Going it alone....right thing to do?
I posted a few weeks ago about how my IFA had increased charges and was it reasonable. After some thought I have almost decided to go it alone, the IFA has essentially outsourced the growth of my fund to the DFM and is managing my lifestyle needs/future plans, that part I have come to the conclusion I can do myself.
This post it to gather opinions on my proposed approach and whether it has fundamental flaws e.g. my level of knowledge is insufficient to make a go of 'going it alone'.
So, I have a DC pot of c£850k currently with an IFA who uses a DFM, with other income (DB/SP) sufficient to cover basics.
The working parameters are;
1. I don't have sufficient knowledge to rebalance/fully manage a portfolio and am happy to pay 'experts' to do this i.e. a DFM. It appears, as far as I can tell, that you can't use a DFM as a private investor.
2. I am looking for a 'safer' option on a 'riskier' portfolio. In other words I'm happy with 80:20<->100:0 equities but would rather be invested in 'S&P 500' than 'African Smaller Companies'
3. I will likely utilise a diverse portfolio across geographic regions , mainly UK/US, but global overall.
4. I want to keep charges low but they don't have to be the lowest, just competitive.
My first thoughts are to move the funds to either something like Vanguard Lifestrategy/Fidility Open World, or something like an AJ Bell/HL recommended portfolio. The latter however requires more management on my part and whilst I would like to tinker I a)lack sufficient knowledge and/or a crystal ball and b)would tinker far to much. At this stage I'm thinking that an actively managed portfolio, albeit not by me, is my preferred option.
I could do some further research and personally pick a range of popular funds that match my chosen portfolio but I'm not sure what advantage, or improved outcome, that gives me unless I actively manage/swap.
My other thought/opinion on managing it myself is that this is very much an art rather than science and that if it was easy we'd all be multi-millionaires, in other words I think I can get 80% of the benefit (growth) straightforwardly i.e. pick well managed global fund, and that the remaining 20% requires disproportionate effort and relies in some part on luck. What I'm trying to say here is given that equities have by and large outperformed other investments over the years and if the best managed equity funds went up for example x% in the last x years then picking a well managed fund in that sector would likely get you 80-90% of that return without the need for 'active management' on my part.
(Someone may well tear that last paragraph apart!)
1. Is there something that sits between, as examples, 'Vanguard Lifestrategy' and 'AJ Bell portfolio' meaning actively managed across multiple funds i.e. what a DFM does that a private investor can use?
2. Is something like VLS100 not diverse enough i.e. is one fund not usually recommended?
3. Is there any benefit e.g. reduced risk, to splitting the pot across say 'Company1 Lifestrategy' and 'Company2 Lifestrategy' or 'Global Fund A and 'Global Fund B'?
4. If I picked an advised fund portfolio, say 5-10 actively managed funds, could I essentially 'fire and forget' or is active management on my part really considered mandatory in this scenario?
5. Am I miles out and completely missing something here?
Thanks in advance.
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