Adviser has advised......

Richmmm5645

I have been moved to another adviser, I currently have a SIPP with 10 various holdings spread about the market. When I asked where to invest, the adviser suggested moving it all into one 40-85% fund. I was not impressed.

Would you have been?

Rich

Albermarle

Richmmm5645 said:

I have been moved to another adviser, I currently have a SIPP with 10 various holdings spread about the market. When I asked where to invest, the adviser suggested moving it all into one 40-85% fund. I was not impressed.

Would you have been?

Rich

There is a tendency amongst some private investors and some financial advisors , to overcomplicate things by having too many different funds. For many one simple multi asset fund can do a a similar job, and probably cheaper.
If there is  a large amount involved, you might want a bit more diversity though.

MallyGirl

If you have £50k in there then one multi asset may well be good enough - for £500k you might want the IFA to be adding something based on their understanding of requirements/goals and how best to achieve that.

Richmmm5645

Thanks Mallygirl....I am in the latter category. I expected more from the adviser.

Pat38493

When you say “adviser” is this an FA or an IFA?  Generally the advice on this forum seems to be to try not to use FA as you are paying for advice which is limited to only a small range or products that are part of the company the FA works for.

It may depend on what you have told the adviser about your attitudes and future requirements.  Some people might argue that the adviser is being unusually honest by arguing that you’ll be just as likely to get the same long term results just by shoving it into one index fund, with less transaction costs.  They should explain their reasoning to you based on your own situation if they are a good adviser.

If I was a cynic I might argue that you are likely to be invested in multiple funds if you are under an adviser for example the reason of your OP - if they put you all in one fund, you will ask the question - what am I paying you for then?  

For example if they mean a global highly diversified fund, you could argue that it’s not worth having multiple funds if there is one fund that basically meets the need of that person.  

This could also depend on your current situation (age, number of years to retirement etc) - being in a single fund might be fine if you are accumulating, but maybe not optimal once you start taking money out as you may want to manage the fund in buckets with different volatility levels.

Marcon

Richmmm5645 said:

Thanks Mallygirl....I am in the latter category. I expected more from the adviser.

Simply suggesting loads of different funds isn't a guarantee of a better outcome, and the suggestion made may actually be spot on for someone in your situation with your wishes and aspirations.

You say you 'expected more' but what information did you give about your requirements and preferences?

dunstonh

When I asked where to invest, the adviser suggested moving it all into one 40-85% fund. I was not impressed.

What is wrong with that?  I have frequently recommended a multi-asset fund where appropriate (typically transactional clients, low knowledge clients who show no interest in trying to understand investing and small amounts).   

An adviser should also take into account investor preferences.  So, did you indicate any preferences?

Some DFMs use a fund structure to run their portfolio.  i.e. a fund of funds where you hold the fund and the portfolio can be run within the fund.  This can aid with CGT on unwrapped holdings compared to DFMs where software is used to control the portfolio rather than a fund structure.   Was the multi-asset fund a DFM based fund?

barnstar2077

I don't see an issue.  A lot of people DIY and just use one or two funds, a hundred percent equities fund for the long term and cash or bonds for nearer expenses.  What do you think you are gaining by having ten holdings?

I think sometimes some financial advisers recommend a complicated set of managed funds to make it seem like you would find it too hard to manage on your own.  It may pay off, or it may not, but either way you are open to more risk and higher fund fees.

Albermarle

barnstar2077 said:

I don't see an issue.  A lot of people DIY and just use one or two funds, a hundred percent equities fund for the long term and cash or bonds for nearer expenses.  What do you think you are gaining by having ten holdings?

I think sometimes some financial advisers recommend a complicated set of managed funds to make it seem like you would find it too hard to manage on your own.  It may pay off, or it may not, but either way you are open to more risk and higher fund fees.

Also a lot of people DIY and use more than one or two funds ( although it is advisable not to have a proliferation of them). Some diversification away from straight equities/bonds/cash is often mentioned, such as the core and satellite approach. So some smaller % in gold/property/infrastructure/specialist funds etc .
I am not saying whether it works or not, but it is a recognised strategy.
I think having more funds is more of a problem, if they are all similar and overlapping each other.