IFA and Pension fund management charges - transferring a DC workplace & private pension

dunstonh

You can if you put the most weight on being ‘passive’ which Monevator does (not sure I agree), and you like home bias in equities. I don’t know about ‘consistency’. Which is the most consistent if not the VLS series?

Consistent is a strange one as its not consistently the cheapest or the best performer.   It has changed the underlying funds over time.  So, what is consistent?  

There are sound reasons for that. Tactical asset allocation, more/less of stocks/bonds according to market timing has not demonstrated it’s a better strategy.

Rigidity hasn't shown it to be better either.

. Vanguard's LifeStrategy funds still exist, but Vanguard froze their allocations at fixed values (20/80, 40/60, 60/40, and 80/20). Vanguard gave up on tactical asset allocation

Or it could be argued that its marketing as people often think of the amount in the stockmarket and the amount not in the stockmarket.

Going ‘static’ is not a problem, and it would only be a relevant active decision if it was a change in fund strategy. If the fund is set up to be ‘static’ and remains so, how is that any more active than deciding to use the MSCI global index rather than the FTSE global index at set up? It seems a ridiculous proposition.

Any decision to build weightings at a certain ratio is an active decision.  Any decision to pick certain areas and not others is an active decision.    asset allocation/weightings may be minor but whether to remain at 60% or switch to 62% are both active decisions.      Same as the decision to hold 26.98% in US equities on 31st January 2021 vs 30.02% on 31st August 2023 (taken from VLS60).    VLS is not as rigid as made out apart from the equity/fixed interest allocation.

We risk making out that the VLS range is not a good option.    That would be wrong.   The discussion point is the monevator article clearly has a bias towards Vanguard and that needs to be taken on board when using it as a reference point.

JohnWinder

I suppose we need be a bit worried about bias in a Monevator article simply as an example, if it were to lead to the omission of relevant information. But if the article puts its argument and tries to justify its position we can check it for fact and logic then agree or disagree with the conclusions. If a lot of readers are not up to fact and logic checking, then we’re in trouble. So, are there any glaring omissions from the Monevator article we should be considering that might have resulted from bias?

‘We risk making out that the VLS range is not a good option.’

I wrote: ‘either option is likely to be a good choice’,
So that would be the royal ‘we’ not the ‘we’ that has me.

‘So, what is consistent?’

No idea. I didn’t suggest VLS was not the most consistent.

‘Any decision to build weightings at a certain ratio is an active decision.’

Yes, but that doesn't make a fund 'active'.
Would it help beginners if we wrote ‘any decision to CHANGE….is an active decision’?
An attraction of a ‘passive’ fund is that the investor knows they’ll get the returns of the index(es) being tracked (less tracking error and costs). Market timing or stock selection mistakes which reduce returns can’t occur. One takes market risk, end of story. That active decisions were taken for the fund to be established, ‘let’s create a 60/40 fund, guys’, and then that weighting is not changed, is exactly what a passive fund investor would want, and I don't think it helps to infer it's an active fund because of how it was established.
An attraction of an ‘active’ fund on the other hand is that the manager can change the securities or funds being held, offering the chance of beating the market. One takes market risk AND manager risk. We take our pick.
VLS is active at the edges, and perhaps less than HSBC GS is although HSBC don’t seem explicit in what I’ve read.

Albermarle

On the subject of IFAs, a good local one is worth going with, but avoid anyone using the “Wealth Management” title. The ones I spoke to all seemed to use another layer of management called a DFM (Quilter is an example). As far as I can see this just adds another layer of fees with no discernible benefit to the client.

AIUI, an IFA is not sitting there reading the FT or Investors Chronicle all day, and will largely buy in investment advice themselves. 

So delegating that part to a DFM does make some sense, so they can concentrate on other issues.

The problem is when the DFM is charging a significant %, and the IFA ( or FA) does not discount their own fees. However as Dunstonh has pointed out there are now many low cost DFM's available.

One key difference is that if the IFA is running the client portfolio, they have to get permission to change it from the client. A DFM can change the portfolio without consulting the client, but of course they have to work within the general guidelines for that client set out by the IFA.

DeadlyD

Morning, I’ve  spoken to Fidelity, perhaps I was lucky but the customer service was exceptional, so another confidence booster and cash back is £1000 
👊 And @dunstonh it is indeed Origo to Origo transfer, no charge for the service and normally takes a week or so. They reassured me on how to assess  a Multi Assest Fund so I am now in the realms of choosing one or a few (?) with a risk profile of 7, they’ve sent me lots of links to check out. 
The neophyte continues on her journey. 

j@JohnWinder understand the pre chosen passive weighting’s so will be considering my options and reporting back. 

Deadly