Is it time to change from a wealth Manager aka True Potential to IFA or go DIY?

TallGirl

Thanks all still waiting for the statements but building a picture and learning until I can decide what route to take.  Thanks 

TallGirl

Morning I am just going to write all the charges down here for ISA, GIA and Pension so I have it all in one place. 

Royal London Pension
Value £254,798 

Fees Feb 22 to Feb 23
RL charges £991.33 (equivalent to 0.40%)
Transaction costs £240.09

Adviser Charges £1240.45
Total Cost £2471.84

True Potential GIA
Value £27,025

Service Costs 0.83% £348.50
Product Cost 0,78% £325.91
Total cost £747.41

Breakdown of Service Cost
Ongoing Advice Charge 0.50% £193.61
Platform Charge - percentage 0.40% £154.89

Breakdown of Product Cost
Ongoing charges 0.75% £314.94
Transaction Charges 0.01% 5.45
Performance fees 0.01% £5.52

True Potential ISA
Value £153,051

Service Costs 0.84% £1166.65
Product Cost 0.81% £1127.52
Total cost £2294.17

Breakdown of Service Cost
Ongoing Advice Charge 0.50% £648.12
Platform Charge - percentage 0.40% £518.53

Breakdown of Product Cost
Ongoing charges 0.78% £1078.97
Transaction Charges 0.01% 17.27
Performance fees 0.02% £31.28

Sorry for the long post again from me but I wanted to check my calculations are correct before I speak to them in regards to me making a decision to DIY or stick with them. 

Royal London Pension
Q: £1231 is the cost of the platform and the fund managers so I would still have that but I would save the £1240?

Re:True Potential (I have moved £20K of the GIA into my ISA they are invested in the same funds). 
Q: Adviser cost for both is £193 + £648 = £841 so I would definitely no longer have this? Effectively £2000 a year saved on ongoing advice costs. 

Q: Platform Charges is 0.40% I know all products have platform charges but how does this compare?

Q Is the ongoing charges 0.75 & 0.78% the cost for having an actively managed fund? What is the cost for a non managed fund say Vanguard? Is that split into platform charges and ongoing charges or is it just one amount.

Hope that makes sense thank you so much for taking the time to read this it will hopefully be my last questions on True Potential 

TallGirl xx

Albermarle

TallGirl said:

Morning I am just going to write all the charges down here for ISA, GIA and Pension so I have it all in one place. 

Royal London Pension
Value £254,798 

Fees Feb 22 to Feb 23
RL charges £991.33 (equivalent to 0.40%)
Transaction costs £240.09

Adviser Charges £1240.45
Total Cost £2471.84

True Potential GIA
Value £27,025

Service Costs 0.83% £348.50
Product Cost 0,78% £325.91
Total cost £747.41

Breakdown of Service Cost
Ongoing Advice Charge 0.50% £193.61
Platform Charge - percentage 0.40% £154.89

Breakdown of Product Cost
Ongoing charges 0.75% £314.94
Transaction Charges 0.01% 5.45
Performance fees 0.01% £5.52

True Potential ISA
Value £153,051

Service Costs 0.84% £1166.65
Product Cost 0.81% £1127.52
Total cost £2294.17

Breakdown of Service Cost
Ongoing Advice Charge 0.50% £648.12
Platform Charge - percentage 0.40% £518.53

Breakdown of Product Cost
Ongoing charges 0.78% £1078.97
Transaction Charges 0.01% 17.27
Performance fees 0.02% £31.28

Sorry for the long post again from me but I wanted to check my calculations are correct before I speak to them in regards to me making a decision to DIY or stick with them. 

Royal London Pension
Q: £1231 is the cost of the platform and the fund managers so I would still have that but I would save the £1240? Yes as long as RL were happy to deal with you direct. Best to double check as they prefer to go via advisors ( but not exclusively)

Re:True Potential (I have moved £20K of the GIA into my ISA they are invested in the same funds). 
Q: Adviser cost for both is £193 + £648 = £841 so I would definitely no longer have this? Effectively £2000 a year saved on ongoing advice costs. 

Q: Platform Charges is 0.40% I know all products have platform charges but how does this compare? They all charge a bit differently so tricky to make exact comparisons, but can say you can easily get cheaper than that.

Q Is the ongoing charges 0.75 & 0.78% the cost for having an actively managed fund? Presumably yesWhat is the cost for a non managed fund say Vanguard? Is that split into platform charges and ongoing charges or is it just one amount.
A typical low cost multi asset fund from Vanguard, HSBC, Blackrock etc will cost around 0.2% + platform cost.

Hope that makes sense thank you so much for taking the time to read this it will hopefully be my last questions on True Potential 

TallGirl xx

Comments in bold above.

dunstonh

Sorry for the long post again from me but I wanted to check my calculations are correct before I speak to them in regards to me making a decision to DIY or stick with them. 

Just remember that transaction costs are synthetic and change quarterly.   You can largely ignore them as there are multiple calculation methods that can be used that give different outcomes.    It can include an element of profit and loss.     Not many people take the transaction charges figure seriously.

However, all funds have them.  And I notice that you have not included it with some of the options lists. e.g. you have with RL but not with TP.

Q: Platform Charges is 0.40% I know all products have platform charges but how does this compare?

Not correct. Only platforms have platform charges.   Products do not have a platform charge as they are not platforms.  They may have their own product charges though.  Some platforms have a product charge on top of the platform charge.

Q Is the ongoing charges 0.75 & 0.78% the cost for having an actively managed fund? What is the cost for a non managed fund say Vanguard? Is that split into platform charges and ongoing charges or is it just one amount.

Difficult to say as you have given a product charge and platform charge but not mentioned any fund charges (or the transaction charges).

Vanguard have many funds in the ballpark of 0.1 to 0.22%.   Vanguard are not the cheapest tracker provider and some of their funds have higher volatility than the competition (possibly as they often use sampled replication rather than full replication).   Vanguard funds are available on whole of market platforms as well as their own in-house platform.   I read on another thread that their in-house platform doesn't offer all of their funds.     As Vanguard (like all fund houses) doesn't offer the best funds in every area, it is usually best to stick to whole of market.

TallGirl

I had my annual 10 min conversation with True Potential today. I had specifically said I wanted to discuss the fees when I booked the appointment but she asked for what I wanted to discuss. I quoted the figures and she did not contradict me she mention a 1.7% fee several times and the ongoing adviser fee of 0.5% so I felt I had done my homework right (thanks to you guys too). 

She took no details from me about my current situation just asked if anything had changed. I mentioned my partner might lose her job in August and will have very little income as a reason for me wanting to look at the fees.

I asked what they gave me for my fee (I get 10 min chat once a year) to challenged her and asked if there was nothing she could tell me without me having to ask and drive the conversation. She did say my profile is still growth that has not changed and that the markets have been downwards but they are for the long term and they seem to be coming out of this. With my old IFA he would ask questions and check everything was the same but with this they seem to what to know nothing unless you come up with something. Very passive which I was no expecting but maybe it is normal. 

I asked what they actually do for the fee they take to advice on my Royal London Pension and she did not answer. I am sure they have never changed anything on that one. 

She has offered to compare my ISA with a passive tracker so I mentioned Vanguard and Blackrock as an example of two (all I could remember at the time. I can add others so I will go away and study and see if there are any others. I understand what the guru Dunstonh says about Vanguard not being whole of the market. 

I will have a think and does this seems the right way to concentrate my next step:

1. Find 2 or 3 passive funds and inexpensive platforms (cheaper than True Potential) and ask her to compare with those as I think by saying Blackrock I did not think of the platform which she will obviously need or she might just look at the performance over that time. Also thinking some of them offer an incentive fee to switch. 

2. Is there anything I can ask her to do that will make this more useful for me say compare the last two years had I been in a passive tracker incl the fees what would my money look like now. Is that what she will do or do I need to ask her for this. 

3. Double check there is no exit fee from True Potential

jimjames

TallGirl said:

Q: Adviser cost for both is £193 + £648 = £841 so I would definitely no longer have this? Effectively £2000 a year saved on ongoing advice costs. 

Q: Platform Charges is 0.40% I know all products have platform charges but how does this compare?

Just to pick up on these items, if you have a static portfolio that you aren't actively adding to or trading regularly then somewhere like iWeb would give you a massive saving if you decide to DIY. Their platform charge is effectively 0% once you pay the one off £100 opening fee. That would save you a total of £2000 advice + £600 platform every year which is a massive saving. It does sound like there is virtually no benefit in that relationship from the description of your conversation and certainly not one I'd be happy to pay £2600 pa for.

AlanP_2

I have a pension pot with Royal London and have no issue with their fees. It is tiered and like you I'm in the 0.4% band which for the equivalent of platform + fund charges is reasonable.

In addition there is an annual "bonus" which has been 0.15% for the last 2 years from memory.

Effective net cost is only 0.25% once that is factored in.

It had to be set up initially by an IFA but no ongoing involvement from them since then.

JohnWinder

She has offered to compare my ISA with a passive tracker so …..

I will have a think and does this seems the right way to concentrate my next step:

1. Find 2 or 3 passive funds and inexpensive platforms (cheaper than True Potential) and ask her to compare with those as I think by saying Blackrock I did not think of the platform which she will obviously need or she might just look at the performance over that time. Also thinking some of them offer an incentive fee to switch. 

2. Is there anything I can ask her to do that will make this more useful for me say compare the last two years had I been in a passive tracker incl the fees what would my money look like now. Is that what she will do or do I need to ask her for this. ’

Good idea, but would you be able to evaluate that she has done it properly? If you don’t know how you would go about doing it yourself, I’d guess you’re not up to knowing if you’re having the wool pulled over your eyes. But help is coming. Related to this, is what period will the comparison cover? You’re investing for 30 years, so two! years of comparison is not significant, and start and end dates are always relevant because asset A does better this year while asset B does better next year. The conundrum is that you need long periods to make valid comparisons because of market price gyrations, but investment returns in one long period might be quite different from the next (picture the decades of the bond bull market recently ended). But we can try to cobble together some ‘truth’.

It’s clear that for equities, index investing gives better returns than all but a ‘handful’ of active funds can achieve over the longer term. And we don’t know how to identify that ‘handful’ before their long period we need, and even if we did we wouldn’t know if they did it by skill or luck - not that it would matter I suppose.

But you’re in multi-asset funds and need such a balanced portfolio were you to choose ‘trackers’.

How to compare? Morningstar attempt this by ‘inventing’ an imaginary fund of and equity tracker and a bond tracker in appropriate proportions, so you can compare the performance with funds like yours. https://indexes.morningstar.com/indexes/details/morningstar-uk-moderately-adventurous-target-allocation-nr-FS0000G3JZ?currency=GBP&variant=NR&tab=performance

A similar approach is described here: https://www.pipsbenchmark.com/2023/05/does-award-winning-fund-beat-benchmark.html.   They create an imaginary family of funds with varying stock/bond mixes, like the Vanguard life series, and then graph what their returns would have been (over a period) against what their risk was. If you plot the active fund you’re interested in on that graph you can see whether its returns for risk have been better or worse than the imaginary family of multi-asset index funds. Over the last ten years, they report that of 600 GBP multi-asset funds only six did better than the imaginary funds. If active managers had been about as good as a sit-on-your-hands passive investor, then about 300 should have been better and 300 worse. They didn’t get close to that.

Perhaps the galling thing about a high fee service like you’ve suggested you’re ‘enjoying’ is that not only do they not put you into the funds most likely to do best, they charge handsomely for a very questionable choice.

Beddie

Ditch this expensive and poor service and do it yourself on a cheaper platform. You can pretty much copy what investments you have, or read more about a good passive fund choice suitable for you. 

You won't regret it, as from what it sounds like they are not interested in offering a good service anyway.

TallGirl

Thank you so much for all your comments it is so appreciated. 

@jimjames good point about the trading fees I am not intending to switch around or do anything other than look at it one a year and check if there is anything that has changed in my risk profile.

@AlanP_2 good to know you do not have adviser fees from Royal London I makes me feel more confident that it is doable.

@JohnWinder I agree you make a really good point about when do you compare over and what time frame. I have been with True Potential about 2 years so I was thinking that period but as you say it really goes deeper than that. I would actually be interested to see what she suggests she is going to compare it with and what period of time. 

@Beddie you make a good point and yes I can chose my own passive funds 

I will take some time and think it through and let you know when I get the comparisons.