First Time DIY Portfolio

Bianchiintenso

I think the OP is in danger of over analysing and getting bogged down, how much worse off would/could you be by keeping to 'picked' ready made funds aimed at your age, requirements and risk tolerance by the likes of Vanguard/AJ Bell/HL or choose 2 or 3 mainstream funds such as VLS, HSBC?
After that all you would need to worry about is getting the cheapest platform that match your requirements.
All of these things have been playing round in my head as I get ready to transfer into a SIPP and from everything I've read/seen on all the relevant websites I could go on forever researching and fine-tuning my pick, but having the sense to know I need to play as safe as possible within the options available I'll probably stick with the 'experts' at AJ Bell/HL/VG to give me a ready made package.

hotncold47

I would agree with the comment above and find myself in a similar postion. Two years ago I made my first and only post regarding transferring a Pension Fund to a Sipp. Bianchiintenso and myself received explanations from Dunstonh which left me with more questions than answers. My Fund at Zurich had to be cashed before it could be moved to an AJ Bell Sipp. I would be interested if this is the postion Bianchiitenso is in at the moment?

From having zero knowledge of pensions/investing I've tried to improve my knowledge by reading the recommended books, consuming hours of YouTube content . After two years I'm still stuck in Analysis Paralysis with most of my pot as cash, I just don't seem to be able to decide on my risk level, I'm 70 and retired. Part of me tries to think I dodged a bullet being out of bonds but I'm not convinced.

I'm grateful for this thread as it has made me address my situation. Sorry to the OP to go off topic.

RichardS

No problem @hotncold47 it’s interesting to hear your story. Thanks. 

Qyburn

RichardS said:

It’s doing my head in thinking about whether this discretionary managed approach is worth the £3k charges. I can’t help thinking it isn’t. 

Is that £3k all in, or are there platform and fund charges on top? I think you said the value was £200k, making that 1.5% which sounds high if it's just for management.

dunstonh

It’s doing my head in thinking about whether this discretionary managed approach is worth the £3k charges. I can’t help thinking it isn’t. 

Full DFM is just an added layer of charges with little benefit.  More to rub your ego as you get to speak to the investment manager.    Part DFM (MPS style) is viable. A few years back I would have still been cynical but you now have low cost MPS that can run a discretionary portfolio of trackers cheaper than the VLS range.

So, like many things, it is more nuanced than you have suggested.  An expensive DFM is different to a low cost DFM running on MPS basis.

RichardS

Qyburn said:

RichardS said:

It’s doing my head in thinking about whether this discretionary managed approach is worth the £3k charges. I can’t help thinking it isn’t. 

Is that £3k all in, or are there platform and fund charges on top? I think you said the value was £200k, making that 1.5% which sounds high if it's just for management.

That covers all charges 

Cus

dunstonh said:

It’s doing my head in thinking about whether this discretionary managed approach is worth the £3k charges. I can’t help thinking it isn’t. 

Full DFM is just an added layer of charges with little benefit.  More to rub your ego as you get to speak to the investment manager.    Part DFM (MPS style) is viable. A few years back I would have still been cynical but you now have low cost MPS that can run a discretionary portfolio of trackers cheaper than the VLS range.

So, like many things, it is more nuanced than you have suggested.  An expensive DFM is different to a low cost DFM running on MPS basis.

Can a retail investor access these low cost MPS that you suggest directly or do they need to go through an IFA and therefore pay an additional charge?

Bostonerimus1

Cus said:

dunstonh said:

It’s doing my head in thinking about whether this discretionary managed approach is worth the £3k charges. I can’t help thinking it isn’t. 

Full DFM is just an added layer of charges with little benefit.  More to rub your ego as you get to speak to the investment manager.    Part DFM (MPS style) is viable. A few years back I would have still been cynical but you now have low cost MPS that can run a discretionary portfolio of trackers cheaper than the VLS range.

So, like many things, it is more nuanced than you have suggested.  An expensive DFM is different to a low cost DFM running on MPS basis.

Can a retail investor access these low cost MPS that you suggest directly or do they need to go through an IFA and therefore pay an additional charge?

Good question. DFM is how advisors outsource risk and the headaches of investing a client's money. People often go to a financial advisor who they think will invest and manage their money for them, but often the advisor simply passes this task onto a DFM who puts the pools the money into a particular portfolio, ie. basically a multi-asset fund. IMO this is just adding complexity and cost to what should be a pretty simple process. All the acronyms and levels of service should be understood when assessing the overall expense as each middleman will want their fee. There are many excellent multi-asset funds that can be purchased directly and the fund and platform costs need to be carefully compared with the overall costs involved in the advisor and DFM route and their services to assess value.

gm0

To access these - I think this would be case of finding the transactional IFA (pension transfer farm or willing local firm) that uses a desired provider. 

And finding the low fixed fee for one off cutdown advice to get you from consumer who wants it to Advised consumer for whom it is suitable.  So end provider liability is zilch.   They likely won't shift on that.  No direct sales.

In many cases they will likely have multi-asset funds to sell you just not the same ones which don't require the extra steps.

Total costs look mildly alarming just on the example I clicked through to.  Invesco MPS on Fidelity. 

Ivesco risk tiered MPS "Fund of funds" 0.64%

Fidelity (assumed 0.3% as retail for funds - could be wrong about indirect pricing being the same.  Unlikely to be zero.

IFA Advice 0.5%

DFM element ?  Could be extra or all offset (cut out of - advice fee) - call it 0.25 absent a more informed quote

So 1.7%

At a point in time you can find exact (some cases I looked at) and where you can't similar focus funds) i.e. broadly the same assets retail. 

And cut out a lot of that cost drag.  But nobody is watching the portfolio for you.  So there is a value to that.

This leads me to think that the desirability of this it coupled to whether you are committed to being in a long term IFA relationship anyway in which case this is one version of that. 

And also to general investment philosophy and portfolio shape to a degree. 
The value add of MPS fund monitoring and ongoing restructuring of portfolio shape within the stated objectives about risk tier and volatility vs general market is much more relevant to the active fund heavy betting versions. Than to simple passive + extensions and specific geographic tilts - built out with indexers. 

I don't see the point at all for the latter as you have sharply diminished the need for fund monitoring (if you chose carefully with that criteria built in).

hotncold47

I rest my case, the  last few comments are an example off why people using this forum for guidance and help end up being more confused than when they started.