Transfer from management of investments in active Wealth Manager to Vanguard passive funds

bostonerimus

Bobajobbob said:

Thank you all for the feedback. To answer the question above about investments the bespoke portfolio built and managed by the wealth manager is a global mix of funds, individual stocks and bonds. The funds I have in Vanguard are mostly invested in their global equity and lifestyle trackers. The portfolio with the wealth manager has been built based on my appetite for risk so focused more on capital gain than income at this time.

The fees on the Vanguard funds and service are a fraction of the active management and execution fees whilst the performance has been comparable over a number of years now through varied market conditions and crises. (I know that alternatives to Vanguard service are out there and cheaper but for time being I am just looking at the delta between my two services today). When you consider the compounding of the fees over many years without noticeable additional gains or protection from falls you begin to question the merits of the service. 

I guess I've reached a point where I've realised that I only need the assistance because the portfolio is complex and cumbersome to manage whilst also realising that it simply doesn't need to be complex and cumbersome because the same results can be achieved with a single fund. At this point there is no need for the bureaucratic assistance and no need for the additional fees.

Of course each to their own and if the fees I pay were lower I probably wouldn't be thinking about this. 

Thanks for the advice on a GIA transfer. It is a good suggestion that I simply transfer everything in specie to a self managed service and then slowly simplify these holdings. I guess I could also ask the manager to do this for me in advance, slowly migrate over a few years the multiple holdings into a few simple funds. Food for thought and thanks again for the feedback.

 

Complexity doesn't necessarily lead to greater gains. There is still a perception that the inefficiencies of the UK market can be exploited by folks calling themselves wealth managers to out perform. That is highly debatable on average particularly on a risk adjusted basis. IMO it's best to know where you have every penny and why and be able to perform what little management is required for a simple portfolio yourself.

Richard1212

bostonerimus said:

 

Complexity doesn't necessarily lead to greater gains. There is still a perception that the inefficiencies of the UK market can be exploited by folks calling themselves wealth managers to out perform. That is highly debatable on average particularly on a risk adjusted basis. IMO it's best to know where you have every penny and why and be able to perform what little management is required for a simple portfolio yourself.

"Folks calling themselves Wealth Managers" need , in order to be a "Chartered WM", need a university degree ( a 2:1 or higher) gaining a BA or BSc, after 3 or 4 years, in economics or a financial management subject. They then have to work in the financial sector for 3-4 years whilst studying for and gaining the CISI Level 4-7 ( average required is 6); only then do they gain the coveted Chartered Wealth Manager qualification. Chartered Financial Planners follow a similar gruelling path.

Folks calling themselves Independent Financial Advisers come in all shapes and sizes but one factual example to provide food for thought is :  the London Institute of Banking and Finance give away a Diploma for Financial Advisers ( DipFA) after a course lasting as low as 6 months.

Hairdressers serve an 18 months apprenticeship in a salon and then have to obtain an NVQ Level 2 to qualify as a junior stylist and continue for 5 years and more qualifications before being eligible to be called a "senior stylist".

Albermarle

Folks calling themselves Independent Financial Advisers come in all shapes and sizes but one factual example to provide food for thought is :  the London Institute of Banking and Finance give away a Diploma for Financial Advisers ( DipFA) after a course lasting as low as 6 months.

Seems to be even easier to be a wealth manager, according to this no qualifications are needed at all...

How to become a Wealth Manager | reed.co.uk

Richard1212

You completely miss the point in my post. I suppose I could set up as a Wealth Manager, an IFA or a hairdresser. There are such rogues in all walks of life.You are talking about poor imitations, like IFAs.

That is why I made a point of referring only to the very high standards that must be attained by advisers who hold the coveted  "CHARTERED WEALTH MANAGER" qualification and are legally allowed to use that title.    

bostonerimus

Richard1212 said:

bostonerimus said:

 

Complexity doesn't necessarily lead to greater gains. There is still a perception that the inefficiencies of the UK market can be exploited by folks calling themselves wealth managers to out perform. That is highly debatable on average particularly on a risk adjusted basis. IMO it's best to know where you have every penny and why and be able to perform what little management is required for a simple portfolio yourself.

"Folks calling themselves Wealth Managers" need , in order to be a "Chartered WM", need a university degree ( a 2:1 or higher) gaining a BA or BSc, after 3 or 4 years, in economics or a financial management subject. They then have to work in the financial sector for 3-4 years whilst studying for and gaining the CISI Level 4-7 ( average required is 6); only then do they gain the coveted Chartered Wealth Manager qualification. Chartered Financial Planners follow a similar gruelling path.

Folks calling themselves Independent Financial Advisers come in all shapes and sizes but one factual example to provide food for thought is :  the London Institute of Banking and Finance give away a Diploma for Financial Advisers ( DipFA) after a course lasting as low as 6 months.

Hairdressers serve an 18 months apprenticeship in a salon and then have to obtain an NVQ Level 2 to qualify as a junior stylist and continue for 5 years and more qualifications before being eligible to be called a "senior stylist".

While I'm sure these financial professionals work hard to get their "trade qualifications" by doing lots of future value calculations and studying MPT efficient frontiers, letters after the name do not allowed you to consistently outperform a benchmark. The vast majority of retail investors will be best served by using simple personal finance principles of frugality, avoidance of debt, maximizing tax efficiency with pensions and ISAs and using inexpensive multi-asset and tracker funds to get market returns rather than chasing alpha.

I have no doubt that most wealth managers believe they are providing a useful service, but more often than not I think they trade on FOMO to keep themselves employed. The OP has identified their wealth manager as an unnecessary expense and I agree with them. 

Audaxer

bostonerimus said:

Richard1212 said:

bostonerimus said:

 

Complexity doesn't necessarily lead to greater gains. There is still a perception that the inefficiencies of the UK market can be exploited by folks calling themselves wealth managers to out perform. That is highly debatable on average particularly on a risk adjusted basis. IMO it's best to know where you have every penny and why and be able to perform what little management is required for a simple portfolio yourself.

"Folks calling themselves Wealth Managers" need , in order to be a "Chartered WM", need a university degree ( a 2:1 or higher) gaining a BA or BSc, after 3 or 4 years, in economics or a financial management subject. They then have to work in the financial sector for 3-4 years whilst studying for and gaining the CISI Level 4-7 ( average required is 6); only then do they gain the coveted Chartered Wealth Manager qualification. Chartered Financial Planners follow a similar gruelling path.

Folks calling themselves Independent Financial Advisers come in all shapes and sizes but one factual example to provide food for thought is :  the London Institute of Banking and Finance give away a Diploma for Financial Advisers ( DipFA) after a course lasting as low as 6 months.

Hairdressers serve an 18 months apprenticeship in a salon and then have to obtain an NVQ Level 2 to qualify as a junior stylist and continue for 5 years and more qualifications before being eligible to be called a "senior stylist".

The OP has identified their wealth manager as an unnecessary expense and I agree with them. 

I also agree. It would be interesting to compare the long-term performance of an active portfolio managed by a 'Chartered Wealth Manager' against a similar risk level portfolio of passive funds such as a low-cost globally diversified multi-asset fund. As costs have a major effect on returns, I'm fairly sure that the multi asset fund with a similar risk level would produce better long-term returns. That is presumably why the OP has decided to move from the wealth manager to passive funds.

mattywallace121

Richard1212 said:

You completely miss the point in my post. I suppose I could set up as a Wealth Manager, an IFA or a hairdresser. There are such rogues in all walks of life.You are talking about poor imitations, like IFAs.

That is why I made a point of referring only to the very high standards that must be attained by advisers who hold the coveted  "CHARTERED WEALTH MANAGER" qualification and are legally allowed to use that title.    

I think it’s yourself who was missed the point of the OPs post, they weren’t  asking for opinions on whether managed or DIY was the best route for them?

Richard1212

bostonerimus said:

Richard1212 said:

bostonerimus said:

 

Complexity doesn't necessarily lead to greater gains. There is still a perception that the inefficiencies of the UK market can be exploited by folks calling themselves wealth managers to out perform. That is highly debatable on average particularly on a risk adjusted basis. IMO it's best to know where you have every penny and why and be able to perform what little management is required for a simple portfolio yourself.

"Folks calling themselves Wealth Managers" need , in order to be a "Chartered WM", need a university degree ( a 2:1 or higher) gaining a BA or BSc, after 3 or 4 years, in economics or a financial management subject. They then have to work in the financial sector for 3-4 years whilst studying for and gaining the CISI Level 4-7 ( average required is 6); only then do they gain the coveted Chartered Wealth Manager qualification. Chartered Financial Planners follow a similar gruelling path.

Folks calling themselves Independent Financial Advisers come in all shapes and sizes but one factual example to provide food for thought is :  the London Institute of Banking and Finance give away a Diploma for Financial Advisers ( DipFA) after a course lasting as low as 6 months.

Hairdressers serve an 18 months apprenticeship in a salon and then have to obtain an NVQ Level 2 to qualify as a junior stylist and continue for 5 years and more qualifications before being eligible to be called a "senior stylist".

While I'm sure these financial professionals work hard to get their "trade qualifications" by doing lots of future value calculations and studying MPT efficient frontiers, letters after the name do not allowed you to consistently outperform a benchmark. The vast majority of retail investors will be best served by using simple personal finance principles of frugality, avoidance of debt, maximizing tax efficiency with pensions and ISAs and using inexpensive multi-asset and tracker funds to get market returns rather than chasing alpha.

I have no doubt that most wealth managers believe they are providing a useful service, but more often than not I think they trade on FOMO to keep themselves employed. The OP has identified their wealth manager as an unnecessary expense and I agree with them. 

Quote>"The vast majority of retail investors will be best served by using simple personal finance principles of frugality, avoidance of debt, maximizing tax efficiency with pensions and ISAs and using inexpensive multi-asset and tracker funds to get market returns rather than chasing alpha.">Unquote
Personally I do not presume to know what the vast majority of retail investors would be best served to do , and neither should you nor anyone. 
Unless you employ a Wealth Manager with a Masters Degree in Economics and Financial Management from Cambridge and a long history in the City, I doubt you would understand their worth for anyone with a sizeable portfolio. I can only assume you do not have a sufficient portfolio.
And, as for letters after names, I value my own BA ( Hons) ---and I take great care in looking at the letters after the names of all people I employ, such as consultant physicians or surgeons whom I consult. And I expect they find comfort in those letters after the name and do not ever regard them as "trade qualifications".

Richard1212

mattywallace121 said:

Richard1212 said:

You completely miss the point in my post. I suppose I could set up as a Wealth Manager, an IFA or a hairdresser. There are such rogues in all walks of life.You are talking about poor imitations, like IFAs.

That is why I made a point of referring only to the very high standards that must be attained by advisers who hold the coveted  "CHARTERED WEALTH MANAGER" qualification and are legally allowed to use that title.    

I think it’s yourself who was missed the point of the OPs post, they weren’t  asking for opinions on whether managed or DIY was the best route for them?

I don't think I've missed the point when the O/P's opening sentence was " Quick question for anyone who has transferred their general investments and ISAs from an active manager to simple passive Vanguard funds. " O/P is quite obviously asking about whether managed or DIY is the best route in her case................

dunstonh

Richard1212 said:

bostonerimus said:

 

Complexity doesn't necessarily lead to greater gains. There is still a perception that the inefficiencies of the UK market can be exploited by folks calling themselves wealth managers to out perform. That is highly debatable on average particularly on a risk adjusted basis. IMO it's best to know where you have every penny and why and be able to perform what little management is required for a simple portfolio yourself.

"Folks calling themselves Wealth Managers" need , in order to be a "Chartered WM", need a university degree ( a 2:1 or higher) gaining a BA or BSc, after 3 or 4 years, in economics or a financial management subject. They then have to work in the financial sector for 3-4 years whilst studying for and gaining the CISI Level 4-7 ( average required is 6); only then do they gain the coveted Chartered Wealth Manager qualification. Chartered Financial Planners follow a similar gruelling path.

Folks calling themselves Independent Financial Advisers come in all shapes and sizes but one factual example to provide food for thought is :  the London Institute of Banking and Finance give away a Diploma for Financial Advisers ( DipFA) after a course lasting as low as 6 months.

Hairdressers serve an 18 months apprenticeship in a salon and then have to obtain an NVQ Level 2 to qualify as a junior stylist and continue for 5 years and more qualifications before being eligible to be called a "senior stylist".

You do realise that wealth managers and IFAs have exactly the same regulatory permissions and qualification levels?

Wealth management is a business model and not an adviser type.   It hoovers up assets under management, usually exporting the investment responsibility to a DFM or third party (at added cost) and is usually the most expensive distribution method going.

Chartered is level 6 whilst standard is level 4.    Many advisers have some of the level 6 modules but not all as in reality, you can serve 97% of the population without being chartered.       Being chartered is not coveted in the real world.