Should I stay with current IFA or jump ship?

mrtubs

Hi
I am approaching 60 and want to semi retire. I would love to retire completely but cannot afford it just yet.  I have had the same job for 40 years, it is a managerial job and I propose to step down to a member of staff earning just over minimum wage and to work for around 20 hours per week.

 I need approx £2000 net per month to live comfortably.

My pensions and investments are:

A frozen final salary scheme that will pay out £4,500 pa when I hit 65
A current workplace pension pot of 169k (my employer contributes 15%)
A fidelity pension managed by my local IFA of 105k
A fidelity stocks and shares isa managed by my local IFA of 40k  
And I will receive full state pension at 67

The thing is that the funds managed by the IFA, I don't believe are doing well.
I have been with him 3 years and the pension fund has only increased by 0.37%.  It took a big hit for 2 years and has recovered this year.  The ISA has increased by 5% over that time.

I filled in a form on facebook for information from a firm called Fisher investments and, so far, have had 2 long zoom calls from them.

They claim that they could get a much better return on both the IFA funds and my work pension.  Although pointing out the obvious that past results are not guaranteed to continue they think that they can return 7-8% per annum, so an enormous difference.

They would do this by increasing the risk to 70/30 in equities and reducing UK investments and investing elsewhere.

The fees (1.5% set up costs, and 1.5%pa ongoing) are not dissimilar to my IFA but 10 x my work pension. 

It seems a no brainer given the massive difference in growth

BUT

Everywhere I look online there are negative reviews on Fisher.  The most common complaints are high charges for underperforming funds.

I don't know which way to jump and would appreciate any advice.

However, please remember that I have zero knowledge of investing, so telling me to manage it myself is not an option.

Many thanks in advance

Ian

LHW99

I don't think they are independent financial advisers. They call themselves Wealth Managers, and there is no confirmation of the "Independent" bit on their current home page.

This may be helpful?

https://forums.moneysavingexpert.com/discussion/6435508/ifa-fisher-investments?utm_source=community-search&utm_medium=organic-search&utm_term=fisher+investments

They may be persistent, now you have got onto their phone list, so be aware.

Also, IMO 7% - 8% pa is rather optimistic, unless they put you into high equity (higher risk?) funds. Also, is that including inflation? Recent CPI is around 4.5%, so if they are talking 7%+ on top of that I wouldn't trust the prediction.

gm0

Not with your barge pole would I.

The thing you are missing is that Fisher are NOT PROMISING THIS WILL HAPPEN.  This is sales and marketing bs.  The contract will not include any floor for losses or prediction or commitment to any particular performance of the investments absolute or relative.  Nada.

The only thing it will commit is the higher fees.  Let that sink in.  And they will expensively invest you into whatever they are recommending.

Funds are structured and restructured by providers to delete failures and create 3-5 year backward looking stories that support a claim of superior fund management insight or of better historic short term performance.  The ugly secret of fund management as a business over the 20th century to date - is that it is about assets under management and their rake - not about you and your outcome.  Little to no duty of care.  No fidicuary responsibility to you.
And they respond strongly to those incentives. 

The phrase I believe is "Where are the customers' yachts".  Another favoured fund management quote (Bernstein book) is - "at the end of each trading day we throw all the money in the air.  Anything which sticks to the ceiling goes to the clients"

Your various pots perform based on what they are invested in.  And not particularly because of the provider being "good" or "bad".  The provider may be expensive or cheap.  In house funds will be what they are - good or bad.  But usually bad over the long term.  Similar performance but higher fees = worse.

Take a similar risk - a mix of equities and other things (bonds etc) and the market return for that mix will start fairly similar "gross" and the difference will be about drag (fund, advice and provider (platform) fees in other words)

A super duper active fund from a provider may shoot past the market return - or lose a fortune - depending how skewed away from own the market it is and what happens in any given short period.  Very narrow (few specific investments) can shoot to the moon and crash back to earth.  Think tech stock specialists as an example both in the  .com boom 90s and more recently again.   At which point *when* you bought it matters - a lot.  Late to the party. Massive losses. Early adopter. Not stellar but not as bad.

You have paid an IFA to invest one of your pots.  In your annual review.  You should be discussing its performance - absolute and relative.  Is the risk posture taken "right" for you.  It clearly was connected in some way to what you told the adviser when you set that up.  Fact find and suitability/risk attitude.

It is best to look at your overall position and whether it suits age and attitude (how many equities, how much safer stuff).  You will get different performance at different times from the various components.  It can't and won't all win all the time.  That is as expected. 

Go to amazon.  Buy "The Four Pillars of Investing".  Read it.  Sit on your hands meanwhile.  Then consider your decision about which advisers (if any) you wish to work with.

dunstonh

They claim that they could get a much better return on both the IFA funds and my work pension.  Although pointing out the obvious that past results are not guaranteed to continue they think that they can return 7-8% per annum, so an enormous difference.

IFAs are whole of market and can select investments from the marketplace.    Fisher are tied sales reps of their own funds.  

I have been with him 3 years and the pension fund has only increased by 0.37%.  It took a big hit for 2 years and has recovered this year.  The ISA has increased by 5% over that time.

That is not down to the IFA.  That is down to the asset classes used to reflect your risk profile.

From Nov 2021 to October 2023, fixed interest securities suffered a negative period.  Some of which had their worst period in over 100 years.  The image below is an example of the different types of fixed interest securities and not one of them was positive.



The next chart is the same period with the different equities regions/countries (using the typical US, Europe, UK etc)


All them positive in that period except emerging markets.

So, basically, if you were higher in equities in that period, you would have made more.  And if you were higher in fixed interest securities (bonds) then you would have made less.

If the fisher agent is claiming 7-8% per annum then they have to be recommending you invest high up the risk scale as that is the only way those figures are likely to be seen as a long term average return.   And in that period you would see periods where you could almost lose half your value in a year.

They would do this by increasing the risk to 70/30 in equities and reducing UK investments and investing elsewhere.

So, in other words, they are comparing a lower risk portfolio with a higher risk one, using some hindsight (ironically, many feel that the UK is actually in line for a better period than the US) and saying they are better.  If we all had that hindsight, we would all have piled into technology funds in this cycle.    However, they appear to have forgotten what happened last time people piled into technology funds too much which then went onto drop 90% from peak to trough.

It seems a no brainer given the massive difference in growth

Its not a no brainer.  Its sales talk and you are falling for it.

Firstly a 70% equities portfolio is unlikely to return 7-8% p.a. over the long term.   We have had a sustained period where equities have been very good.   Especailly US equities.   In the previous cycle, equities lost money over 10 years and US equities were one of the worst areas.      So, anything that only shows the last 10-15 years or less and not the decade before that is going to give above typical figures.

Everywhere I look online there are negative reviews on Fisher.  The most common complaints are high charges for underperforming funds.

Yep.  Sales vs reality.

I don't know which way to jump and would appreciate any advice.
However, please remember that I have zero knowledge of investing, so telling me to manage it myself is not an option.

Talk to your IFA.  Your IFA should be able to walk all over tied sales reps to find a solution that fits your needs.  Both in terms of cost and investing style.   If you want to move up the risk profile and accept more volatility then talk it through with the IFA.      

Broadly speaking, the higher the level of equities, the better the long term returns will be (long term really means long term and not 10 years).    However, in shorter term periods, the higher the losses will be when they come along and you really need to be able to handle those negative periods (of 25%-50%).  

You say you don't think your funds are doing very well but then you say you don't know about investments.  So, how do you know that your funds are not doing very well and its not down to how those areas you are invested in?

MeteredOut

Should you stick with your IFA? Answers above - work with them to ensure your investment meet your needs/appetite to risk, then decide from there. Many on this board believe a DIY approach with a investment in tracker funds (no IFA fees, cheaper management fees) works for them.

Should you move to Fisher? NO NO NO NO NO.

artyboy

Fisher... just a bunch of SJP wannabies. And the annoying thing is that they are carpetbombing me with their rubbishy faux hand drawn cartoon ads. Doesn't matter how many negative comments I leave (and they delete), they just won't go away. Absolute shysters.

MeteredOut

artyboy said:

Fisher... just a bunch of SJP wannabies. And the annoying thing is that they are carpetbombing me with their rubbishy faux hand drawn cartoon ads. Doesn't matter how many negative comments I leave (and they delete), they just won't go away. Absolute shysters.

Just in case anyone is unaware, that is NOT a compliment

Pipthecat

They would do this by increasing the risk to 70/30 in equities and reducing UK investments and investing elsewhere.

Not a recommendation but you have to ask yourself could this not be achieved by self investing in one of the off the shelf lifestyle product like a 60/40 or 80/20 fund  LifeStrategy Fund | Vanguard UK Investor (vanguardinvestor.co.uk)

mrtubs

That you all for taking the time to provide such detailed and helpful answers. You are very much against Fisher and I shall take your advice and steer clear. I’ll also read the recommended book. Thanks again, I really appreciate it. 

Albermarle

mrtubs said:

That you all for taking the time to provide such detailed and helpful answers. You are very much against Fisher and I shall take your advice and steer clear. I’ll also read the recommended book. Thanks again, I really appreciate it. 

The crux of the problem with flat performance of your funds is that you are most likely invested in medium/low risk funds, as in your past discussions with the IFA , this has been assessed as your risk profile.
Has as been explained in the last 3 years these types of funds have not done so well .( specifically between around the end of 2021 and the middle of 2023) 
With hindsight you would have been better off in higher risk funds. Would that be the same going forward- nobody knows.
If there is a big crash in shares, you will wish you had stayed with the lower risk investments.
By the way if you look just over the last 12 months or so, you should see some positive % return on your current investments?

dunstonh

Not a recommendation but you have to ask yourself could this not be achieved by self investing in one of the off the shelf lifestyle product like a 60/40 or 80/20 fund  LifeStrategy Fund | Vanguard UK Investor (vanguardinvestor.co.uk)

Its a potential option but VLS classic has been held back a bit by home bias.  That hasn't been seen in VLS global but DIY investors cannot get VLS global.  You have to use an IFA to get that.    However, there are other versions of similar investment strategies available to IFAs that are cheaper than VLS classic or global and have had better performance.     There are alternative multi-asset funds available elsewhere that do cater for DIY investors.