IFA fees

LHW99

MQA said:

dunstonh said:

MQA said:

I have read that some people draw their income from the investment gain / profit,  if II have worked out if I make 5% gain a year, I will need to draw out all the gain then there will be no gain left to re-invest - is that the norm? so the investment with stay more or less the same?

If you have a spending need that requires 5% draw then you are possibly better off with an annuity (or a combination).   Anything above 3.5% means you are at risk during bad negative periods of eroding your capital and never recovering.

In most periods you would get away with drawing 5% (I have several clients that started 5% of initial amount draws in the late 90s (prior to dot.com etc) and they still draw the same amount today. Their value is a higher than they started.   However, there isn't much scope for inflation increases.

Annunity - great idea. However, I am not sure whether the value of my pension will generate much income (I was an employee for 3 years and rest of the time opted out)

What is the value of the pension? you could put it into a web calculator (I think HL have one) which would give you some idea.

But opted out - Ouch! - or do you mean "contracted out"???

GeoffTF

An annuity is certainly a safer course of action. MoneyHelper has a tool for comparing annuities:

https://www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/compare-annuities

Beddie

MQA said:

@ dunstonh  I am not sure what 'equity content' means ? All my SS ISA are in fund, do you mean what market or industry?

Equity means company shares, basically a fund might be all equity, or it might also have bonds, property, gold, gilts, all sorts! This makes for lower risk of big falls. Look at this fund and you'll see what I mean

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/h/hsbc-global-strategy-balanced-portfolio-c-accumulation/fund-analysis

Albermarle

MQA said:

dunstonh said:

MQA said:

I have read that some people draw their income from the investment gain / profit,  if II have worked out if I make 5% gain a year, I will need to draw out all the gain then there will be no gain left to re-invest - is that the norm? so the investment with stay more or less the same?

If you have a spending need that requires 5% draw then you are possibly better off with an annuity (or a combination).   Anything above 3.5% means you are at risk during bad negative periods of eroding your capital and never recovering.

In most periods you would get away with drawing 5% (I have several clients that started 5% of initial amount draws in the late 90s (prior to dot.com etc) and they still draw the same amount today. Their value is a higher than they started.   However, there isn't much scope for inflation increases.

Annunity - great idea. However, I am not sure whether the value of my pension will generate much income (I was an employee for 3 years and rest of the time opted out)

What did your advisor say about you opting out of free money every year? They probably had a fit !

LHW99

MQA said:

Albermarle said:

MQA said:

dunstonh said:

MQA said:

I have read that some people draw their income from the investment gain / profit,  if II have worked out if I make 5% gain a year, I will need to draw out all the gain then there will be no gain left to re-invest - is that the norm? so the investment with stay more or less the same?

If you have a spending need that requires 5% draw then you are possibly better off with an annuity (or a combination).   Anything above 3.5% means you are at risk during bad negative periods of eroding your capital and never recovering.

In most periods you would get away with drawing 5% (I have several clients that started 5% of initial amount draws in the late 90s (prior to dot.com etc) and they still draw the same amount today. Their value is a higher than they started.   However, there isn't much scope for inflation increases.

Annunity - great idea. However, I am not sure whether the value of my pension will generate much income (I was an employee for 3 years and rest of the time opted out)

What did your advisor say about you opting out of free money every year? They probably had a fit !

Did you mean by not having to pay their fee?

No because you had turned down a) free money because your employer would be paying in and b) free money because HMRC puts back basic rate tax into your pension.

So £100 in your pension would become £125 with just tax relief, and then there would be extra from your employer put in as well.

MX5huggy

I would get rid of them, they can’t answer a straight simple question. Are you an IFA? is one word answer. They have created a portfolio of 24 funds to make it look like they are doing something magic and amazing which you can’t do yourself. They aren’t they’re creating unnecessary complexity and the general effect is that your returns trend towards bang average minus the expensive fees. If you get bang average without the fees you beat them. 

Name the company then we can tell how they operate. 

You don’t seem to have enough knowledge currently to go DIY you can either invest your time and effort into learning (a couple of books, specific YouTube channels, websites and asking and reading and here, would be enough). Or find an IFA who can do this for you. 

boingy

30 funds!!!
Did the FA/IFA explain the purpose of each of those?

dunstonh

I can easily understand 15 funds but 24 funds is really pushing it.    However, there will be a reason for that.   Liquidity.

This is almost certainly a DFM MPS portfolio.    Probably has billions of pounds invested in it (or its risk based varients).  Fund houses will often impose restrictions on their funds of a maximum amount invested  to ensure they can maintain liquidity.   This results in the DFM having to add an alternative fund house to cover the same area.

RogerPensionGuy

I just spotted the link below today, think its old news, they are in the press a plenty lately, 80% and from my reading on average 90% of IFAs achieve a lesser outcome than just picking a low cost platform and pick 1 or more of the standard trackers of whatever you like.

I get that IFAs can make you feel warm and secure and help planning if a person needs it, but these last few years with nice easy low cost platforms, it looks to me like DIY will just keep growing and growing, the IFA has had a good long run in the old days, but its all different now.

***

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dunstonh

I just spotted the link below today, think its old news, they are in the press a plenty lately, 80% and from my reading on average 90% of IFAs achieve a lesser outcome than just picking a low cost platform and pick 1 or more of the standard trackers of whatever you like.

The headline doesn't appear to suggest that at all.     I suggest you try again.