When my Mum died I inherited took half of her investment as they were rather than cashing them in and having to chase around to reinvest. They're run 'Wealth Managers', a reasonably well known outfit, who take an ongoing management charge of around 1.5%.
We have further money, approx £80k cash, to invest. About half is in Cash ISAs though I don't think that's relevant.
They want 5%, so approx £4000, as a fee to add our cash and invest it in their products.
Is that a reasonable/competitive charge?
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>> They're run 'Wealth Managers',
>> a reasonably well known outfit, who take an ongoing management charge of around 1.5%.
>> Is that a reasonable/competitive charge?
>>
1.5% sounds quite a lot.
Vanguard - a Which? recommended company take around 0.20%.
tinyurl.com/mrx95e6e
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Are you adding to inheritance 'pot'?
I don't think I've ever been charged to add in additional money. Your money will have to work really hard.
Is it a tracker, actively managed, blended etc?
I'm not sure what this means 'They're run 'Wealth Managers ?
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Yes, I'm adding money to the existing pot.
>> I'm not sure what this means 'They're run 'Wealth Managers ?
The word 'by' is missing.
A well known firm with a similar national profile to Vanguard etc.
I've had them visit and give advice, 3 hrs over the last couple of years, not all of which (eg about joint bank accounts on death) was accurate. Some of what was said about IHT and treatment of residential property was off beam as they forgot my partner and I are not married.
The current investments are spread over several sets of Unit Trusts. When I next see them I need to go through them one by one as I'm not convinced I've got the right spread of risk/return. At that point what they're proposals are for the £80k should be spelled out. They have mentioned something with a specific name designed to account for the latest round of CGT changes.
Last edited by: Bromptonaut on Sun 2 Jul 23 at 11:08
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I don't see what this 4k is for exactly. I've got some investments but no expert. What's the performance of the funds like?
Do you see the same person each time? Do they ask what you want to do with the money and work back from there, are you generally happy with them?
A meeting with an ifa might be handy.
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>> I don't see what this 4k is for exactly.
That's my point. Exactly.
My sister uses the same outfit and advises playing hard ball with them.
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If it were me, I'd move. It's not something I'd want to be/ have to play hardball with. It shouldn't be that hard.
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Extract from Which?
Vanguard is a Which? Recommended Provider for 2023-24, alongside AJ Bell, Freetrade and InvestEngine.
This is thanks to its high overall customer score of 73%, placing it third out of the 18 investment platforms we looked at, as well as its very low fees.
Vanguard received four stars for almost every category; while it received the full five stars for data on investment performance and three stars for information on investment opportunities.
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I've tried different financial advisors and chose to ignore them all. Had some very poor advice from a bank and the IFAs I tried seemed to want me to invest in whatever gave them their maximum commission.
I've been told a good accountanr would know the best thing to do with your money and avoid tax, legally.
I know someone who puts everything into NS&I products, as there's no £85K limit on guaranteed protection.
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A purely personal view.
Generally investment funds accept new investment on the basis that they benefit from the subsequent fee income - the initial charge of £4k seems unusual.
1.5% seems high as an annual charge - but it is not clear whether the funds are invested in active (which require management) or passive (following an index) funds.
My strong inclination, even if I was currently happy with the performance of the funds advised by my wealth manager would be to spread the risk.
Putting all funds in the care of one manager (ignoring the risk of fraud) risks your entire wealth to the investment outlook and philosophy of a single organisation. If you are at a relatively comfortable stage of life, security of investment may be of greater importance than risker greater rewards.
It is worth noting that for all their self promotion many fund managers fail to beat even simple index trackers - their real skill levels may be somewhat illusory.
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From an online article.
"Every pound that an investor pays in fees is a pound less for them to spend.
There are some portfolios where the total cost is more than 2% a year, which is the equivalent of starting a 1km race 20 metres behind the start line. It’s a hurdle just to break even.
For example, say you had a £10,000 investment which you held for 30 years:
With a 2% fee the investor would receive a net return of 3% and would end up with just over £24,270
But with a fee of just 0.5% and the same net return of 3%, that £10,000 fund would be worth around £37,450
That’s a huge difference of £13,180, which goes to show the difference fees can make to the size of your investment".
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I pay a similar ongoing fee to the one Bromp quotes. Additional investment costs about 1% if I remember rightly. This is for discretionary investment I.e. they select the investment and buy and sell. I have looked at lower cost options but they never make it very clear what I would get for my money. Any that are significantly cheaper seem to require me to select funds.
I don’t think the existing service I get is particularly good value but they have outperformed inflation for most of the nearly twenty years I have been with them. In contrast any shares I bought personally have performed poorly. All have been household names and tipped in the press at the time of investment. So the advisor outperforms me by a mile.
As for N&SI their main benefit is security. With very few exceptions they will lose money compared to inflation. For example I have Premium Bonds as a ready access account on average they will not beat inflation. Amazingly I lucked out with Index linked savings before they withdrew them. But even then, matching inflation shows up starkly how much the value of money is falling.
Anyone looking to invest their own money would also be advised to look at pensions investing but that’s a different topic in its own right.
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>> Anyone looking to invest their own money would also be advised to look at pensions
>> investing but that’s a different topic in its own right.
Would that still apply when we're both close to State Pension Age?
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Bromp I think we need to tread carefully on giving advice but the facts as I understand it are-
- even as a non earner you can contribute up to £2880 each year and the govt will automatically top up by £720, i.e 20% tax relief. This offsets fees.
- if you don’t draw it and sadly die before age 75, the fund is not part of your estate for inheritance tax and passes to your heirs free of tax. If you die after 75 it’s taxed at your heirs’ marginal rate.
Google “Can I still contribute to a pension after retirement” or similar for more details online. The whole area is potentially complex with recycling rules but my understanding is what I’ve described is not caught by these.
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>>Amazingly I lucked out with Index linked savings before they withdrew them. But even then, matching inflation shows up starkly how much the value of money is falling.
Same here, I got into the last index linked issue (1996 IIRC) which rolls over periodically and is therefore the last investment I will cash in. The maximum investment pp was £15,000.
The first 5 years was RPI+ something like 0.4%. The rollovers were on RPI + 0.01% and from the 2021 rollover it's been on CPI+0.01%. The original £15,000 was £23,404 at renewal in June and nearly £1900 of the £8,400 uplift was for the previous 12 months.
The boss has the same. My thinking is that if we have spent everything else by then, or inflation has wiped it out, we can use these to buy our last car!
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Absolutely refuse to pay 'wealth managers' 5% upfront then 1.5%/yr of your total fund?
Bwahahahahaaa......
Get an account with AJBell or IA or Vanguard (others exist) and there will be no 5% lopped off and the fees will be around 0.25% + fund cost (from ~0.1% for an index tracker to 0.8% for a more managed fund)
Wealth managers are great at creating wealth.....
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I'll post here rather than starting a new thread.
The company mentioned in the OP was St James Place.
The adviser we used has, based on my complaining as well as others, jumped ship to an outfit called True Potential and, all things being equal I'd like to move my portfolio over. The issue there is that the holdings are not in an ISA so if I sell and reinvest there's a potential CGT liability.
I took the holding in SJP as part of my Mother's estate. She died in September 2017 and I understand the start point for CGT is the probate value at that date.
Is that right in principle and does it apply to interest paying bonds as well as equities paying dividends?
SJP are sending me a CGT calculation but having spoken on the phone to a guy at the agent they've appointed I feel as though there's a village somewhere missing it's idiot. He tells me the start valuation is £x and the gain is £2200 but he can't tell me the date of £x.
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We have some money with St James' Place and we had a meeting with the local franchise holder last month, to be fair it was quite re-assuring, we're staying for now.
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With SJP you are paying for 3 or 4 things somewhere along the line.
Advice - do you need it?
Management - both in the 3rd party funds and if applicable the 'funds of funds' if there are any of those.
SJP being expensive anyway.
Platform fees
Is there an intermediary as well?
If you don't need advice there are self investor platforms via which you can invest in many many funds, usually without initial deductions, and I suspect lower fees. Maybe 'free' trading too. And you can hold in an ISA subject to your available allowances.
I use HL who are not the cheapest but much cheaper than the numbers you mention. I have a slightly cheaper deal on platform fees because I moaned when they put the fees up years ago.
TBH if you are happy with passive you could save a lot in fees with Vanguard so much that it would be difficult not to make more headway over a period of years.
That's not advice.
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Largely agree with Manatee.
You need to decide whether you want active management and advice, or are happy to go with passive. Active investment charges are 1-2%, compared with passive funds often below 0.5%.
A typical long term return of ~5% is the sort of growth assumption a pension fund would use in assessing the adequacy of its fund against future pension obligations.
There is a lot of research comparing the performance of the two approaches - the general opinion seems to be that whilst actively managed funds can do better short term, over the longer term performance differences are inconclusive.
Personally - I use tracker funds. Quite simply I have reached the stage in life when I do not want to spend time analysing markets and companies, talking to advisors, nervously looking to see whether I have won or lost, should hold or sell.
This is obviously a personal opinion - your circumstances may be different to mine. I have pensions which cover normal needs, no mortgage, no dependents etc. The likely outcome is that any savings or investments will go to meet care home fees (a depressing thought) or the kids.
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Fees on Investing Etc. - Duncan
