Reviewing elderly mum's investments

Genevieve29

Hi. I'm helping my recently widowed mum review her investments. She is 86, lives in her own home owned outright and has a DB pension plus full state pension which together amount to three times her monthly outgoings so, she is very comfortably off and has an excess income of over £1000 per month. Her home is in good repair. The most likely use for her savings and investments is for future care either help at home or residential, though she is currently in good health. The house could also be sold to fund residential care if required and would cover around 10 years of care at current value/cost.

She has:
S&S ISA Janus Henderson Multi-Manager Diversified Fund A Acc
- valued at around £95k
- she has contributed £5k this tax year
- charges are: initial charge 5%, annual charge 0.75%, ongoing charge 1.18%

Shares in a single UK company valued at around £75k (they were advised by IFA's to diversify but Dad didn't want to)

Cash savings of around £40k

My initial thoughts are to
- transfer the ISA to one with lower charges, possibly Vanguard or AJ Bell, standard portfolio with a low to moderate risk profile
- look into selling the shares and putting the money into a GIA with the same provider and same portfolio (I know we need to consider CGT which is something I've never had to deal with before)
- use her annual ISA allowance each year by paying in from spare cash and/or transferring from the GIA

We're looking for simplicity, value for money, appropriate level of risk. Are we on the right track? What do you think?

Thanks

Linton

I think you are on the right track.  Err on the side of caution, cash is not necessarily a bad option for someone over 80-85.  At her age and with her high income good investment returns do not provide much real benefit.

Is you mother in a good mental state and able to understand investing and its risks?  If so I think you should be careful to ensure that it is all her decision.   If the market falls and your mother's investments suffer relationships could suffer if it could be seen as your fault.  If your mother does have mental difficulties caution is even more important and I think cash should be seriously considered.

Has your mother set up Power of Attorney?.  If not it should be arranged as otherwise it could be very difficult to access her money should she be unable to do it herself.   It would be a good idea to confirm that the chosen ISA provider has well established procedures for dealing with an Attorney.

jimjames

Genevieve29 said:

She has:
S&S ISA Janus Henderson Multi-Manager Diversified Fund A Acc
- valued at around £95k
- she has contributed £5k this tax year
- charges are: initial charge 5%, annual charge 0.75%, ongoing charge 1.18%
Thanks

I'd definitely ditch this, I didn't realise any funds still charged 5% initial, that's pretty outrageous costs if it's done directly. Sounds like you're looking at the right things by selling the shares. CGT allowance reduces soon so worth considering that too.

Genevieve29

jimjames said:

Genevieve29 said:

She has:
S&S ISA Janus Henderson Multi-Manager Diversified Fund A Acc
- valued at around £95k
- she has contributed £5k this tax year
- charges are: initial charge 5%, annual charge 0.75%, ongoing charge 1.18%
Thanks

I'd definitely ditch this, I didn't realise any funds still charged 5% initial, that's pretty outrageous costs if it's done directly. Sounds like you're looking at the right things by selling the shares. CGT allowance reduces soon so worth considering that too.

The ISA was set up a long time ago and just left :-(

Genevieve29

Linton said:

I think you are on the right track.  Err on the side of caution, cash is not necessarily a bad option for someone over 80-85.  At her age and with her high income good investment returns do not provide much real benefit.

Is you mother in a good mental state and able to understand investing and its risks?  If so I think you should be careful to ensure that it is all her decision.   If the market falls and your mother's investments suffer relationships could suffer if it could be seen as your fault.  If your mother does have mental difficulties caution is even more important and I think cash should be seriously considered.

Has your mother set up Power of Attorney?.  If not it should be arranged as otherwise it could be very difficult to access her money should she be unable to do it herself.   It would be a good idea to confirm that the chosen ISA provider has well established procedures for dealing with an Attorney.

Yes, POA is in place for both finances and health & welfare.

Mum is in a good mental state, but is intimidated by this sort of thing as Dad always dealt with it and made all the decisions.

dunstonh

jimjames said:

Genevieve29 said:

She has:
S&S ISA Janus Henderson Multi-Manager Diversified Fund A Acc
- valued at around £95k
- she has contributed £5k this tax year
- charges are: initial charge 5%, annual charge 0.75%, ongoing charge 1.18%
Thanks

I'd definitely ditch this, I didn't realise any funds still charged 5% initial, that's pretty outrageous costs if it's done directly. Sounds like you're looking at the right things by selling the shares. CGT allowance reduces soon so worth considering that too.

Its the pre RDR shareclass.   Possibly held direct with the fund house.  Fund houses were not required to move people to clean share classes.    Its a decade out-of-date.

LHW99

Part of the money from the shares could be transferred into ISA's (perhaps fixed term / instant access cash). There's probably enough time to transfer £15k of it into one this financial year and £20k for next. ISAs can be accessed tax-free which could be useful now interest rates on cash are increasing Also Capital Gains allowance is reducing, so the shares may have to be sold in tranches to reduce the tax due.

Albermarle

As there is a distinct possibility that some cash may be needed for care ( even if it is only at home, it still can be quite costly) then you do not want to be selling investments at short notice to pay for this.
Of course the future is unpredictable and although she seems in good health, one bad fall and it can go rapidly downhill from there. Hopefully not of course.
So I would follow some if the helpful comments above, such as transferring out of the old ISA and not having so much money in one companies shares, but at the same time build up more cash reserves rather than keep investing more.
Savings interest rates are at a better level than they have been for some time.

Sebo027

My initial thoughts are to

- transfer the ISA to one with lower charges, possibly Vanguard or AJ Bell, standard portfolio with a low to moderate risk profile
- look into selling the shares and putting the money into a GIA with the same provider and same portfolio (I know we need to consider CGT which is something I've never had to deal with before)
- use her annual ISA allowance each year by paying in from spare cash and/or transferring from the GIA

In similar circumstances, a relative of mine had inherited money following the passing of a spouse. A pension fund, specifically, was under the "management" of a wealth management company. 

They have effectively done exactly what you are suggesting above and continue to do so:

• She is a bit younger (67) but they invested the money in the 40-60 (equity-bond) dimensional world allocation fund, which is broadly similar to the Vanguard portfolios in intent. 

• Each year they sell 20k from her GIA and reinvest it under the S&S ISA.

• They skim 1% annually. 

Genevieve29

If we're interested in low charges and simplicity who is good to go for?

I'm aware of Vanguard and AJ Bell. Vanguard ISA transfer functionality isn't working for me at the moment (they're going to call me back tomorrow) so it's given me pause for thought about whether to go with them if something that should be so straight forward isn't working. I've used AJ Bell before but didn't think their website was great from a user experience perspective, though I guess it might have improved.

gonboating

If mum doesn't need the income/investment return think about premium bonds. I did this for my  elderly financially unsophisticated in laws and its been great. First of the month we ring them up and i look up on the NS&I website our numbers on the prize checker and they get  real buzz from small wins (particularly if I come up with nothing) so the social connection outweighs any dry old investment uplift once a year (if any)