St James's Place - HELP!!

hedger

I am very very worried (like millions Im sure) about the recent collapse of the markets. I made a few pound (£220K) from property a couple of years ago and invested in May 2006 through St Jamess Place into
ISAs - £14,000
Investment Bond (made up of SJP/GAM Managed, SJP THSP Managed and SJP Invesco Perpetual managed) - £160,000
Unit Trust Feeder (UK & General Progressive / UK High Income / Recovery) - £46,000

I have taken a monthly income from the Bond. The investments were going well until recently and have now lost any profit made (ive £210,000 left) so any income I now take is coming straight out of my own money.
Im 2 years into this investment and the doom merchants say its only going one way - further down. Should I take the 3% penalty and pull the lot out and put it a guaranteed interest rate account or should I stick in there?
this is every penny I have!!!

ianmr65

I'd find an Independant financial adviser- one that you pay money to. Who has a good track record, is an accountant, is realtively local and won't try to sell you anything. Expect to pay up to £100 - £500 per hour for his time.

Also do you're own research.

oh and Good Luck!!

hedger

The financial advisor ive been using (who seems to know what hes talking about) is a St Jamess Place partner so obviously only pushes their products - thats what Im worried about

ianmr65

All financial advisers sound plausible, and even convincing or they wouldn't last long.

That's why you need to be speaking to someone who's independant. IE does not work on commission, or even part commision. That's why he will expect to be paid for his time. The reason for choosing someone who's an accountant, is that he may need to look at your entire financial situation, he will be quailified, and he will be best placed to judge what to recommend for your own specific needs.

hedger

Yeah think ur right Ian.
Cheers!

notis7

hedger wrote: »

I am very very worried (like millions Im sure) about the recent collapse of the markets. I made a few pound (£220K) from property a couple of years ago and invested in May 2006 through St Jamess Place into
ISAs - £14,000
Investment Bond (made up of SJP/GAM Managed, SJP THSP Managed and SJP Invesco Perpetual managed) - £160,000
Unit Trust Feeder (UK & General Progressive / UK High Income / Recovery) - £46,000

I have taken a monthly income from the Bond. The investments were going well until recently and have now lost any profit made (ive £210,000 left) so any income I now take is coming straight out of my own money.
Im 2 years into this investment and the doom merchants say its only going one way - further down. Should I take the 3% penalty and pull the lot out and put it a guaranteed interest rate account or should I stick in there?
this is every penny I have!!!

I would speak to St James Place first......private banking institutions tend to know more

hedger

at the time I was assured that St Jamess Place would monitor the markets and switch my money around in times likes this - I dont see much evidence of this. Still Im only 2 years in and they do say its a mid-long term investment. Its just a very worrying time for me.....

dunstonh

at the time I was assured that St Jamess Place would monitor the markets and switch my money around in times likes this - I dont see much evidence of this. Still Im only 2 years in and they do say its a mid-long term investment. Its just a very worrying time for me.....

St James Place are a complete waste of time for you. This is reflected in the fund choice. With that amount you would really be looking for a minimum of 8-10 funds.

Tied reps have a lower standard of investment advice. Whereas IFAs should portfolio plan and recommend funds, tied agents document the fund choice as "you chose". This is because they nearly all cannot portfolio plan. Indeed, that is reflected in your "portfolio" which isnt really a portfolio but a handful of funds. Tied agents are also not meant to recommend switches of products of funds with most companies and most tied agents take full upfront commission so there is nothing to pay for ongoing servicing.

However, you do need to understand that investing is long term and you average out the ups and downs. We are back to 2005 levels on the markets so you would expect to be down at this time. That said, there are funds to suit all risk profiles and it is possible that the level of risk of these investments is above your risk profile.

I'd find an Independant financial adviser- one that you pay money to. Who has a good track record, is an accountant

I would disagree with that. Its hard enough to be an IFA or accountant by itself without trying to juggle the two roles together. I fear you would end up with a Jack of all trades, master of none. Many IFAs work in conjunction with accountants and solicitors and we all stick to our own areas. That is probably the better way.

EdInvestor

hedger wrote: »

I have taken a monthly income from the Bond. The investments were going well until recently and have now lost any profit made (ive £210,000 left) so any income I now take is coming straight out of my own money.

This is the danger of the investment bond structure: much of the actual dividend income on the underlying investments gets eaten up by charges on both the funds and the bond, so that the punter's "income" actually comes out his capital ( that's why it's tax free, it's not income at all.)

So as soon as the market turns down, the capital starts getting depleted quite rapidly.

this is every penny I have!!!

And if this is the way you feel about it, then 100% of the money should not have been invested in the stockmarket - a hefty chunk should have been left in cash, so you could draw interest.

However, I hesitate to suggest anyone pulls money out of the market right now - it's typical "mug punter" behaviour to buy high and sell low.Much better to wait for recovery.

And it would not be a good idea to incur the penalty by cashing in the bond.But it would be wise to defer drawing income from the bond for now,

What I would do is cash around 6 months' income (say 6k) from the unit trust portfolio and use that to live on for the next 6 months to avoid depleting the capital in the bond. Then take a look at what's happening.

I would also call in the SJP man and get a full reviiew of fund choices in the bond with the idea of have a larger portfolio and a wider spread of risk but without cutting returns too much.

Then post what he says here for a second opinion.

dunstonh

This is the danger of the investment bond structure: much of the actual dividend income on the underlying investments gets eaten up by charges on both the funds and the bond, so that the punter's "income" actually comes out his capital ( that's why it's tax free, it's not income at all.)

Which is not necessarily the case with the better bonds. Indeed, the tax advantages of doing it this way can be more beneficial in the long run.

So as soon as the market turns down, the capital starts getting depleted quite rapidly.

This is incorrect.

Say you are in a fund with a yield of 5% and the 5% is reinvested (as it usually would be in most investment bonds) and then you draw 5% out then you are back where you are. Compare that to the unit trust version of the same fund with a yield of 5% which is paid direct to you. Whats the difference? Nothing apart from taxation as it ends up with the same outcome. Both unit trust and life fund would be subject to fluctuations.

What I would do is cash around 6 months' income (say 6k) from the unit trust portfolio and use that to live on for the next 6 months to avoid depleting the capital in the bond. Then take a look at what's happening.

There is nothing on this thread which tells us about the tax position of the poster and making such a recommendation could create a tax liaiblity higher. To make such recommendations without knowing the facts is not fair on the OP and other posters reading.

I would also call in the SJP man and get a full reviiew of fund choices in the bond with the idea of have a larger portfolio and a wider spread of risk but without cutting returns too much.

I see no point on carrying on with a tied agent.

ianmr65

dunstonh wrote: »

Many IFAs work in conjunction with accountants and solicitors and we all stick to our own areas. That is probably the better way.

Well, i agree it would be a struggle for an IFA to become an accountant.
7 year cima, getting chartered and all that. But many accountants and indeed lawyers are qualified to give financial advice and do.

And with all due respect to your chosen proffession, taking commissons, on products sold (and i know you make full disclousure) somewhat stretches the definition of the word 'independant'.