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Worth noting you don’t even need to do self assessment if you’re in the 40% tax band. You can just write a letter to HMRC with a copy of the contribution receipt from your provider. E: to claim the additional tax relief
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Sep 16, 2020 22:57
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I'm trying to help my mum with her finances and I'm a bit concerned about the cost of the financial advice she's getting. She has about 200,000 to invest to supplement her pension (from investments inherited from her mother which she's liquidated). My Dad (they're divorced, hence managing money separately) set her up with a financial advisor from a company called "true potential wealth management". The plan that they've suggested to her is a cautious investment plan investing in a mixture of true potential's funds, targeting a growth of 4.6% (I'm not sure if this is the target before or after their fees etc). The fees they want to charge are: 5000 pounds up front to set everything up (!! this seems huge to me) 0.6% ongoing fees for the financial advice/management of her portfolio the accounts they're opening for her have an ongoing 0.4% fee the charges for the funds they're investing in range from 0.6% to 1.2%. It seems like the ongoing charges will be 1,200 to the financial advisor and 2,500 to all the accounts and funds - she's trying to get an income of 4800 a year out of this money and the advisor claims the plan will achieve that without reducing the principal. My Dad is very keen for her to take this since it means she won't have to manage the money herself and he can stop being involved, I think this sounds extremely expensive for a "cautious" investment profile. Does anyone have experience with financial advisor costs, do these sound reasonable?
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Sep 21, 2020 19:13
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Bizarro Buddha posted:I'm trying to help my mum with her finances and I'm a bit concerned about the cost of the financial advice she's getting. She has about 200,000 to invest to supplement her pension (from investments inherited from her mother which she's liquidated). My Dad (they're divorced, hence managing money separately) set her up with a financial advisor from a company called "true potential wealth management". Overall summary: they sound like a bunch of scam artists. I've just done a huge amount of reading since mid-July on investing and pensions. There's a crippling amount of mis-selling in the UK market. Before we go too far: in terms of the figures you've mentioned, is the target income of £4,800 per year inflation adjusted over time? If not, over 12 years of 2.5% inflation her actual income will have dropped by a quarter. The same question for the principal. If it's not keeping up with inflation it will drop by a quarter every 12 years (with inflation at 2.5% a year). The fund costs seem extortionate. As an example, here is one fund you may have heard people mention: https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc This charges 0.23%. That's the benchmark for costs you should be looking at. Costs add up very quickly. The difference between a 0.2% charge and a 1.2% charge would be an extra £2,000 a year of income for your mother. Do you have a list of funds they plan to invest in? Your dad's instincts may be in the right place however; if they're separated he probably won't want to be managing your mother's money. That said, there are many other options. Aertuun fucked around with this message at 19:50 on Sep 21, 2020 |
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Sep 21, 2020 19:46
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Those fees are incredibly outrageous and from what you've said they are ripping her off very badly.
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Sep 21, 2020 21:08
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I'm glad to hear other people think the fees are outrageous. I was also suggesting to her that she do something like get an account with vanguard and put the bulk of her money in one of the "targeted retirement" funds. That would mean she's paying 0.15% for the account and 0.24% for the fund and it should be at least counteracting inflation so she has stability. I wasn't present in the meeting (I live in Canada and they live in the UK) so I've been decoding the letter the advisor gave her with the offer and talking to her about it. I assume it should be inflation adjusted over time because the letter says "You have indicated that you wish to receive an income of £4,800 from 2020 to 2050. In order to generate your financial plan we agreed an inflation rate of 2.00%." There's a graph with the projection of the principle over time very slowly increasing, I assume it's in 2020 currency but it doesn't say. This is the fund allocation with their management costs: pre:Fund Investment (%) On-going Charge (%) On-going Charge (£) True Potential Close Brothers Cautious Acc 16.00% 0.84% £275.52 True Potential UBS Cautious 16.00% 0.58% £190.24 True Potential 7IM Cautious Acc 15.00% 0.72% £221.40 True Potential Allianz RiskMaster Cautious 15.00% 0.89% £273.68 True Potential Cautious 14.75% 0.58% £175.38 True Potential SEI Cautious Inc 14.25% 0.99% £289.20 True Potential Schroders Cautious Acc 9.00% 1.21% £223.25
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Sep 21, 2020 21:15
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Those are all extremely high fees. Idk if she would be better off investing herself, just using her bank or buying an annuity but going with these guys definitely isn't the right choice. If you want to go the DIY route you can use vanguard or fidelity, both are super easy and cheap. I would say you should work out if anyone is going to get really mad at you if the investments lose value before you get too involved though - the one service these guys will do is be there to be blamed (they'll deflect it, suggest portfolio changes and charge more fees for them)
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Sep 21, 2020 21:53
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So the overall cost for all those funds is 0.8% annually (once you average out the percentages of the different funds). That's a lot. My most recent reading was by an author who did some very interesting research and, helpfully, covers exactly what your mother is trying to do. https://www.amazon.co.uk/gp/product/0997403403/ref=ppx_yo_dt_b_asin_title_o03_s00?ie=UTF8&psc=1 I was put onto it by Monevator, a UK site which has quite a wealth of interesting articles: https://monevator.com/review-living-off-your-money-by-michael-mcclung/ The book itself is quite... dense... but that's because it researches a wide range of different retirement options, allocations, methods etc. I've included the links so that, if you want to delve into the subject more yourself, you can see where I'm coming from. Disclaimer: There's lots of different ways of going about this. This is one way. FWIW this is the way I'd approach it. We're going to approach this from the perspective of being very conservative about both income and what the world economy/market might do. Your target income rate of 2.4% above inflation is very, very conservative (this is good). The main aim seems to be protecting the principal above inflation. So, one way you could go about this: * Split the money between equity index funds and bond funds. The bond funds should be conservative and diversified, and hold their value while getting (quite mediocre) growth. The equity index funds should also be conservative and diversified, but by their nature (should) provide decent growth. * You will "withdraw" the income money each year, at the start of the year. Sell bond funds to the correct amount (accounting for inflation). Increase the withdrawal amount every year by inflation. * There's no need to rebalance equities and bonds each year. What you want to do is "harvest" the equities whenever they go 20% over their initial amount (accounting for inflation). When they go over this figure, sell back down to their initial amount (accounting for inflation) and transfer the proceeds to your safe bond funds. You can check this once a year, or half year if you fancy it. Given the... febrile... nature of the world markets, you might want to wait until spring/early summer next year to get this going. This will be after Brexit, after the US election, etc. A 55% equity, 45% bond split is a good starting point. Your bond funds are your buffer that you eat from. The equity funds generate the growth that periodically gets harvested into the bond funds. A good buffer stops you eating the equities that generate the growth. But too much buffer and your equity funds can't generate the growth to replenish the buffer. Looking at a Bad Scenario: 2.5% inflation -0.5% Bond Growth/year (after inflation) 2% Equity Growth/year (after inflation) After 35 years you might have £231,033 in equities left over. Which seems "alright" until you realise you should have £463,064 once inflation is taken into account. I dread to think what your True Potential funds would look like. Looking at a still quite bad scenario: 2.5% inflation 0% Bond Growth/year (after inflation) 3% Equity Growth/year (after inflation) After 35 years you might have £350,183 in equities and bonds left over. Still not great. Why does the above not fully protect the principal? In both cases we're dealing with circumstances where the investments can't keep up with the amount of income we NEED to withdraw each year. On the plus side, your mother has always kept her inflation-adjusted income. Look at the above figures in context however. The Vanguard Global Bond Fund has given 3.61% annualised growth over the past ten years. The Vanguard Developed World (ex UK) Equity Index fund has annualised 14.88% growth over the past five years. Neither of these are top performers. However we can't rely on that continuing. Prepare for the worst. With slightly better equity performance: 2.5% inflation 0% Bond Growth/year (after inflation) 6% Equity Growth/year (after inflation) After 35 years you might have £625,396 in equities and bonds. Big profit! And this is still well below how equities have performed over the past decades. But a bad run of equities can very well happen. Reading through the above: I'm deliberately painting a doom and gloom scenario. I've also assumed protecting your mother's income is more important than protecting the principal. Choosing the actual bond fund and equity funds is another discussion. Aertuun fucked around with this message at 23:03 on Sep 21, 2020 |
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Sep 21, 2020 22:42
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pointsofdata posted:Those are all extremely high fees. Idk if she would be better off investing herself, just using her bank or buying an annuity but going with these guys definitely isn't the right choice. Unfortunately savings accounts in the UK are currently all negative growth once you take inflation into account. Buying an annuity would give a guaranteed income but ALL the principal would be gone.
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Sep 21, 2020 23:07
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Thanks for the very detailed response, Aertuun. I'll talk to my parents about implementing something like this, though I'll have to get over the hurdle of selecting the funds and convincing them they don't need to hire someone to watch over it. That doom and gloom scenario is pretty heartening in terms of keeping her income enough even if the principal shrinks. The setup you're describing sounds like what I understand the Vanguard Targeted Retirement funds to be doing under the hood. Using something like that would mean she doesn't need to do the balancing over time herself. Are there any big issues with those funds, or do you know of any other similar products? In researching what to do with my own money, I've seen a site called Canadian Couch Potato talk about ETFs which are set up to do this kind of balancing recommended as well. Alternatively, can anyone recommend a way to find a financial advisor who can help implement a strategy like this without ripping her off, or is that just the nature of financial advisors?
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Sep 22, 2020 04:12
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Bizarro Buddha posted:Alternatively, can anyone recommend a way to find a financial advisor who can help implement a strategy like this without ripping her off, or is that just the nature of financial advisors? vouchedfor.co.uk is a good place to look as the reviews are verified clients. Against my better judgement, I'll put my head above the parapet: those funds are not expensive for what they are. Calling an actively managed DFM service expensive because it's more expensive than an index tracker is not particularly additive. As an actual financial adviser, my observations - before anybody calls for my summary execution - would be:
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Sep 22, 2020 10:23
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I think 0.6% being reasonable for a financial advisor and the active funds having reasonable expense ratios is kind of beside the point. If you had an advisor who was actually going to help you work out what you actually want in a way that fits your circumstances then maybe, but finding one where that's the case seems harder than just working it out yourself. Once the advisor is suggesting their pricey own branded funds you can be certain that isn't the case though
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Sep 22, 2020 14:48
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Theophany, I would not agree that what is being offered here is discretionary fund management. This appears to be a "one-size fits all" portfolio that they offer to a wide variety of their customers. You can see the fact sheet for it here. https://www.tpllp.com/wp-content/uploads/2015/10/200915-True-Potential-Cautious-Portfolio-1.pdf It is VERY expensive for what it is. It isn't cautious, it hasn't provided reasonable growth, and if past performance continues it will not achieve any of the aims that their client is asking for. Over the past three years the cumulative performance is 5.7%, according to the company's own figures. This is at a time of hugely inflating equity markets. S&P 500 trackers have achieved 39.44% over the same time period. The hugely-diversified Vanguard Global All Cap Index Fund has achieved 26.37%. Even if someone invested everything in a global bond fund they would achieve a far higher return with far less risk (of all kinds). The Vanguard Global Bond Index Fund has achieved 12.05% over the same time period. If you were extremely risk averse three years ago and put everything in medium-term US treasuries you would be looking at a 20.93% cumulative return. The performance of their "portfolio" is terrible. And it costs 3-4x as much as any of those other options. I spoke to someone just this Sunday who does have an actual discretionary fund manager. That fund manager does charge 0.5% inc VAT. However they've also achieved a 22% real return over just this past year. I don't think it's a valid argument to say that just because other scam artists charge more, that because these people charge slightly less its "fairly reasonable for an ongoing advice proposition" The product they're offering is completely inappropriate. You'll also notice the upload date on that PDF; 2015. Despite it's poor performance, they haven't changed the weighting of any of those funds in the past five years. The asset allocation of their "portfolio" is also a Frankenstein creation. So the summary appears to be that they're charging £5,000 upfront to invest in a "portfolio" that has performed poorly for the past five years. The cost of the "portfolio" is £1,600/year, they're charging a management charge of £1,200/year (to do what exactly?) and the account charges £800/year just for existing. I'm not trying to bite your head off. It's possible you didn't get a chance to look into this in detail. I just don't understand how a self-described financial advisor can in any way defend this. Aertuun fucked around with this message at 14:54 on Sep 22, 2020 |
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Sep 22, 2020 14:52
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Thinking about it it's insane that we call financial advisors "advisors" when they make money on selling their product, presumably on commission. If you walk into a Land Rover dealership looking for something to run around town in they aren't going to suggest you go to the Toyota shop round the corner!
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Sep 22, 2020 14:53
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Bizarro Buddha posted:Thanks for the very detailed response, Aertuun. I'll talk to my parents about implementing something like this, though I'll have to get over the hurdle of selecting the funds and convincing them they don't need to hire someone to watch over it. Much appreciate the kind words! The key as others mention is to find a solution that your parents are happy with on an emotional level. This is very important if times ever get rough; they'll have confidence in what they signed up to. My understanding of the Vanguard Targeted Retirement funds is they're designed for people leading up to retirement, rather than retirees seeking an income. At your mother's (assumed) age, the Vanguard Target Retirement funds would have 35% in equities, 65% in bonds, which is far too much in bonds (for what you're aiming to achieve). That said, we're not after an "optimal" solution. The best solution might be to keep it simple. Go for a single broadly diversified world equity index fund, and a single global bond fund. Find someone who your mother trusts to do the rebalancing & withdrawals once a year. Initial allocations would be 55% equities, 45% bonds. Two examples which others can talk about & recommend: https://www.vanguardinvestor.co.uk/...xfund_fund_link https://www.vanguardinvestor.co.uk/...xfund_fund_link Disclaimer about these two: You'll find an entire range of opinions on what the best fund or selection of funds is. The book I mentioned in my earlier post had all sorts of elaborate portfolio weights. If you want to get more into this, the Monevator post on index trackers might be a good place to start: https://monevator.com/how-index-trackers-work/ Aertuun fucked around with this message at 15:22 on Sep 22, 2020 |
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Sep 22, 2020 15:09
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Yeah we're trying to get 2.4% return in income (ideally just to avoid the hassle of selling shares to generate capital) and some capital gain in the mix. Just shoving all the money in this one for dividend seeking (I did literally no comparison, I just clicked): https://www.vanguardinvestor.co.uk/...tsetf_fund_link would get the outcome desired at just the Vanguard cost of 0.25%.
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Sep 22, 2020 15:38
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Aertuun posted:Theophany, I would not agree that what is being offered here is discretionary fund management. This appears to be a "one-size fits all" portfolio that they offer to a wide variety of their customers. I think "defending" it is a bit strong. I commented on the reasonableness of the charges. To reiterate: Theophany posted:based on what you've shared there's nothing complex about your mother's affairs. Theophany posted:You've got to remember the cost of doing business for us is literally mind-bending Theophany posted:Yes, DIY via XYZ is cheaper but it's not the same thing. So whilst I didn't just come out and say it bluntly before, Bizzarro's mother doesn't need a financial adviser. But if she is insistent on having one I gave some cliffnotes on reasonableness as per: Bizarro Buddha posted:Alternatively, can anyone recommend a way to find a financial advisor who can help implement a strategy like this without ripping her off, or is that just the nature of financial advisors? That portfolio doesn't appear to be unitised, which is why there is no ISIN on that factsheet or any quoted AUM figure. 'Discretionary' in this context is more of a regulatory term that requires an appropriate qualification in the eyes of the regulator and it means you can alter a client's asset allocation without their written consent (which an adviser cannot). A lot of DFM services that don't have hefty minimum investment amounts take the same approach, make several model portfolios catering to several risk profiles and manage them in bulk. There's no way they'd be able to service any meaningul volume of clients offering a truly bespoke service. I'm not sure of the relevance of the URL as the factsheet PDF says August 2020 right at the top and the commentary mentions COVID? If they knew about that in 2015 you'd think they'd have done better.  As to True Potential, I'd wager somewhere in the report that was provided it will have a disclaimer that the adviser in question operates under a restricted proposition, which means that they will recommend True Potential portfolios if they are suitable and only do whole of market research if True Potential's products do not meet the client's needs in some way. So for example, if they don't have an ISA product, they would have to research the market and find the most appropriate solution. This is an increasingly common business model as it helps to minimise those mind-bending costs I alluded to. Financial advisers are not fund managers or stock jocks and anybody claiming to be one should be an immediate red flag. Investments are a means to an end and largely dictated by the vehicle being used and that's why I kind of glaze over when people get tunnel vision on comparing everything purely on cost/performance. Sometimes a fund is just a means to an end and 'good enough' is the best option if the ancilliary benefits are larger/more important to the client. But as I said, Bizarro's mother doesn't need a financial adviser as her needs are not complex and as such any adviser will end up looking expensive in relative terms.
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Sep 22, 2020 16:16
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Ah, apologies if I came over a bit strong. You're of course completely right about the upload date! Given what you've said in your posts about the costs of operating; if I may ask, what are the typical costs of business for someone embarking as a newly qualified IFA? Is it difficult to operate without going down the "fleece the clients" route?
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Sep 22, 2020 16:37
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Theophany posted:vouchedfor.co.uk is a good place to look as the reviews are verified clients. Thanks Theophany, I'll get her to check out some advisors through vouchedfor for second and third opinions. I'm glad that even someone working as a financial advisor thinks the 5k up front is ridiculous  I take the point re: handing over the responsibility for loving up, but if they do gently caress up it doesn't exactly make the situation better. I'm a bit scared about taking on the responsibility myself but I'd rather my mum was secure. Aertuun posted:Theophany, I would not agree that what is being offered here is discretionary fund management. This appears to be a "one-size fits all" portfolio that they offer to a wide variety of their customers. Funny story the advisor sent my mum this exact PDF but said "have attached a fact sheet for the True Potential Cautious Portfolio which shows growth (after the product fee has been deducted) of 25.3% in just under 5 years. Past performance is not a guide to future performance." so it's good to have that number in context re: Vanguard funds. Aertuun posted:Much appreciate the kind words! The key as others mention is to find a solution that your parents are happy with on an emotional level. This is very important if times ever get rough; they'll have confidence in what they signed up to. I realized I never gave my mum's age - she's 72 and in relatively good health. I'm no actuary but I believe she's planning for 30 years income to almost eliminate the chance of her running out of money and give herself some breathing room in her finances. Re: those funds, I was thinking of trying to pick funds which are somewhat diversified internally to make sure we don't have to manage lots of individual equity funds which seems to be what you've suggested too. Telling her to invest only in UK funds at this point would be a mistake I'm sure.
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Sep 23, 2020 02:00
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A global top 100 will be diversity enough. If that index tracker falls apart it's the end of the world anyway. Comedy bad advice: just shove the whole lot into Unilever. The dividend is solid and everyone is always going to need to buy food.
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Sep 23, 2020 10:58
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So, I know this is the personal finance thread, but I have a limited company, and I'm regularly sad to see cash reserves just sat there in 0% interest accounts (all my business savings accounts went to 0 recently and they weren't that great before). When I bring this up with my accountants they basically say "you're a trading company, not an investment company", which makes sense from a number of angles, but it feels like such a waste. Taking the money out and investing it personally is an option, but I can't see any investment strategy doing much better than the hit I'd take on income tax.
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Sep 23, 2020 11:03
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I took voluntary redundancy and finish work on Friday (1/3 off the workforce going), looks like i'm going to be sitting with £165,000 in the pot (i have an ISA that i have to hunt down from 2006 that might get me to 190k). So this probably going to be a strange question but what happens if i do not claim benefits or seek employment after taking voluntary redundancy? I'm just very unfamiliar with the legality of the situation.... am 52 and after nearly 19 years as a factory worker doing 12hr day/night shifts all i want is normal sleep, weight loss and no annoyances for a year or ten. Will want to keep paying my National Insurance contributions towards my State Pension and invest some in stocks and shares ISAs (or similar) for 15 years down the line. Own my home outright, no debt nor dependants. Any info/pointers would be magical.
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Sep 23, 2020 11:10
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Jaded Burnout posted:So, I know this is the personal finance thread, but I have a limited company, and I'm regularly sad to see cash reserves just sat there in 0% interest accounts (all my business savings accounts went to 0 recently and they weren't that great before). A quick google reveals the critical answer: Companies do not have the exemption on capital gains tax that individuals do. The most tax efficient answer seems to be for the company to invest the money in a pension. That's for truly surplus funds though. Just keep the size of your cash reserves to the size you need them to be and disburse the rest. e: you paid accountants and they gave you professional advice. It is always a bad idea to ask random internet people if you should ignore that advice Just Another Lurker posted:I took voluntary redundancy and finish work on Friday (1/3 off the workforce going), looks like i'm going to be sitting with £165,000 in the pot (i have an ISA that i have to hunt down from 2006 that might get me to 190k). Legally? It's not illegal to be unemployed. With regards to National Insurance, you can make voluntary contributions if it's a good idea for you, see: https://www.gov.uk/voluntary-national-insurance-contributions. Call the Future Pension Centre just to check how many more years of contributions you need to make to get yourself eligible to the full state pension. That's a nice pot of money, but you can't eat it and invest it. It'll also render you ineligible for most benefits. You need a budget to work out how much you need to spend every year, how much you want to spend every year, and how much of that pot of money would be left if you spent it on that until you reach pension age. You've definitely earned a bit of time out, but don't write off going back to work entirely. What isn't unusual for people in your situation to do is find a part time gig that will get them out of the house for 2-3 days a week and put some money in their pocket. Alchenar fucked around with this message at 11:34 on Sep 23, 2020 |
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Sep 23, 2020 11:16
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Alchenar posted:A quick google reveals the critical answer: Google anything limited-company related and you'll get a lot of nice content farms, some of which is correct, yes. Alchenar posted:Companies do not have the exemption on capital gains tax that individuals do. Yes and potentially lose entrepreneur relief as well. I understand why it makes sense not to take a personal investing approach and copy/paste it onto a business. Alchenar posted:The most tax efficient answer seems to be for the company to invest the money in a pension. That's for truly surplus funds though. Worth looking at. Alchenar posted:Just keep the size of your cash reserves to the size you need them to be and disburse the rest. "Just" doesn't work here, I'm afraid. When you disburse the rest that's where the aforementioned income tax comes in. Alchenar posted:e: you paid accountants and they gave you professional advice. It is always a bad idea to ask random internet people if you should ignore that advice Actually I pay accountants to give me tax advice, not financial advice, important difference. I was here looking for alternatives they might not have thought of at the time, don't be an rear end. Jaded Burnout fucked around with this message at 11:26 on Sep 23, 2020 |
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Sep 23, 2020 11:23
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You are asking a question about tax efficiency, not investment.
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Sep 23, 2020 11:49
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Alchenar posted:You are asking a question about tax efficiency, not investment. Ah, it's a misunderstanding then, my apologies I'll rephrase. Given that my accountants have pointed out that there are tax implications to investment as a company, such as we mentioned above, particularly a threshold around how much time you spend managing those investments as a whole (like an hour or so a month would be OK), are there any suitable investment approaches that people can think of that don't rely on the usual personal investment options (e.g. ISAs, CGT breaks), that might stand a decent chance of making a return? You mentioned dumping it into a pension, thank you for that suggestion, I'll look into it in more detail, though it sounds like that's way down on the "non-liquid" end, and my previous approach of highly liquid savings accounts is a non-starter due to non-existent interest rates. Any others that spring to mind for people? Basically I get that I can't go full on bloomberg trader with it, but equally it's a shame to have money that isn't working.
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Sep 23, 2020 12:06
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Jaded Burnout posted:So, I know this is the personal finance thread, but I have a limited company, and I'm regularly sad to see cash reserves just sat there in 0% interest accounts (all my business savings accounts went to 0 recently and they weren't that great before). have you considered investing in the company
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Sep 23, 2020 12:12
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Jaded Burnout posted:Ah, it's a misunderstanding then, my apologies I'll rephrase. Yeah, sorry. It was a bit unclear whether you wanted a long term plan to extract the money from the company in an efficient way, or just to do something with it. Investing in a company pension locks the money away so it's not reserves anymore, but it's the answer for 'I don't want the money now and I want the most tax efficient way to invest it'. The short answer is 'no'. We live in a world of zero interest rates. The only way to get an income out of it is to lock it away. Depending on just how large your reserve fund is (like 3-5 years of operating costs) then it might make sense to have a model where a rolling proportion of money is in a fund tracking UK government gilts as a hedge against inflation. Caveat: I have done no research on the legalities of doing this.
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Sep 23, 2020 12:28
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Breath Ray posted:have you considered investing in the company WHAT Seriously though, I would, but it's at the point where I either carry on exactly how I am, or I go Full Capitalism and entirely disrupt my life and the business in order to move to the next level of scale up. Not something I'm super keen on tbh. Alchenar posted:Yeah, sorry. It was a bit unclear whether you wanted a long term plan to extract the money from the company in an efficient way, or just to do something with it. Investing in a company pension locks the money away so it's not reserves anymore, but it's the answer for 'I don't want the money now and I want the most tax efficient way to invest it'. Gotcha, thanks.
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Sep 23, 2020 12:44
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Alchenar posted:
Will check in with the Pension Centre for sure. If i can get the 190k i will be hoping to invest 30-40 of it (not all in the one pot) over the next year or so, let that accumulate for 10-15 years, and live off the remainder. I had worked out a budget of starting by living off 6.5k (doable for me atm) and incrementally increasing it to 13.5k in fifteen years time. Would not be adding in any money invested unless things got real bad. You are right on the job front but i think we are hitting a nasty spot as regards the job market for the next three years at least, but when things settle down it would be nice to get a small job to retain my sanity. Many thanks. :-) EDIT: forgot this bit; Had already assumed Universal Credit was a no go (over 16k savings) but do i still need to notify them that i don't have a job? Just Another Lurker fucked around with this message at 14:01 on Sep 23, 2020 |
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Sep 23, 2020 13:42
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Jaded Burnout posted:WHAT sounds like you need to appoint a COO
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Sep 23, 2020 13:56
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Aertuun posted:Ah, apologies if I came over a bit strong. You're of course completely right about the upload date! It's difficult to say outright as we typically make a decision on what business we want to engage in by first getting qualified in the relevant area and then seeking the insurance that covers us to advise. As a rule, if you're not insured to advise on a certain area, you cannot advise on it. So if you were starting out as an Independent Financial Adviser and limited yourself to just investments and pensions* then it probably wouldn't be as mind-bending as I'd initially said. However, it probably wouldn't at all be worthwhile as most people can do that stuff themselves through the multitude of direct to consumer platforms out there - I'd wager it'd be impossible to compete on cost and the value add of the advice is practically nonexistent. * not including DB transfers which you've got to be either poo poo hot or really dumb to get involved with. I don't touch them, not because it's too difficult, but just because you're taking an enormous gamble on a person's future and that isn't my business. The alternative is to go with an outfit like True Potential, St. James' Place (gross) or any other of the networks out there. They at least pool risk and use collective bargaining to manage PI costs, give you a solid compliance framework, help drive down the cost to the end customer etc, but of course there is always a trade off in that to cover their costs they will normally stipulate that their products are the default choice in your recommendations and to circumvent those defaults they must not meet the clients' needs. On the one hand it's good to know that they'll never demand a client is given an unsuitable recommendation, on the other you know that if they can provide something that meets the de minimis for 'suitable' they will and it won't be the best. I've heard tell from others that they have seen their PI excess go up as much as £70k p/a recently in light of the British Steel and London Capital & Finance sagas. Hell, if you go back to 2008 it was just as bad with Keydata and Arch Cru. You've also got to remember that the Financial Ombudsman was recently granted an increased award limit from £150k to £350k. The trade press reckon that there have been instances of 500% year-on-year increases in the cost of professional indemnity insurance and if you are just starting out you can basically guarantee the few insurers that would touch you will put you in the highest risk category by default. The 'advice gap' the FCA moans about is a problem of their own making. Bizarro Buddha posted:Thanks Theophany, I'll get her to check out some advisors through vouchedfor for second and third opinions. Sure thing! If she's intent on having somebody do it for her then I hope she'll find an adviser who will work on a near-enough execution only basis and charge accordingly (i.e. not rip her off). I'll keep quiet after this as it is dangerously close to a self-doxx but I do use the True Potential platform for my own investments and setting up an ISA and GIA takes about half an hour. So that initial fee should cement the immorality of that particular adviser and it certainly makes me despair at some of these fuckers. Theophany fucked around with this message at 20:31 on Sep 23, 2020 |
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Sep 23, 2020 20:29
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I did have a look at advisors in her area on VouchedFor and honestly everyone seems to want to take at least 2% of the principal and 0.5% ongoing to manage funds...
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Sep 23, 2020 22:42
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I think this is probably going to be a consistent theme regardless of how wide you cast the net and perhaps is a blessing in that it is a solid argument for putting your mum off paying for advice she doesn't really need.
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Sep 24, 2020 10:58
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Yeah I think they're both coming around to that idea, now they're talking about looking at something like this: https://www.vanguardinvestor.co.uk/...yfund_fund_link I haven't had a chance to compare it against other options yet but it seems like it might be too low in equity for what Aertuun was suggesting still. She says she's not interested in managing something herself so that's another hurdle to overcome potentially. Maybe I could at least convince her that this is a better place to start. https://www.vanguardinvestor.co.uk/...yfund_fund_link
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Sep 24, 2020 16:14
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Very encouraging. I don't have the time at the moment to type out a longer post, but the headlines is that either of those options will vastly outperform what was on the table from before. Just on basics. The platform charge (if using Vanguard) will be far less. The fund fee is a quarter of what it was. The cumulative performance of both over the past three years is 3x that of the previous fund. It's not the best performance, but the best investment is one that your mother is happy with and will stick with if times get rough. There are some howevers, on the other hand. Because it's all lumped into a single fund, when you sell each year to take out the income, you'll be selling your growth-producing equities rather than the bonds. This is a risk over longer retirement periods, as the equities are the ones that produce the growth to support the principal and the income. This is particularly troublesome if markets have a few bad years right at the start. The funds will regularly rebalance internally back to 60/40. This means that when times are bad they'll be automatically selling growth-producing equities rather than the bonds (because equities will be lesser in value). When the recovery comes, it won't be able to bounce back as strong. And when equities are booming, they'll also be selling them to stick them into bonds (harvesting too soon because equities are higher). I'll ponder the management issue! Aertuun fucked around with this message at 18:53 on Sep 24, 2020 |
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Sep 24, 2020 18:32
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Aertuun posted:I'll ponder the management issue! i would. 30yo friend of mijne is being hired to be a coo - was interviewed by the ceo who is semi retired living in south america. my friend will have to do all the hiring and so on to take the biz to the next level
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Sep 24, 2020 18:47
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Breath Ray posted:i would. 30yo friend of mijne is being hired to be a coo I think you're responding to someone else! I was going to ponder his mother's concerns about "management", which could potentially be solved by a few very simple steps to follow, once every year...? Set up properly, all that needs to be done is withdrawing the annual income and selling the equities whenever they get too high.
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Sep 24, 2020 18:56
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Aertuun posted:I think you're responding to someone else! I was going to ponder his mother's concerns about "management", which could potentially be solved by a few very simple steps to follow, once every year...? Set up properly, all that needs to be done is withdrawing the annual income and selling the equities whenever they get too high. Yeah, that was what I was thinking. If I can convince her that 2 funds is not much more complex than 1, and that I can help her with it, then maybe she'll get a better result than just the life strategy fund.
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Sep 24, 2020 19:42
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after a dicey august i've made a cool £3.95 thanks to vanguards Japan Government Bond Index Fund - Hedged Accumulation
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Sep 25, 2020 23:57
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Financial advisor update - my mum signed a contract with the advisor without getting back in contact with me to talk about what we'd been researching.  I've asked her to send me the contract and look into the cooling off period.
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Oct 3, 2020 18:11
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