Dumping IFA portfolio to go DIY

LHW99

thunderroad88 said:

Bostonerimus1 said:

thunderroad88 said:

JG1A said:

dunstonh said:

JG1A said:

Looks like you are paying about 1.34% of your portfolio value every year, about 1% to your IFA and about 0.34% to cover fund and platform costs. If you ditch your IFA you save the 1% and its easy to replicate your portfolio on any platform such as Vanguard, Interactive Investor, with similar fund/platform costs.

IFAs will include transaction charges in their disclosures.  DIY investors disregard these.   So, you would need to strip out the TC for a like for like comparison.       

I would be possible to build the same portfolio on a platform for about 0.34% including the platform costs and fund/trans. costs.

It absolutely would JG but I’m asking myself why I might do that when a single global tracker like Vwrp or HSBC all world would have provided the same return. Sure there are a few tilts in my 7 fund pf but if there’s a crash it’ll probably drop the same amount as a global tracker. The only reason I can see to replicate it myself on a low cost platform would be for some reassurance that it was ifa designed but the stats say I shouldn’t worry too much about that. Doing away with my adviser will save me at least £5k in the next year i think…during the last year I’ve had three conversations about families and holidays and how well the pf was going no need to change anything, a 26 page analytic report full of pie charts showing different ways of breaking down my pf but no analysis per se, and the customary annual investment suitability review (no change vs last year). Not even any isa b&b’s for him to do this year as we’re now fully within isa wrappers. For that I paid £4.5k which is what finally kicked my backside enough to stop lurking and do something. 

I'm in retirement and my attitude is that I don't want the bother of a complicated portfolio or the volatility of an EM tilted portfolio. I get all the analysis I need using the tools provided on my investment platform. I have good guaranteed retirement income sources so I can take the risk of a 85% to 90% equity portfolio that is basically similar to a global tracker, maybe with a slight US tilt because that's where I live. This has meant that my portfolio has grown nicely over 1 year, 5 years,10 years etc., but when a crash comes I will probably lose more than a more defensive portfolio with a similar composition to VLS60 say. So your portfolio is a tool that you hone to your particular circumstances, objectives and comfort.

I noticed you said that you a US investment and a non US investment… mind me asking why you didn’t just choose a global tracker? Did you want even more US exposure than they provide? 

Bostonerimus1 lives in the US (I think) so extra US % is equivalent to the VLS funds having UK "home bias" for those here.

However, the US stockmarkets have done better than the UK over the last 10 years andmost US based investors seem to want far less global exposure than those in the UK are happy with.

Then for UK investors, there are also currency fluctuations if your investments return in $ rather than £.

Qyburn

dunstonh said:

So, yes, the VLS60 & 80 would have cost less, but the portfolio, as stated in post #1, is yellow. You would have saved a small fortune in adviser fees (around £15,292.79), but you would be over £100,000 worse off with VLS80 and nearly £180k worse off with VLS60.

Since his portfolio is 100% equities, i wonder how that would look compared to a single index fund like HSBC FTSE All-World, or Vanguard VLS 100.

Aminatidi

Qyburn said:

dunstonh said:

So, yes, the VLS60 & 80 would have cost less, but the portfolio, as stated in post #1, is yellow. You would have saved a small fortune in adviser fees (around £15,292.79), but you would be over £100,000 worse off with VLS80 and nearly £180k worse off with VLS60.

Since his portfolio is 100% equities, i wonder how that would look compared to a single index fund like HSBC FTSE All-World, or Vanguard VLS 100.

Looks like the same £300K invested on 25th August 2016 would be worth around £660K according to Trustnet.

Or around £700K using Fidelity Index World P Class.

Bostonerimus1

thunderroad88 said:

Bostonerimus1 said:

thunderroad88 said:

JG1A said:

dunstonh said:

JG1A said:

Looks like you are paying about 1.34% of your portfolio value every year, about 1% to your IFA and about 0.34% to cover fund and platform costs. If you ditch your IFA you save the 1% and its easy to replicate your portfolio on any platform such as Vanguard, Interactive Investor, with similar fund/platform costs.

IFAs will include transaction charges in their disclosures.  DIY investors disregard these.   So, you would need to strip out the TC for a like for like comparison.       

I would be possible to build the same portfolio on a platform for about 0.34% including the platform costs and fund/trans. costs.

It absolutely would JG but I’m asking myself why I might do that when a single global tracker like Vwrp or HSBC all world would have provided the same return. Sure there are a few tilts in my 7 fund pf but if there’s a crash it’ll probably drop the same amount as a global tracker. The only reason I can see to replicate it myself on a low cost platform would be for some reassurance that it was ifa designed but the stats say I shouldn’t worry too much about that. Doing away with my adviser will save me at least £5k in the next year i think…during the last year I’ve had three conversations about families and holidays and how well the pf was going no need to change anything, a 26 page analytic report full of pie charts showing different ways of breaking down my pf but no analysis per se, and the customary annual investment suitability review (no change vs last year). Not even any isa b&b’s for him to do this year as we’re now fully within isa wrappers. For that I paid £4.5k which is what finally kicked my backside enough to stop lurking and do something. 

I'm in retirement and my attitude is that I don't want the bother of a complicated portfolio or the volatility of an EM tilted portfolio. I get all the analysis I need using the tools provided on my investment platform. I have good guaranteed retirement income sources so I can take the risk of a 85% to 90% equity portfolio that is basically similar to a global tracker, maybe with a slight US tilt because that's where I live. This has meant that my portfolio has grown nicely over 1 year, 5 years,10 years etc., but when a crash comes I will probably lose more than a more defensive portfolio with a similar composition to VLS60 say. So your portfolio is a tool that you hone to your particular circumstances, objectives and comfort.

I noticed you said that you have a US investment and a non US investment in your pf… mind me asking why you didn’t just choose a global tracker? Did you want even more US exposure than they provide? 

My funds have a bit of historical inertia. I started with just a US total stock market and a US bond index fund and eventually added an international ex-US stock fund for diversity and a balanced income fund because of it's historical performance. Before I retired I sold my bonds to buy into an employer's DB pension plan and put some in cash savings. In the 10 years I've been retired I haven't taken any income or sold anything and so my equity percentage has increased to where it is now ~85%

Qyburn

Aminatidi said:

Qyburn said:

Since his portfolio is 100% equities, i wonder how that would look compared to a single index fund like HSBC FTSE All-World, or Vanguard VLS 100.

Looks like the same £300K invested on 25th August 2016 would be worth around £660K according to Trustnet.

Or around £700K using Fidelity Index World P Class.

That's quite a lot more than the OP's IFA-crafted portfolio as shown on dunstonh's graph. But I think he factored in platform fees which would close the gap.

boingy

Qyburn said:

Aminatidi said:

Qyburn said:

Since his portfolio is 100% equities, i wonder how that would look compared to a single index fund like HSBC FTSE All-World, or Vanguard VLS 100.

Looks like the same £300K invested on 25th August 2016 would be worth around £660K according to Trustnet.

Or around £700K using Fidelity Index World P Class.

That's quite a lot more than the OP's IFA-crafted portfolio as shown on dunstonh's graph. But I think he factored in platform fees which would close the gap.

Dunston never misses an opportunity to snipe at Vanguard. I guess we all have our biases, even IFAs. 

Aminatidi

Qyburn said:

Aminatidi said:

Qyburn said:

Since his portfolio is 100% equities, i wonder how that would look compared to a single index fund like HSBC FTSE All-World, or Vanguard VLS 100.

Looks like the same £300K invested on 25th August 2016 would be worth around £660K according to Trustnet.

Or around £700K using Fidelity Index World P Class.

That's quite a lot more than the OP's IFA-crafted portfolio as shown on dunstonh's graph. But I think he factored in platform fees which would close the gap.

You could do it with next to no platform fees.

I'm assuming there's a reason for the allocation in the opening post?

Just interesting that whatever the reasoning behind it a cheap dumb global tracker looks to have done better.

I suppose in a different environment that may not have been the case?

dunstonh

boingy said:

Qyburn said:

Aminatidi said:

Qyburn said:

Since his portfolio is 100% equities, i wonder how that would look compared to a single index fund like HSBC FTSE All-World, or Vanguard VLS 100.

Looks like the same £300K invested on 25th August 2016 would be worth around £660K according to Trustnet.

Or around £700K using Fidelity Index World P Class.

That's quite a lot more than the OP's IFA-crafted portfolio as shown on dunstonh's graph. But I think he factored in platform fees which would close the gap.

Dunston never misses an opportunity to snipe at Vanguard. I guess we all have our biases, even IFAs. 

That is selective reading on your part.
I have several Vanguard funds in my portfolio and frequently say where they are good.    However, I don't let bias make me think they are good at everything.  No fund house is good at everything.    I point out the negatives and the positives.   

For example, I am shifting from HSBC GS back to Vanguard LS again.  Although I am using the IFA version of Lifestrategy which doesn't have the home bias.

Aminatidi

I really wish they'd offer that via normal retail platforms 😖

thunderroad88

Aminatidi said:

I'm assuming there's a reason for the allocation in the opening post?

Just interesting that whatever the reasoning behind it a cheap dumb global tracker looks to have done better.

I suppose in a different environment that may not have been the case?

Which I why I’m thinking of moving to a cheap dumb tracker and trying to find a reason not to.. what kind of different environment would it take for my ifa crafted pf to either perform significantly better or worse than a global tracker? Do the allocations provide significant defensive protection against certain potential market conditions and give reason to retain the pf structure albeit on a diy platform? I personally can’t see how they would but maybe someone else can