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  • FIRST POST
    • seb2020
    • By seb2020 13th Jun 19, 4:00 PM
    • 17Posts
    • 1Thanks
    seb2020
    Sipp - To use or not to use an IFA
    • #1
    • 13th Jun 19, 4:00 PM
    Sipp - To use or not to use an IFA 13th Jun 19 at 4:00 PM
    Is there any real benefit (financial or otherwise) in using a regulated Independent Financial Advisor or Financial Planner for the purposes of setting up and running a Sipp investment portfolio?

    What are your views on going down the DIY route (if you have the confidence to do so) and use a number of passive diversified tracker funds and managing the Sipp yourself?

    What are your reasons for:-

    1/ Not using an Independent Financial Advisor or Financial Planner for the purpose of choosing a Sipp funds portfolio.

    2/ Using an Independent Financial Advisor or Financial Planner to choose the Sipp funds portfolio.
Page 1
    • Aegis
    • By Aegis 13th Jun 19, 4:05 PM
    • 5,112 Posts
    • 3,449 Thanks
    Aegis
    • #2
    • 13th Jun 19, 4:05 PM
    • #2
    • 13th Jun 19, 4:05 PM
    If you're happy doing it yourself, including doing the research and monitoring the outcomes, then DIY is fine. Once it gets to a point where it would be catastrophic to lose or you are no longer comfortable looking after it, consider an adviser, if only to ensure discipline with the investment strategy.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • dunstonh
    • By dunstonh 13th Jun 19, 4:18 PM
    • 98,597 Posts
    • 67,050 Thanks
    dunstonh
    • #3
    • 13th Jun 19, 4:18 PM
    • #3
    • 13th Jun 19, 4:18 PM
    Is there any real benefit (financial or otherwise) in using a regulated Independent Financial Advisor or Financial Planner for the purposes of setting up and running a Sipp investment portfolio?
    Your cholce should either be IFA or DIY. Forget any option that is an FA.

    What are your views on going down the DIY route (if you have the confidence to do so) and use a number of passive diversified tracker funds and managing the Sipp yourself?
    Some people do it and are very capable.
    Some people do it and make a right mess of it.

    You should be focusing on your reasons. Not those of someone else. If you are up for DIY and can do it well then you should pretty much know that and not need to ask here.

    Some use IFAs as they dont have the knowledge. Some do it as they prefer to allocate their time on other things.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Albermarle
    • By Albermarle 13th Jun 19, 4:21 PM
    • 1,564 Posts
    • 997 Thanks
    Albermarle
    • #4
    • 13th Jun 19, 4:21 PM
    • #4
    • 13th Jun 19, 4:21 PM
    I expect this question will set off the usual /daily argument about IFA's
    • OldMusicGuy
    • By OldMusicGuy 13th Jun 19, 4:38 PM
    • 1,080 Posts
    • 2,262 Thanks
    OldMusicGuy
    • #5
    • 13th Jun 19, 4:38 PM
    • #5
    • 13th Jun 19, 4:38 PM
    Very expensive for no discernible benefit IMO. I manage a large SIPP fund myself and am achieving my objectives using a small number of multi-asset funds. I simply cannot abide the thought of a percentage of that SIPP being used to fund something I can do myself. It would amount to a huge amount of money over 30 years.

    It's taken me about 5 years to build the confidence and knowledge to do this. The main challenge IMO is actually setting clear goals and understanding your attitude to risk and investing.

    The only benefits IMO are if you can't be bothered to do it yourself or you have some really complicated circumstances that really do need specialist advice.
    • seb2020
    • By seb2020 13th Jun 19, 4:54 PM
    • 17 Posts
    • 1 Thanks
    seb2020
    • #6
    • 13th Jun 19, 4:54 PM
    • #6
    • 13th Jun 19, 4:54 PM
    OldMusicGuy - Would you mind sharing which "...small number of multi-asset funds..." you chose and why you chose them?
    • OldMusicGuy
    • By OldMusicGuy 13th Jun 19, 5:20 PM
    • 1,080 Posts
    • 2,262 Thanks
    OldMusicGuy
    • #7
    • 13th Jun 19, 5:20 PM
    • #7
    • 13th Jun 19, 5:20 PM
    OldMusicGuy - Would you mind sharing which "...small number of multi-asset funds..." you chose and why you chose them?
    Originally posted by seb2020
    I prefer not to reveal my fund choices in detail. Two reasons:

    - Classic newbie mistake is to think the answer is to use someone else's fund ideas. You get sucked into chasing funds around based on someone else's posts/ideas. That's what I used to do. You need to define your own clear objectives and choose the funds accordingly based on your reading.
    - IMO there is too much willy waving on forums about fund choices. I don't need a bunch of comments on my fund choices. I have made them, they are long term choices, I don't need anyone else to comment on them.

    What I will say is that they come from some (but not necessarily all) of the commonly mentioned multi-asset funds from BlackRock, HSBC, L&G and Vanguard. The investments are spread to give good global diversification and I am holding about a 50/50 equity/bond split (based on analysis in McClung's "Living off your money" book). Also, they are only part of my portfolio (which includes a lot of cash and a bond ladder).

    All of this suits my investment objectives which I am pretty certain won't be the same as yours
    • Albermarle
    • By Albermarle 13th Jun 19, 5:31 PM
    • 1,564 Posts
    • 997 Thanks
    Albermarle
    • #8
    • 13th Jun 19, 5:31 PM
    • #8
    • 13th Jun 19, 5:31 PM
    The commonly mentioned multi asset funds are all quite similar to each other , at the same sort of risk/%equity level . There are some differences ( country weighting for example ) but it is not the same as comparing them with actively managed funds or investment trusts as an example .
    Personally I would not stress too much about which provider , more about picking the appropriate risk level for your personal circumstances /preference.
    • BLB53
    • By BLB53 13th Jun 19, 6:12 PM
    • 1,548 Posts
    • 1,402 Thanks
    BLB53
    • #9
    • 13th Jun 19, 6:12 PM
    • #9
    • 13th Jun 19, 6:12 PM
    If you want to consider DIY with a simple multi asset fund such as Vanguard Lifestrategy or HSBC Global Strategy, it could save you a lot in adviser fees. I suggest get hold of 'DIY Pensions' book by J Edwards which should provide an overview and help you to decide whether you can run your own SIPP.
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • atush
    • By atush 13th Jun 19, 6:17 PM
    • 17,955 Posts
    • 11,400 Thanks
    atush
    How much do you intend to invest?

    If it is not much, i'd DIY ito a Global Tracker or Multi asset fund along the lines of Vanguard series. Until your pot is north of 20K, not much reason to pay for an iFA.

    Stay away from all UK funds and singe shares until you learn about investing.
    • seb2020
    • By seb2020 13th Jun 19, 6:26 PM
    • 17 Posts
    • 1 Thanks
    seb2020
    Some good responses so far - Please continue to keep them coming.
    • dmelife
    • By dmelife 13th Jun 19, 6:47 PM
    • 108 Posts
    • 96 Thanks
    dmelife
    It depends on whether you believe the IFA can cover their fees through improved performance and value for money services, versus whatever portfolio and strategy you cobble together.

    There are a lot of people here that think that all an IFA does is choose investments. Most would be able to add value through a variety of means and may be able to save you money compared to DIY investing.

    If you don’t think an experienced IFA can cover 0.5% per annum then you must also believe that everyone on this forum is achieving the same return as each other as it’s impossible to outperform the market.
    • barnstar2077
    • By barnstar2077 13th Jun 19, 7:14 PM
    • 221 Posts
    • 359 Thanks
    barnstar2077
    I decided to DIY based on the fact that my financial situation is not at all complicated. If I was earning a lot of money, had several pensions and other savings / investments and a wife and children then I would definitely seek the advice of an IFA. I don't personally think they would be able to increase my money through choosing different funds without increasing my risk, and I can do that myself if I wish to, so I would instead employ their services to find the most tax efficient way of using my money and leaving as much tax free to my family in the event that I should go first.
    If you don't have your own plan, then you're following someone else's!
    • dmelife
    • By dmelife 13th Jun 19, 7:19 PM
    • 108 Posts
    • 96 Thanks
    dmelife
    So you have managed to pick the best performing funds globally for your risk strategy?!
    • davidwatts
    • By davidwatts 13th Jun 19, 7:28 PM
    • 270 Posts
    • 200 Thanks
    davidwatts
    How much do you intend to invest?

    If it is not much, i'd DIY ito a Global Tracker or Multi asset fund along the lines of Vanguard series. Until your pot is north of 20K, not much reason to pay for an iFA.

    Stay away from all UK funds and singe shares until you learn about investing.
    Originally posted by atush
    Do you mean £20k or have you missed a zero off?
    • lisyloo
    • By lisyloo 13th Jun 19, 8:18 PM
    • 25,441 Posts
    • 13,643 Thanks
    lisyloo
    Is there any real benefit (financial or otherwise) in using a regulated Independent Financial Advisor or Financial Planner for the purposes of setting up and running a Sipp investment portfolio?

    What are your views on going down the DIY route (if you have the confidence to do so) and use a number of passive diversified tracker funds and managing the Sipp yourself?

    What are your reasons for:-

    1/ Not using an Independent Financial Advisor or Financial Planner for the purpose of choosing a Sipp funds portfolio.

    2/ Using an Independent Financial Advisor or Financial Planner to choose the Sipp funds portfolio.
    Originally posted by seb2020
    2) My IFA has experience of the platform and gets me institutional rates. They advise me quarterly on the asset allocation/investmwnt funds. They have access to a much greater pool of knowledge than me on assets, investment funds, even fund managers, how to globally diversify. For this they charge me 0.5%. Oh and also keeping up to date on any pension legislation changes.

    If individuals think they have that level of skill then that is up to them, but there’s quite a lot there and it’s not my hobby.

    I think most people are taking a risk trying to replicate the work of a professional IfA who in turn would be relying on other departments.
    • uk03878
    • By uk03878 14th Jun 19, 6:41 AM
    • 131 Posts
    • 102 Thanks
    uk03878

    I am due to retire next year and plan on using an IFA who has a number of portfolios
    I have been tracking one of the balanced portfolios this year, the chart shows it against the example in John Edwards book as well as the Vanguard Lifestrategy 60:40
    I like the smoothness of the IFA portfolio - this doesn't really show the fact that the IFA balanced portfolio can change maybe twice a year (this portfolio started to be used in Jan 2019 so history doesnt really make any sense - but its good for reference)
    Last edited by uk03878; 14-06-2019 at 6:49 AM.
    • beamyup
    • By beamyup 14th Jun 19, 6:55 AM
    • 146 Posts
    • 43 Thanks
    beamyup
    I have been tracking one of the balanced portfolios this year, the chart shows it against the example in John Edwards book as well as the Vanguard Lifestrategy 60:40
    Originally posted by uk03878
    Those 3 portfolios are tracking really closely.

    If you went with Vanguard on a cheap SIPP platform, with a e.g. £500k portfolio you should be paying <0.4% in fees/charges in total

    With your IFA portfolio, what is total % in charges? (IFA+Platform+fund+dealing)?

    If you plot out the effect of that difference in charges over e.g. 30 years (or whatever period suits you) what is the overall cost to you?
    • lisyloo
    • By lisyloo 14th Jun 19, 7:00 AM
    • 25,441 Posts
    • 13,643 Thanks
    lisyloo
    It depends on whether you believe the IFA can cover their fees through improved performance and value for money services, versus whatever portfolio and strategy you cobble together.
    Originally posted by dmelife
    Itís also about making it less risky I.e. covering their fees (and some) in a dip/crash.
    Iíd expect my globally diversified portfolio to be cushioned from say a fall in the FTSE or the £.
    Yes sure you can do that yourself (if you know all the risks of all the regions of the world) but can you do it as well as an individual with recourse to much wider resources,

    So for me itís not just can it increase by more than 0.5% but will I be sustanstially better off in negative territory.

    There are a lot of people here that think that all an IFA does is choose investments. Most would be able to add value through a variety of means and may be able to save you money compared to DIY investing.
    One example is institutional rates.
    A second example is a access to cheaper platforms. My IFA uses Novia and I donít think thatís one that is available to indivduals.
    The self investment platforms are more expensive.
    • lisyloo
    • By lisyloo 14th Jun 19, 7:07 AM
    • 25,441 Posts
    • 13,643 Thanks
    lisyloo
    With your IFA portfolio, what is total % in charges? (IFA+Platform+fund+dealing)?
    Originally posted by beamyup
    Mine is approx 1.44% but that includes all ongoing advice required about anything.
    I say approx because funds have different %s so each switch could alter the figure slightly.

    How much time would you expect to spend as an individual managing a self invested portfolio? Including researching funds, assets etc.

    How much time in spent gaining the initial knowledge.

    This isn’t my bag, I don’t want to take the risk and I don’t want to spend my time doing it but it would be interesting to see the numbers.

    And what happens if you are otherwise engaged (I’ll, v.busy, dealing with death etc) and things happen in the market? Is this a risk?
    Last edited by lisyloo; 14-06-2019 at 7:10 AM.
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