M&G Wealth / Openworks Pension Advisor charges

dunstonh

marky9074 said:

It would seem harder than you would think... seems all roads lead back to Saint James's Place!

With IFAs, the is little concern about quality of advice.    It is really about cost.    So, contacting multiple IFAs to dicsus their charges and their typical portfolio charges should give you a broad range.

Tied agents/FAs are nearly all expensive by default and restricted.

The problem with the directories is that they have become extremely greedy.     Either by wanting a massive monthly fee that is just not justifiable for small firms wanting to be cost-effective or by taking a percentage of the fee income from the clients that they referred.     A distribution channel that relies on directories will be expensive as that has to be paid for.   Whereas those firms that get business without being on directories don't have that cost to factor in and can be better value.   But those firms are harder to find (although most will come up when you do a google search).

Whenever someone asks for an IFA on the local community facebook group, you always get responses from people giving SJP reps as the answer.   Many don't know the difference and SJP are a marketing machine.

marky9074

Is there any way I can get up to date performance on this Openworks Graphene C1 Adventurous Model Portfolio fund? The only reference I can find is that same PDF from April. 

dunstonh

marky9074 said:

Is there any way I can get up to date performance on this Openworks Graphene C1 Adventurous Model Portfolio fund? The only reference I can find is that same PDF from April. 

Its one of the limitations of using options that are restricted.  I couldn't find it on the three systems I have available.

I had to use that factsheet earlier in the thread and then use the whole of the market options to compare against that same time period to ensure like-for-like.

marky9074

I had an interesting conversation with the Openworks/M&G Advisor. He seemed to put to bed some of my concerns.

With regards to the assumption on growth, he stated that this low/mid/high rate shown on the statements was a market average across the sector and not a reflection of the assumed growth on that exact fund (that was a complete eye opener for me). So essentially these assumed growth percentages are completely irrelevant (well to me anyway).

There was a pitch that this fund was UK centric (and always has been) and that the UK equities were undervalued and ultimately would drag themselves up to parity with the rest of the world markets, and cited the growth in my fund in the last 12 months as case in point. There has been a steady mandate over the years of buying in 'whilst cheap' and this is not untrue I guess. I would be intrigued to see peoples thoughts on this, especially over the long term (next 15 years).

As for charges, stated that there would be charges elsewhere (but didn't address the elephant in the room in that M&G is at the highest end of that spectrum).

Apparently there is a way to monitor the fund day to day, but alas I have not been able to see how, so is going to explain the platform to me in a one-to-one.

I have always maintained that if the return is high I have no issues with paying the charges (we are all in it to make some money), but I am still pessimistic that this is the right fund for me.

dunstonh

With regards to the assumption on growth, he stated that this low/mid/high rate shown on the statements was a market average across the sector and not a reflection of the assumed growth on that exact fund (that was a complete eye opener for me). So essentially these assumed growth percentages are completely irrelevant (well to me anyway).

That is not correct.  Projections are synthetic assumptions using rates published by the FCA that reflect the underlying assets. e.g. equities use a different percentage to bonds or cash.  it is nothing to do with market average.

There was a pitch that this fund was UK centric (and always has been) and that the UK equities were undervalued and ultimately would drag themselves up to parity with the rest of the world markets, and cited the growth in my fund in the last 12 months as case in point. There has been a steady mandate over the years of buying in 'whilst cheap' and this is not untrue I guess. I would be intrigued to see peoples thoughts on this, especially over the long term (next 15 years).

It is true that many feel the UK is undervalued relative to other markets.  However, markets do not work on the basis of achieving parity at some point.

Only time will tell but the UK is a dinosaur market. its made up mostly with old fashioned industries.  Mining, Energy, finance.   When they are out of fashion, then the UK underperforms.  The UK is generally fixated on dividends which take money out of the company to pay the shareholders rather than use the income to grow the company.   That style has also been out of fashion for over 15 years.

I have always maintained that if the return is high I have no issues with paying the charges (we are all in it to make some money), but I am still pessimistic that this is the right fund for me.

Its a restricted offering which is not transparent (no publishing of data beyond factsheets).    Restricted offerings are rarely the best option or even much above average.

marky9074

Given the US election result, I'm even more inclined to push more towards US equities. The Openworks FA commented on a new product and I did some digging yesterday. It seems to be called Omnis Agility, and looking at most adventurous (!) the below is breakdown:

• 31.5% UK equities
• 31.7% US equities
• 21.5% Other Developed Markets Equities
• 10.3% Emerging Markets
• 2.5% UK Corporate Bonds
• 1.0% Global Bonds

The FA was resolute that he was not recommending a change due to the fact the product only started in May 2024, but I do wonder if this is a better option that what it is currently in (Openwork Graphene C1 Adventurous).

marky9074

Just to point out I still have not made a decision on what to do, because for once this year the product has had a healthy return.

Linton

marky9074 said:

Just to point out I still have not made a decision on what to do, because for once this year the product has had a healthy return.

I suggest that you dont get fixated on return especially over a small number of years.  Returns come from the behaviour of global markets over which you have no control nor any abililty to predict.  All you can do is to invest widely at a level of risk you are able to accept and is appropriate to your needs.  Investing widely is vital as it ensures you get benefit from unexpected winners and do not make large losses when one area fails. 

The first thing to understand is what are your objectives:
I assume long term growth - how long?  But perhaps there are other objectives.
What sort of returns above inflation do you need to meet your objectives?

Secondly, what level of risk?  That risk is both short term and long term.  For example the portfolio you produced earlier:

Bearing in mind I obviously have little idea what I am doing, but am reasonably confident that I couldn't pick worse funds than I am already in, have looked at the below based on my adventurous attitude. If I were to pull everything out of the M&G and split evenly over the following I don't think I would be in bad shape.

	Charge	TC	5 Years
Fidelity Global Technology Fund	1.04	0.47	19.61%
Fidelity European Fund W Acc	0.92	0.07	9.36%
Fidelity Index World P	0.12	0.00	11.00%
Scottish Mortgage Investment Trust plc	0.35	0.04	9.65%
Vanguard FTSE All-World UCITS ETF	0.22	0.02	9.86%
Vanguard LifeStrategy 100% Equity Fund	0.22	0.02	8.90%

could have fantastic growth in the good years but you should be prepared for the occasional shorter term 50% fall.  Would you sell the lot in a panic?

In the long term if you are too cautious you may not get the returns you need to retire when you want to at the standad of living you would find acceptable.

These are the sort of questions that an IFA should discuss with you or you should discuss with yourself before choosing investments.

Charges are important but not as important as investing in appropriate funds.

ColdIron

marky9074 said:

• 2.5% UK Corporate Bonds
• 1.0% Global Bonds

I'm struggling to see the purpose of this allocation

dunstonh

These are the sort of questions that an IFA should discuss with you or you should discuss with yourself before choosing investments.

Just on that point, Openwork are FAs.  Openwork is the current name for what was the old Zurich Advice Network and before that, it was Allied Dunbar.

FAs from salesforces usually have an internal remit where they are not allowed to recommend investment changes.  They can present options but they leave it and document it as a customer choice.    Whereas an IFA would not put the onus on the client to choose.   They should say "this option is better because....."

In the case of the recent comments, neither the existing option or the alternative looks attractive    The latest option being offered is a hybrid portfolio of trackers and own-brand managed funds.   Own brand funds are rarely attractive (regardless of brand) and for a hybrid portfolio, it is quite expensive - mainly due to the inclusion of those own-brand funds.