Low interest rates on savings
- Thread starter AnnO'Neemus
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platinumsage
HaveMyPassword123
Fund managers have no idea about your personal circumstances, they don't even know you exist, so it's up to you to invest in the right funds for your circumstances.
An IFA would know that you're self-employed, are renting out your late mother's flat, that you intend to retire in 17 years, that you recently remortgaged your home and it has 22 years left, that your wife works part time and has cerebral palsy, that you're sending your youngest kid to a private school because of their autism, and that you'd probably sack your IFA and move all your ISAs into cash if there was a stock market crash followed by a 2+ year bear market that saw your investments drop 50%.
bimble
floofy
So if you were to place a bet on UK versus Rest Of The World (as in choose a tracker fund) you might think UK is a good bet, what with everything in place for the escalating removal of workers rights and general immiseration of all those who aren’t shareholders. Am i wrong? The worse the better, as someone, probably not Lenin, said.
strung out
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The value of IFAs (in my opinion obviously) is for people with complex financial situations, or who lack the capacity to research their own fund selections. I don't think they do anything particularly worthwhile that you can't do yourself with a bit of time and effort, and that includes being able to choose appropriate funds for your particular risk appetite.
strung out
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For people with straightforward financial affairs, they don't really provide anything else that you can't just do yourself. They basically ask you what your risk appetite is and then choose the appropriate funds for that risk profile.
platinumsage
HaveMyPassword123
Restricting yourself to ~6% of the world's markets carries more risk than diversifying internationally.
Besides, much of a UK tracker would be in companies like Shell (oil from all over), BHP (mining in Australia), BAT (tobacco in the US and developing countries) etc.. to whose profits worker's rights in the UK are largely irrelevant.
Winot
I wholeheartedley agree with your viewpoint
On a basic level mine switches money between funds, and between funds and cash. He also does the research into potential new funds, and potential new products eg EIS/SEIS opportunities.
To be honest, I think we’re all saying the same thing and just have a different view as to where the line is drawn as regards to what we take as a given with respect to our own ability to make decisions taking our own circumstances into account.
That was a long sentence.
i agree with strung_out that most people’s circumstances are not actually that complicated and that the IFA likely just uses a simple risk scoring approach that lumps all those apparently complicated personal circumstances into general wide buckets. It may be, however, that using this intermediary gives people the confidence to invest more aggressively than they would do themselves, in which case it is money well spent. Just because you could do it yourself, doesn’t mean you would do it yourself.
I am less convinced by the idea that IFAs research individual fund managers any more meaningfully than read the Morningstar reports. If you invest in a Threadneedle or a Jupiter fund, they’re the ones researching the markets to decide what stocks to pick. What can your IFA add to this other other than pointing out which one has a better track record, (which isn’t very meaningful anyway over a five year horizon)?
If you want an IFA to help you choose to go for equities rather than bonds then fine, although that’s a pretty straightforward question anyway of “do you need ask this money back in the next five years?” If you think the IFA is worth 0.75% for choosing Jupiter over Threadneedle then I’m not saying you’re wrong but I am saying that I’ve never been convinced.
That was a long sentence.
i agree with strung_out that most people’s circumstances are not actually that complicated and that the IFA likely just uses a simple risk scoring approach that lumps all those apparently complicated personal circumstances into general wide buckets. It may be, however, that using this intermediary gives people the confidence to invest more aggressively than they would do themselves, in which case it is money well spent. Just because you could do it yourself, doesn’t mean you would do it yourself.
I am less convinced by the idea that IFAs research individual fund managers any more meaningfully than read the Morningstar reports. If you invest in a Threadneedle or a Jupiter fund, they’re the ones researching the markets to decide what stocks to pick. What can your IFA add to this other other than pointing out which one has a better track record, (which isn’t very meaningful anyway over a five year horizon)?
If you want an IFA to help you choose to go for equities rather than bonds then fine, although that’s a pretty straightforward question anyway of “do you need ask this money back in the next five years?” If you think the IFA is worth 0.75% for choosing Jupiter over Threadneedle then I’m not saying you’re wrong but I am saying that I’ve never been convinced.
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strung out
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I reckon I could give pretty much exactly the same advice about how to deal with those situations to create an investment strategy as an IFA would, and I'm a librarian with no financial qualifications.
Now obviously I'm not saying that you should take the advice of some anonymous librarian off the internet (I'm not completely mad), but I do think that it's actually pretty straightforward to do a bit of research and self directed learning to figure out how to deal with that kind of stuff yourself, and not pay someone tens of thousands of pounds over the lifetime of your relationship with them.
That's not to say that nobody should ever use one - as kabbes notes above, if you think the benefit of reassurance and risk management on your behalf is worth it to you, then who am I to say you shouldn't? I do think that the demystifying of investing and financial advice through financial education, without gatekeeping from investment experts or financial advisers is an important part of how poor people can become less poor though.
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Reaching out
A fund manager invests in stocks, probably on an execution only basis is. Tell them what you want, they do it.
As people mention, an IFA is more holistic. They take into account your full circumstances, risk profile, hopes and expectations and help you manage the entire spectrum of things, from mortgages, to various ISA's, pensions, life insurance Etc. They also help with tax planning.
strung out
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That's a stockbroker, not a fund manager.
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Reaching out
I would check on that before investing if I were you.
strung out
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Are you trying to tell me I'm wrong? If so, I'm not sure you know what a fund manager is - they certainly won't invest in what you tell them to. They manage a fund and are responsible for implementing that fund's investment strategy, e.g. Neil Woodford
strung out
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Ok, glad you agree - I didn't understand your comment about checking on it.
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Reaching out
Sorry for being pedantic but they really are two different things.
An early company I dealt with I think was Hargreaves Lansdown. They will buy and sell shares on a clients behalf on an execution only basis, I think, they did for me. They will also recommend a fund manager based on your requirements.
I wonder, do people just look at your attitude to risk these days or do they look at your requirements as to negative and positive investments with regards to ethics, environment Etc. anyone know?
An early company I dealt with I think was Hargreaves Lansdown. They will buy and sell shares on a clients behalf on an execution only basis, I think, they did for me. They will also recommend a fund manager based on your requirements.
I wonder, do people just look at your attitude to risk these days or do they look at your requirements as to negative and positive investments with regards to ethics, environment Etc. anyone know?
strung out
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I know they're different things, that's why I corrected you!
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Reaching out
Whats your attitude to risk? What do you want to achieve with the money?Can I just interject here and say imagine being able to save £500 a month
Any long term plans for it, expected or unexpected? Any concerns about access or strategy IE instant access or do you care where it's invested?
Umm it’s for the kids property deposits. Risk is medium high. No instant access, at least ten years. Able to save £100 a month on months that aren’t birthdays or Christmas!
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Reaching out
You have many many choices Edie. You could chose something like a monthly savings plan with a building society, possibly an ISAor could
even save into riskier like a monthly savings directly into a stocks and shares fund.
The greater the risk, the greater potential for gain.
Bottom line is I'm no IFA and perhaps you should speak to one.
even save into riskier like a monthly savings directly into a stocks and shares fund.
The greater the risk, the greater potential for gain.
Bottom line is I'm no IFA and perhaps you should speak to one.
strung out
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Hollis
bloody furious
There's an exterme school of thought you can find on 'tinternet, which says you basically only need two trackers: a passive tracker for global equities, and another for global bonds. Anything else means you think you know better than the market.
I think Warrent Buffett has said something along the lines that if he was advising his wife he'd tell her to put the money in trackers.
Hollis
bloody furious
I think depending on how much you've got and your circumstances IFAs can probably earn their money as much for sorting things out around the quagmire of tax rules, as the actual investment advice.
I have resisted getting one, because I'm financially literate or meant to be, however even I struggle when confronted with the HMRC tax rules around pensions..
I have resisted getting one, because I'm financially literate or meant to be, however even I struggle when confronted with the HMRC tax rules around pensions..
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Yes thank you but I’ve already got it in a stocks n shares ISA with Nutmeg x
nick
Pleomorphic Adenomas R us
This is what I want - Woodford took a year's growth out of my SIPP. I should have been switched on enough to spot the risk associated with his lack of liquidity - but didn't and I got burnt. Want someone to tell me their view about such risks on any of my other stuff.
I guess it is down to whether it feels a sensible price for getting a second opinion: hopefully one that is better informed that the views of Steve down the pub or (no disrespect) some randoms on a bulletin board
Thanks all
FWIW I will have an initial chat with the bloke charging 0.75% (being well aware of the impact of that % on a chunky portfolio over a decent time span)
+ ve: he knows the family - including some non-vanilla circumstances
+ve : track record . Nice bloke
-ve: he's in Hampshire & I'm in London (but Zoom)
-ve: he is my age or a little older, so if it's him to look after me I need succession planning
Also got an initial call with some fixed fees outfit based in the City next week. Let's see what they offer in comparison
Talking of percentage fees - Mrs Nick continues to use St James Place for pension because that it what her company used for pension contributions a while ago. Their percentages are outrageous. But she is the kind of person who has absolutely zero interest in managing personal money - so paying them a fortune is better than leaving it in a current account - and they do provide a nice biscuit and coffee when I drag her in there for the odd review meeting + sales pitch
nick
Pleomorphic Adenomas R us
Heard good things about nutmeg
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Reaching out
I've made excellent returns on some dabbling in stocks many years ago. I'm also useless and thoughtless with money. Consequently I've been very irresponsible, thoughtless and short sighted with regards to my own financial planning and responsibilities. I've never considered things like life insurance or critical illness cover as I could never afford to.
Well I dunno if this makes sense to you (I don’t understand the difference) but my simple return is 21.15% and my time-weighted is 16.07%.
My social responsibility score is ‘high’.
And this is what it costs me. (Sorry can’t seem to find the name of the actual fund
)
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