Looking for advice 5 years from retirement

JohnWinder

‘One of them is 1.28% and a couple of others are 1.10%.

I find it all a bit baffling (and scary) to be honest.’

‘I'm not panicking quite so much now!’

‘I regularly (sometimes a couple of times a week) get notified of fund changes etc. Is that sort of thing worth paying higher charges for or is that what most people have anyway?’

‘…so I'm probably better off trusting them to make the changes they are making (I suppose!)’

‘I got an apologetic reply from my FA…’

Apologies for missing your post five years ago reflecting your confusion, disappointing advisor and lamenting high fees.

But with five years to retirement and another fifteen in retirement it would certainly be worth your while getting some understanding of personal investing: you could save thousands of pounds each year in fees; you’d be rid of the uncertainty and mystery surrounding your investments; you could have confidence in making your own decisions; you’d know what sort of advisor, if any, you needed; and you’d definitely know that reviewing and adjusting your investments every year or so was wiser than changing investments every week.

Investing has been transformed in recent decades. It’s no longer difficult, expensive or hazardous to the little man. Investment products have been commodified; you buy something suitable off the shelf like detergent in a supermarket, and they give you above average after fee returns. Forget the DFA’s and advisors for investing.

Otherwise you could be back in another five years time, deja entendu.

RichardS

Thank you everyone for your comments and suggestions. All very helpful and appreciated. 

RichardS

JohnWinder said:

If you decide you’re up for it, Tim Hale’s book Smarter Investing is probably all you need. I think it’s in the west country libraries.

The Little Book of Common Sense Investing is another. You'll get an old edition as a free pdf, and it's worth every penny and more.

‘If You Can’ is a free pdf by W Bernstein, short and sweet.

The Bogleheads' Guide to Investing, by Larimore et al is a 7.2MB pdf. I think it's here: https://ia803405.us.archive.org/23/items/the-bogleheads-guide-to-investing/The Bogleheads' Guide to Investing.pdf

Expected Returns An Investors' Guide to Market Returns by Ilmanen is not such an easy read, but a free 23MB pdf, after you’ve read the others.

The Basics of Investing Basics  A primer for the young retirement investor by A. Dad, is a free pdf written by a father for his daughters, not published as a book I think, but good enough at 40pp.

Investment Strategies for the 21st Century by Frank Armstrong is a 160pp pdf.

The Future of Life-Cycle Saving and Investing by Bodie et al is a 200pp pdf free from the Research Foundation of the CFA Institute. Sensible, but not a first read.

Serious Money, Straight talking about retirement investing, by Richard Ferri is a free 200pp pdf

Unveiling the retirement myth, by Jim Otar is 400pp free pdf written in the clearest well-structured way as an engineer would, but there's a lot of detail for when it comes time to decide how you can live of your investments based on a lot of financial history.

Thank you so much for these suggestions, I will take a look at some of them 

boingy

Just to add that you don't need to go crazy learning investment stuff if you don't want to (although it can be fun!)
There are plenty of companies that offer just a couple of low cost funds specified by your attitude to risk. For example I used to have a Virgin Money pension which invested in their own index tracker. Fees were around 0.6%. The performance was decent and it really was a "fire and forget" option. That's not a recommendation for Virgin, just an illustration. These days there are things like Vanguard who offer their own LifeStrategy funds which are very popular and well-priced. Their account fees are capped too so a whole lot more of your money would go into your pension pot rather than your advisor's pocket! Fees are not everything but on long-term stuff like pensions high fees can really eat into your investment.

RichardS

boingy said:

Just to add that you don't need to go crazy learning investment stuff if you don't want to (although it can be fun!)
There are plenty of companies that offer just a couple of low cost funds specified by your attitude to risk. For example I used to have a Virgin Money pension which invested in their own index tracker. Fees were around 0.6%. The performance was decent and it really was a "fire and forget" option. That's not a recommendation for Virgin, just an illustration. These days there are things like Vanguard who offer their own LifeStrategy funds which are very popular and well-priced. Their account fees are capped too so a whole lot more of your money would go into your pension pot rather than your advisor's pocket! Fees are not everything but on long-term stuff like pensions high fees can really eat into your investment.

Thanks. I guess one option might be to transfer the personal pension into my Scottish Widows company pension. I’m not 100% sure of the charges but I guess they are a lot lower. I just looked to see what the Investment split is and it says 98% in Scottish Widows Pension Portfolio Four CS8 and 2% in their Portfolio Three.   I assume with these sort of pots the allocations within them are reviewed annually?

AlanP_2

RichardS said:

boingy said:

Just to add that you don't need to go crazy learning investment stuff if you don't want to (although it can be fun!)
There are plenty of companies that offer just a couple of low cost funds specified by your attitude to risk. For example I used to have a Virgin Money pension which invested in their own index tracker. Fees were around 0.6%. The performance was decent and it really was a "fire and forget" option. That's not a recommendation for Virgin, just an illustration. These days there are things like Vanguard who offer their own LifeStrategy funds which are very popular and well-priced. Their account fees are capped too so a whole lot more of your money would go into your pension pot rather than your advisor's pocket! Fees are not everything but on long-term stuff like pensions high fees can really eat into your investment.

Thanks. I guess one option might be to transfer the personal pension into my Scottish Widows company pension. I’m not 100% sure of the charges but I guess they are a lot lower. I just looked to see what the Investment split is and it says 98% in Scottish Widows Pension Portfolio Four CS8 and 2% in their Portfolio Three.   I assume with these sort of pots the allocations within them are reviewed annually?

Assumptions can damage your wealth.

Scottish Widows are the administrators of the pension they are not managing it.

You, or your adviser, are. In this case it's you by the sounds of it. Your management decision may have been "do nothing" and go with whatever default option the scheme offers but it's still your decision.

The default may be a managed lifestyle fund that moves funds from equities in to bonds over the 5 to 10 years leading up to a nominal retirement date. This is done automatically via set formulas and isn't managed based on what markets are doing.

For example you may have read about how supposedly safe bonds fell heavily recently as interest rates and inflation shot up. A lifestyle type fund will have sailed on through those choppy waters regardless of whether it was a sensible choice or not.

Find out what you have under the SW hood and don't assume anything.

Nardy

JohnWinder said:

‘If You Can’ is a free pdf by W Bernstein, short and sweet.

I like the way Bernstein compares investing to dieting and then says

"Dieting and investing are both simple, but neither is easy".

Aminatidi

You could do it yourself for 0.2% so I think it comes down to whether you're comfortable or even want to be taking on that responsibility.

What do you feel you're getting for 1.3% a year?

What do you think when you see the difference in what you keep between paying 1.3% and 0.2% https://larrybates.ca/t-rex-score/

Albermarle

Bostonerimus1 said:

Your FA is very expensive so get them to earn their money and ask them your questions.

Seriously at those level of fees your FA is a major drag on your returns.

I would sit down and do a budget to see how much retirement income you need, then take off your guaranteed income sources like DB pensions and see how much your investments need to generate. Then think about your asset allocation and how you might generate the required income, then drop the FA and yoi'll have an immediate 1.3% windfall.

As far as I know the OP Has not fully clarified what they are paying. 
Whether it is 1.3% advisor alone or whether it is 1.3% all in, including advisor, platform and fund costs.
The latter is in acceptable territory for an advised portfolio . A DIY portfolio could cost anything from 0.2% to 2 % ( if expensive managed funds were picked on an expensive platform ) .
The OP is not clear on charges for their other pension either.
Thanks. I guess one option might be to transfer the personal pension into my Scottish Widows company pension. I’m not 100% sure of the charges but I guess they are a lot lower.

penners324

What are those pension pots invested in?

Increase your company pension contributions as much as you can or feel comfortable with