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    • dc learning
    • By dc learning 11th May 18, 12:40 PM
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    dc learning
    Management & Advice for "legacy" investments when an IFA joins SJP?
    • #1
    • 11th May 18, 12:40 PM
    Management & Advice for "legacy" investments when an IFA joins SJP? 11th May 18 at 12:40 PM
    Hello - would appreciate thoughts and perspectives on this subject please and assessment outlined below.

    Our IFA has recently become a partner with SJP and I'm trying to understand and assess the longer term implications for ongoing management and advice for our funds which are still held outside of SJP. My assessment and understanding of this new situation is as follows:

    When joining SJP - the (ex-IFA) SJP Partner is no longer regulated to offer existing clients advice or recommendations on non-SJP products

    As part of the new relationships arrangement - our 'legacy funds' have been transferred to a company called Policy Services for on-going administration management while the SJP Partner is still our client facing 'advisor'

    All our investments still include trail commissions - and it is my understanding/assumption that this is now shared between Policy Services and SJP Partner for on-going client relationships. Policy Services provide our SJP partner with updated valuation reports for review conversations.

    My understanding/assumption is that trail commissions are payments for on-going portfolio reviews and advice/recommendations that are in best interests of the client
    It seems to me that when an IFA joins SJP - clients like us are put into what feels like a very ambiguous situation, for example:

    - Our advisor is no longer able to give any specific advice or recommendations on our portfolio
    - There is no direct contact between us and Policy Services
    - Our default position is to continue to have advisor reviews based on Policy Services valuation reports stating past/current value of investments - while our advisor is effectively constrained and not able to make/suggest any changes should they be appropriate now or in the future
    - The on-going charge to investments for trail commission continues - yet there is now a perceived/real reduction in client service under these new relationships
    - This is the new status quo arrangement - indefinitely - unless we make appropriate interventions
    Am guessing there may be others out there in a similar situation.

    Would appreciate any observations / challenges / suggestions on the above.
Page 2
    • dc learning
    • By dc learning 14th May 18, 9:30 PM
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    dc learning
    Having looked over KIIDs I've estimated charges ranging between 0.66% and maybe a couple of funds approaching 2%. For my own estimating I assumed worst case 2.2% including management fees, commissions/advisor charges and transactional costs.

    There is some complication in determining overall performance - as there have been fund withdrawals over the years to fund various things/events/children etc - so I've calculated performance (maybe simplistically) at two levels (1) original investment and latest valuation and (2) original versus latest valuation (including withdrawals within latest value).Recognise it may not make logical sense to do (2) but it seemed interesting at the time.

    Have also calculated compounded average growth rate at individual fund level (assuming my excel formula was correct) as well as time-horizon level.

    There have only been withdrawals from individual funds since their inception - no additional moneys added to an already existing fund over the years, just new fund additions.

    At a portfolio level over the entire horizon I estimate the following:

    Total Portfolio analysis
    - grown by 79% (excluding withdrawals - latest portfolio value as a % of original investment)
    - grown by 99% ( if earlier withdrawals were added to the latest valuation)

    CAGR Analysis over time horizons
    1997 funds - 6.2%
    1999 funds - 8.1% (driven by the 'star performer' Jupiter Smaller companies)
    2004 fund - 5.7% (the Fidelity multi-asset is this single 2004 fund (but I listed it above as 1999)
    2010 funds - 3.7%

    At individual fund level CAGR ranges from 1.5% to 11.8% - which highlighted some interesting insights for me (assuming my logic is on track) - for example:

    Jupiter UK Smaller companies has CAGR 11.8% over 18 years ( admittedly it stated from a relatively low initial value ) and as you can see above - it has grown to now represent 12% of total portfolio value. This is a +9% change.

    It was this analysis that prompted me to consider an holistic review and if there was opportunity for improvement and where, cost analysis and so on.

    Can share this analysis if you think it may trigger further views/perspective.
    Last edited by dc learning; 15-05-2018 at 8:28 PM.
    • dc learning
    • By dc learning 14th May 18, 9:41 PM
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    dc learning
    As you don't need the portfolio for retirement income you have some freedom to take more risk than most....or you could look at it form the opposite perspective and say you have the luxury of not needing to take as much risk as most people. Right now you are in the first situation.
    Had come to similar conclusion - and still working how to resolve it.


    I'm at the simplicity extreme as I am convinced it gives me the best change of a good return and with 24 funds in some pretty focused markets you are at the other extreme. Maybe there's a happy medium for you to find.
    Am heading in a similar direction for a 'complementary DIY portfolio' - and have already open up a couple of VLS funds - but am thinking a blend of active/passive which is taxing brain/thinking to get right mix.

    Thanks
    • bostonerimus
    • By bostonerimus 14th May 18, 10:06 PM
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    bostonerimus

    Am heading in a similar direction for a 'complementary DIY portfolio' - and have already open up a couple of VLS funds - but am thinking a blend of active/passive which is taxing brain/thinking to get right mix.

    Thanks
    Originally posted by dc learning
    VLSxxx is a pretty radical departure from your current style. I would not be in a rush to buy more funds. I think you first need to do a good spring clean of what you already have and take a good look at the Life Bonds' performance. Then come up with a plan to rationalize what you have; get rid of overlap and get it down to a manageable number of funds. Some trackers might be in there, but I'm not sure you need multi-asset funds....what size of portfolio are we talking about here.... 100k, or 1M?
    Misanthrope in search of similar for mutual loathing
    • dc learning
    • By dc learning 14th May 18, 10:11 PM
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    dc learning
    around 100k 'complementary' fund
    • bostonerimus
    • By bostonerimus 15th May 18, 12:12 AM
    • 2,251 Posts
    • 1,553 Thanks
    bostonerimus
    around 100k 'complementary' fund
    Originally posted by dc learning
    So in total how much will you have invested and how many funds? I assume the 100k in the complimentary portfolio is in addition to what you already have in those 24 funds you've already mentioned.
    Misanthrope in search of similar for mutual loathing
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