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

Brilley

An interesting thread as we have been with TP for 6+ years and are now considering alternatives particularly now "normal" savings rates are getting better. Like the OP our FA started out being quite helpeful for the first couple of years, but laterly has not really been that proactive.

Since we started with TP we have not drawn any money out, and up to few years ago we did add extra funds and also took out a SIPP with them. Our original plan was to use the funds to provide an income between early retirement ad pensions kicking in, but due to poor stock market retiurns we ended up funding the gap using other cash savings. (During covid we did not actually need that much!)

I am well aware that the markets have not performed that well over the last few years, and also understand that you should only use the stock market if you are prepared to invest for a minimum of 10 years, but after 6 years we have only seen an overall gain equivalent to 1.7% per year on our investments, (we are in the medium risk category).

Last year we decided to "go solo" and start SIPPs using HL instead of giving any more money to TP.

At some point we may well look to withdraw all our funds from TP and find alternatives. We have not yet decided whether these alternatives will be DIY (eg HL S&S Isas), or just put the money back into fixed rate cash Isas which is were it started?

Albermarle

I am well aware that the markets have not performed that well over the last few years, but after 6 years we have only seen an overall gain equivalent to 1.7% per year on our investments, (we are in the medium risk category).

Depends what you mean by 'few' . Apart from in 2022, returns have been quite good most of the previous years.

A typical 60/40 medium risk  multi asset fund is up 23% to 27% over the last 6 years, so around 4.5% pa

The fees may be partly to blame, as with a low cost investment platform ( not HL, which is the most expensive) the total charges would be around 0.4/0.5%. 

Brilley

With one exception out TP S&S have never delivered anything like 4.5%, so I guess it is all going in fees.

Interesting to note that HL are considered an expensive platform, but they do seem to offer a good website and range of products, just wondering what a "lower cost" DIY optiion we should be considering, I don't mind trying a few more out?

dunstonh

With one exception out TP S&S have never delivered anything like 4.5%, so I guess it is all going in fees.

A rephrase may be better.  Such as you haven't experienced anything like 4.5% (although you probably have in short term discrete periods).    It wouldn't be true to say that TP has never delivered anything like 4.5% as they have.

The issue for you will be timescale so far (vs a more realistic investment period) and the risk profile.   

I once came across someone who was boasting about how good his investment decision-making was after he moved from one provider to another because the first provider lost money and the second one made so much more.    However, when looking closer, he had invested in an identical fund.  The first one went through the credit crunch and lost money because of that.  The second one went through the recovery period.   It was all about timing and time.

Todays downs will be tomorrows ups and todays ups will be tomorrows downs.   

2022 was a horrible year for low risk investors.  The worst for generations.   It will likely be generations before a similar period occurs again.  But remember that equities will have worse years.  Not if, but when.

jimjames

Brilley said:

 HL are considered an expensive platform, but they do seem to offer a good website and range of products, just wondering what a "lower cost" DIY optiion we should be considering, I don't mind trying a few more out?

HL charge 0.45% platform fee, Vanguard (although limited to their own funds) only charge 0.15%. iWeb for example charge no platform fee and only £5 to buy & sell. All of these are much cheaper than HL but maybe not the same good website so it depends if that's worth paying hundreds per year for. I decided it wasn't.

Albermarle

Brilley said:

With one exception out TP S&S have never delivered anything like 4.5%, so I guess it is all going in fees.

Interesting to note that HL are considered an expensive platform, but they do seem to offer a good website and range of products, just wondering what a "lower cost" DIY optiion we should be considering, I don't mind trying a few more out?

There is no question that HL have a good website, a very large range of investments and good customer service, but the 0.45% platform fee is the highest. Also you have to watch out for all the marketing/sales blurb, dressed up as guidance pushing you towards their own expensive in house investment funds. They are not the only platform who does this, but they seem to do it more.
Their biggest similar competitors are 
Fidelity 0.35%
A J Bell 0.25%
Interactive Investor Flat fee 
However it is not that simple as the charging regimes are all a bit different. Here is a comparison, including ones with a restricted range, like Vanguard.
Broker comparison: cheap investment platforms UK (monevator.com)

adindas

Brilley said:

An interesting thread as we have been with TP for 6+ years and are now considering alternatives particularly now "normal" savings rates are getting better. Like the OP our FA started out being quite helpeful for the first couple of years, but laterly has not really been that proactive.

Since we started with TP we have not drawn any money out, and up to few years ago we did add extra funds and also took out a SIPP with them. Our original plan was to use the funds to provide an income between early retirement ad pensions kicking in, but due to poor stock market retiurns we ended up funding the gap using other cash savings. (During covid we did not actually need that much!)

I am well aware that the markets have not performed that well over the last few years, and also understand that you should only use the stock market if you are prepared to invest for a minimum of 10 years, but after 6 years we have only seen an overall gain equivalent to 1.7% per year on our investments, (we are in the medium risk category).

Last year we decided to "go solo" and start SIPPs using HL instead of giving any more money to TP.

At some point we may well look to withdraw all our funds from TP and find alternatives. We have not yet decided whether these alternatives will be DIY (eg HL S&S Isas), or just put the money back into fixed rate cash Isas which is were it started?

I am not quite sure your requirement. But Looking into the fee posted previously charged by TP  and you do not need advice on tax, pension withdrawal, etc I fail to understand what you are paying for.

Literally all you need to do is just close your eye and throw your money into index you could easily beat that.

Out your money into saving account you earn much more than that.

TallGirl

Thank you so much for all the comments and the article on comparing costs really interesting and I am still thinking. Really liked this and it does apply to me too as i have had the advice on Pension withdrawal so unless it changes in the next 3 to 5years before I retire would I need it again. If so I could just pay a one off fee.  adindas said:

"I am not quite sure your requirement. But Looking into the fee posted previously charged by TP  and you do not need advice on tax, pension withdrawal, etc I fail to understand what you are paying for."

TallGirl

Got the reply this morning from TP 

"I have queried with our Investment Management team how the Blackrock and Vanguard funds have performed similar to TP growth portfolio, unfortunately there is not a similar strategy for Blackrock but for Vanguard the common ones are the Life Strategy range which has different equity levels. For our Growth portfolio, we could compare against either the 80% Vanguard fund based on risk asset exposure, or the 60% fund based on the volatility the fund has experienced. The performance figures attached, over the last 3 years we are ahead of the 60% fund but behind the 80% fund. Longer term, Vanguard have outperformed as passive strategies had a very good run up to and including the Covid period as market leadership was very narrow, lead by a handful of the large US tech names, and bond yields were falling so holding duration without actively managing it was beneficial. With higher inflation and higher interest rates, we could be in a very different environment looking forward which makes active management more appealing."

I have also worked out exactly how my ISA and SIPP has fared since I transfered to them which was Jan 22. The RL SIPP has increased by £19K and the ISA dropped by £8K. 

Leaning towards Vanguard Life Strategy 80% or 60% but via IWEB so it has more choice in case I wish to switch. Still need to do some more research but comments welcome as always.

JohnWinder

Decent of them to explain as they see it. A bit of customer respect is nice.

It’s not important that I don’t understand their comparison with VLS 60 and 80, but as I read it, your fund returned something between the returns of the ‘60 and ‘80, and as to risk yours was similar to how risky yours and the ‘80’s assets had been (ie the past), but more risky than the assets turned out to be (ie the future). It might have been simpler to just give the Sharpe or Sortino ratios. But performance figures for 3 years are meaningless if we’re investing for 25 years.

Their reason for longer term underperformance could very honestly have been: ‘we’re not closet trackers, sometimes we do better and sometimes worse than a tracker; if you like that style of investing stick with us’. 

Whereas the reason they give offers no confidence: ‘economic and investment circumstances did not favour active management pre-covid’. Well it is useless saying that in hindsight; they needed to anticipate that before it all unfolded, that’s the skill of active management - knowing what will do well and what won’t. To suggest the new future conditions looks more appealing for active managers suggests they didn’t have the flexibility to adapt to changing conditions or didn’t know what’s coming (as no one does). But none of it is surprising given four decades of research suggesting active is not suitable for most people. https://www.evidenceinvestor.com/active-outperformance-is-it-luck-or-skill/