Pension advice - Jones & Co Financial Advice

InhaleMood

Hi,
I've had a couple of initial free advice sessions with Jones & Co. I've been very impressed with the time and effort the FA has put in, all for no charge yet.
We have just done the comparison of Net Yield with their fund (Vision 8) versus my L&G and Scottish Widows pension funds and it is approx 5% higher.
So, if I have it correct, even with paying them approx 2%, I will still potentially be getting better returns.
The only thing this doesn't take into account is the upfront fee of £2000. This is quite a big chunk (about 6.5%) of the initial amount they would be managing, but I can't figure out how to account for that in the returns.
Realistically, I could move the money to the types of funds they have suggested myself. There are two reasons why I'm leaning towards going with them:
1) the returns look better than what I am currently getting
2) yes, I can move the money now, but how would I know what to do in the future? 
3) this is not as important, but we have a mix of cash and pensions, and she showed a great forecast of when we would have to use the cash and what the shortfall would be - is there a way of doing that myself?

Does anyone have any advice on this?

Thanks,
Tanya

MeteredOut

Not heard of them, but they sound very similar to St. Jame's Place. Read up on some of the threads here on SJP.

Are they an IFA?

The investments have to perform a LOT better to make up for that 2%, especially over a number of years when you're losing out on the benefits of compounding. And £2K up front costs on a £30K initial investment will kill your returns.

If you want advice, I'd strongly recommend an IFA, not a financial product sales company.

Post the net yield results here, and I suspect some of those more knowledgable than me will be able to pick it apart. Its easy, in hindsight, to show you their best performing fund.

El_Torro

I've had a quick look at the Jones & Co website. If it's the same one you're talking to they appear to be Independent Financial Advisors, not Financial Advisors. This is an important distinction since the general guidance is to use an IFA, not an FA. So you've ticked that box at least.

What doesn't fill me with confidence is the fees you have stated. 2% ongoing charge and £2,000 upfront fee? Sounds pretty steep to me. An IFA should be charging you about 1% including their fees, platform fees and fund fees. 2% is far too high and will drag your returns down significantly. 

An IFA (and even an FA) can show you all the fancy charts they like showing how great their returns are. Ultimately though past performance does not equal future performance. Just because the fund they suggest has done better than the fund you are in now that doesn't necessarily mean that will always be the case. Also if their fund is higher risk (more volatile) then it stands to reason that it will outperform your current fund. That doesn't necessarily mean it's the right fund for you. 


Using an IFA is fine, even though they charge for their service they can save you a lot of money vs doing it badly yourself. I would be concerned about the amount they are charging you though, it's worth shopping around to see if there are more reasonable charges out there.

MeteredOut

This is the one I found, but maybe its not the same one

https://financialadvisers.co.uk/financial-advisers/north-hykeham/m-jones-and-co-wealth-management-ar/lincoln/michael-jones/p8/

Turns out they are with SJP.

El_Torro

MeteredOut said:

This is the one I found, but maybe its not the same one

https://financialadvisers.co.uk/financial-advisers/north-hykeham/m-jones-and-co-wealth-management-ar/lincoln/michael-jones/p8/

Turns out they are with SJP.

This is the one I found after a quick Google search: https://ifajonesandco.uk/

Hopefully the OP can specify who we're talking about.

InhaleMood

Hi, sorry I should have specified, it is this one: https://ifajonesandco.uk/
These are the figures I jotted down:

	5yr cumulative growth	Net Yield (after fees)
L&G	7.00%	6.68%
Scottish Widows	5.59%	4.54%
Scottish Widows x2	5.15%	4.11%
J&C Vision 8	11.69%	9.26%

I did ask about any reduction in fees but she said it wasn't possible. 
Yes, there is a chance they are slightly more risky than my current ones. So, I could move the Scottish Widows into L&G and perhaps move them into slightly higher risk funds. 
I think the part I am most unsure about is how I track things long term. How do I know on an annual basis whether my funds are performing well?

Beddie

I did ask about any reduction in fees but she said it wasn't possible.

Then say goodbye - past performance is no guarantee of future returns, as you know.
All you are doing here is funding their retirement, not yours. Both the upfront and ongoing fees are too high, but that is possibly because you are below their usual pot amount and are hitting their minimum fee structure. 
Just my opinion, I'm sure they are good IFAs but not worth the high costs.

dunstonh

I think the part I am most unsure about is how I track things long term. How do I know on an annual basis whether my funds are performing well?

It will form part of your discussion with the IFA each year, if that is what you want to talk about.

Yes, there is a chance they are slightly more risky than my current ones. So, I could move the Scottish Widows into L&G and perhaps move them into slightly higher risk funds. 

Typically, risk differences and relative performance are normally discussed.    I would imagine that excluding adviser charge, the IFA can beat both L&G and SW in costs unless those existing plans are on heavily discounted terms.

The reduction in yield in charges on the existing plan suggest 1.0% AMC on the SW and 0.3% on L&G.

The total charges look to be around 2.25% on the J&C Vision 8 which is damned expensive.    To get that high they must be using fully managed funds (not passives) and an expensive DFM.    DFMs can range from under 0.1% to 0.5%.   In this day age, nobody should be paying over 2% pa. for charges. 

To be an IFA, you have to be whole of market and follow instructions from the client when they have investment preferences.   That could be ethical, religious, ESG or cost focused.  So, if you want them to bring the costs down then tell them you would prefer a low cost portfolio of trackers.    That would bring the fund costs down to around 0.1% to 0.25% p.a.   For context in bottom line prices, platform charges are typically in the 0.15-0.2% ballpark nowadays (there are more expensive but again, IFAs are whole of market and can place them accordingly).    So, if you have a platform charge of 0.15% and investment charges of 0.18% = 0.33%.  Add the ongoing adviser charge on top (typical range is 0.5% to 1.0%) and you have total annual charges.

InhaleMood

Beddie said:

I did ask about any reduction in fees but she said it wasn't possible.

Then say goodbye - past performance is no guarantee of future returns, as you know.
All you are doing here is funding their retirement, not yours. Both the upfront and ongoing fees are too high, but that is possibly because you are below their usual pot amount and are hitting their minimum fee structure. 
Just my opinion, I'm sure they are good IFAs but not worth the high costs.

Interesting, thanks.

InhaleMood

dunstonh said:

I think the part I am most unsure about is how I track things long term. How do I know on an annual basis whether my funds are performing well?

It will form part of your discussion with the IFA each year, if that is what you want to talk about.

Yes, there is a chance they are slightly more risky than my current ones. So, I could move the Scottish Widows into L&G and perhaps move them into slightly higher risk funds. 

Typically, risk differences and relative performance are normally discussed.    I would imagine that excluding adviser charge, the IFA can beat both L&G and SW in costs unless those existing plans are on heavily discounted terms.

The reduction in yield in charges on the existing plan suggest 1.0% AMC on the SW and 0.3% on L&G.

The total charges look to be around 2.25% on the J&C Vision 8 which is damned expensive.    To get that high they must be using fully managed funds (not passives) and an expensive DFM.    DFMs can range from under 0.1% to 0.5%.   In this day age, nobody should be paying over 2% pa. for charges. 

To be an IFA, you have to be whole of market and follow instructions from the client when they have investment preferences.   That could be ethical, religious, ESG or cost focused.  So, if you want them to bring the costs down then tell them you would prefer a low cost portfolio of trackers.    That would bring the fund costs down to around 0.1% to 0.25% p.a.   For context in bottom line prices, platform charges are typically in the 0.15-0.2% ballpark nowadays (there are more expensive but again, IFAs are whole of market and can place them accordingly).    So, if you have a platform charge of 0.15% and investment charges of 0.18% = 0.33%.  Add the ongoing adviser charge on top (typical range is 0.5% to 1.0%) and you have total annual charges.

Thanks for this. Regarding tracking things, I mean without the IFA, how would I do this on my own?

Yes, it sounded like it was fully managed. I could ask for a passive tracker fund, but then I figure I could do that myself? 
The actual fee to the IFA is 1%, the additional amounts are the other charges.

Interestingly, the IFA didn't seem to think it was worthwhile for me to go with them.

wjr4

Why are they concentrating on returns? What about providing you with a financial plan? They say they provide lifestyle financial planning but only the MD has that qualification (CFP)? They mostly seem very new financial advisers?