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  1. #1

    Another Pension Headache

    Evening, my father is 55 this year. He has a GTV of just over 5M. He has gone to 3 different IFA's and all have come up with the same (ish) deal of around 1.3% PA. He will use a small amount of cash to pay off his mortgage etc. He's thinking of level 1 or 2 risk (low). One of the proposals is suggesting 40% Bonds. UK and INT equities 16 / 16 %. Alternatives 25% and the rest in cash. Does anyone have any thoughts on the proposal? Are the bonds far too high or should he reduce them and take a slightly higher risk and up the equities? He doesn't really want to get involved, so I'm going trying to go over it for him. Hope that's clear.

  2. #2
    I do not know what GTV is, but assume this is the amount he wishes to invest.

    Without a fact find and analysis of his financial objectives and needs, and timescales, it is difficult to know what the percentage allocations should be.

    If he is prepared to pay 1.3% to an (independent?) financial adviser, then he may be better of with a discretionary fund manager. I have researched the DFM market and my favourites are Sarasin and Cannacord Genuity. Sarasin is strong with charities - get a copy of their yearbook - full of good stuff.

    I also like Mike Lipper's 'timespan portfolio' approach which divides one's assets into four timespans. I have a lot of time for Mike and his blogs.

    Be wary of any financial adviser that takes a chunk of your money (e.g. 5%) upfront as a part of the investment process.

  3. #3
    Since the IFA will have done a fact find, looked at assets/liabilities, dependants etc difficult to comment. Mitigation of IHT may be a determining factor. Personally wouldnt use an IFA who took more than 0.5% (actually I wouldn't use one at all). In general an equity holding if 60-40% seems to be recommended but I assume large direct holding of IL gilt would be in there somewhere. Vanguard lifestrategy or similar? That's a lot of cash to invest so a good IFA may help with alternatives/ direct investments.

  4. #4
    For 5 million + GTV (Guaranteed Transfer Value I guess), paying 1.3% is at 65,000 grand a year. ouch.

    Presumably this would be in a drawdown SIPP

    I think the most important advice might be about things like the LTA, how much to take and when, IHT implications etc. If you could get good advice on that for a reasonable fixed fee, its probably money well spent.

    In term of investment advice, 65,000 grand a year & rising seems crazy. You could probably do better with cheap tracker like Vanguard LS60 or Vanguard LS80.

    For this size pot, its worth spending the time and effort to really understand the options.

  5. #5
    Tell us more about the 'Alternatives'.
    Also if possible the 'Bonds'.
    Presumably this is a 'set it and forget it' allocation, with just rebalancing through time?

  6. #6
    One of the proposals is suggesting 40% Bonds. UK and INT equities 16 / 16 %. Alternatives 25% and the rest in cash. Does anyone have any thoughts on the proposal? '.

    Without knowing more about the situation I do not think it is possible to comment on the allocation/asset mix. It really does depend on when he wants to use the money. Study Mike Lipper's timespan portfolio: https://www.google.co.uk...YhGsWvvJCey3tgePvqrYAw.

    5m is a lot of money. Doing research via several IFAs and DFMs will pay off.

    Be prepared to pay the IFAs on a time basis for their fact finds and proposals.
    Understand the difference between an IFA and a FA. Many will drool at the thought of a 5m portfolio, so keep your wits about you and do not rush into a decision, especially any time-based 'deal' that is offered to you.

    Apart from investing in specific funds and investment trusts I have utilised the Vanguard 'Lifestrategy' range - worth looking at.


 

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