them - hopefully when they are well into middle age - and not something they will be counting on.

What we care about is having sufficient income to enjoy our retirement while we’re well, and pay for whatever care we need should that be necessary.  With the DB’s and SP’s as secure income, we’re good for both of us needing residential care for more than a decade after my husband turns 80.  And that was without selling the house.  It’s highly unlikely that we would both start to need care together on that exact date, AND that both of us would still be alive more than 10 years later. Whichever one goes first, the other will inherit the lot.

That sounds very similar to our own situation and analysis, though we haven't given all that much thought to care requirements. I suppose we think we'll cross that bridge if we come towards it. The government keeps talking about changing the rules, but they may never do so.

I've been doing pension drawdown these past two years, but I think next year I will use my ISA instead.

Albermarle

With the DB’s and SP’s as secure income, we’re good for both of us needing residential care for more than a decade after my husband turns 80.  And that was without selling the house.  It’s highly unlikely that we would both start to need care together on that exact date, AND that both of us would still be alive more than 10 years later. Whichever one goes first, the other will inherit the lot.

Just FYI, less older people actually go into care than is commonly thought. Also for those that do the average stay is about two years. Some lower cost care at home is a more likely scenario though.

There are other scenarios of course for people with some assets, such as retirement villages etc

Audaxer

BarbaraG2000 said:

squirrelpie said:

ISAs or cash are useful as an immediate source of money, but form part of your estate.

These days access to drawdown from a pension can be nearly as quick and pensions are outside your estate, but DC pensions can still be inherited effectively.

So people advise running down ISAs before using DC pensions. Inheritance taxation may or may not matter to you.

That is in essence what the last-but-one IFA said - reduce the size of your estate - even though it means not using our personal allowances until the DB and SP’s are in payment.

I would agree it would be better to drawdown from your DC pensions first to use up your personal tax allowances, getting out as much as possible tax-free before DB and SP's kick in. Any of the drawdown you don't need for spending, could just be reinvested in similar funds within your S&S ISAs.

BarbaraG2000

Albermarle said:

Just FYI, less older people actually go into care than is commonly thought. Also for those that do the average stay is about two years. Some lower cost care at home is a more likely scenario though.

There are other scenarios of course for people with some assets, such as retirement villages etc

Yes, I realise that. Better to be prepared for the worst than hope for the best, though, eh?