Intelligent Money - your investment questions answered

[Testaburger]

aleksboch said:

Nvidia. What are your thoughts? hodl?

More gin.

[Unexpected Item In The Bagging Area]

aleksboch said:

Nvidia. What are your thoughts? hodl?

hodl and wodl

[Intelligent Money]

giles panizzi said:

In the process of switching over to IM, good comms and process knowledge all the way through. What was initially quite a daunting step, in reality is quite simple.

Thanks Nik

Hi Giles,

Thanks for your feedback, all the more welcome when it is good

I'm glad to of been able to help.

Nik

[Ayahuasca]

Will Woodford get his mojo back?

[Ayahuasca]

JulianPH said:

Testaburger said:

Hi Julian,

Having glossed over the IM website (in particular the timeline), I see that in recent years you appear to have set up an international client service.

I couldn’t find more on that - but wondering if you provide the same management services for non-UK residents (obviously outside SIPP/ISA wrappers..

If so, I’d be keen to have a chat. One day, you may even get to buy me that cheese soufflé!

Hello mate

It is still in ongoing development but we hope to be live in first quarter of the new tax year.

The infrastructure is all in place but it is the regulatory aspect that is fiendishly complex and long winded.

As you have probably experienced much of the offshore ex-pat offerings are basically at the same point financial services in the UK was in the 80s. Allocation rates, commissions, no disclosure, etc.

The original demand stemmed from Dubai but as we started development this quickly spread to other territories (including Hong Kong) and there is a strong demand for a clean and transparent gross roll up investment solution, so despite the time it is taking we are pushing hard to launch ASAP.

I'll let you know when we go live and will happily buy you that cheese soufflé and venison dinner!

Edited to add...

Yes, it will be exactly the same management service with identical portfolios, just structured off-shore for international clients seeking gross roll-up outside of any tax wrappers.

Edited by JulianPH on Sunday 20th January 12:09

When this is up and running please PM me details. Will you market to clients directly or use intermediaries?

[JulianPH]

Ayahuasca said:

Will Woodford get his mojo back?

I believe he will, he has certainly done so before.

I remember back in the dot com boom/bubble he took a lot of grief for not joining in the race to invest in these ridiculously overvalued loss making companies that were burning through cash, therefore missing out on the soaring share prices.

Instead he had to defend his positions, such as significantly increasing his holding in M&S (on the basis he could buy this profitable business for less than the price of its property portfolio alone).

History, of course, proved him right.

The fundamentals are different now, but I respect that he has always remained a man of his conviction and never tried to hug markets in the way most fund managers do. This can lead to periods of strong out performance, but also periods of great under performance to.

This really goes back to my previous comment about stock pickers. You have to identify in advance who will deliver the best future performance (and at what point to replace them with the next future best performer) in order to ensure you outperform the markets.

This is why we simply buy the markets and (given asset allocation is the key driver of investment returns) manage the asset allocation weightings in each portfolio to meet the aims and requirements of different clients.

[JulianPH]

Ayahuasca said:

When this is up and running please PM me details. Will you market to clients directly or use intermediaries?

Will do. It is looking increasingly to be that case that what people really like the idea of is a UK based solution with gross roll-up, rather than on off-shore satellite that would require the use of a bond.

Modern UK transparency as to the investments and the costs seem to trump the old approach.

I would welcome your opinion on this.

We will offer it directly or though regulated intermediaries. Obviously the former saves costs, but the latter is always available.

Cheers

[JulianPH]

Given the amount of questions I've seen here over the years relating to people seeking financial advice (and more specifically wanting to pay only for the advice at the point of delivery - not paying an additional ongoing annual fee for it) I thought it would be useful to make a post that clarified what exactly people mean when they talk about financial advice.

Advice in the everyday world generally means an experienced and professionally informed opinion. Something that provides information and guidance that better enables you to come to a decision on any given matter.

However, in the FCA regulated world 'Advice' has a very specific definition that differs greatly from the generally understood definition of the word.

For historical context, back in the days where we had only 3 TV channels, salesmen did a very good job of selling financial products that no one would have otherwise bought. This resulted in people being insured for life events they didn't want to even consider ever happening and having personal pension provision for a retirement that was to far away to even be considered.

It actually worked pretty well, even if the value of these products was highly questionable by modern day standards (which they certainly were).

Being as progressive as every other sector the industry decided to re-brand its sales force as 'financial advisers'. This superficial (at the time) transition from sales to advice led to the regulator of the day having to change the definition of the 'sale' of financial products and create a definition of 'advice' instead.

Thus the regulatory definition of financial advice was born.

This definition broadly means a personal recommendation of a particular course of action based upon your individual circumstance (typically the sale/purchase of a financial product).

So, back to the original question (what is it you mean when you say you want financial advice?).

If you mean you want a qualified and regulated individual to make a personal recommendation to you regarding a specific course of action (a product sale/purchase) you will need to seek a regulated financial adviser and pay their fees for this service.

If you mean you want an experienced and professionally informed opinion, providing information and guidance that enables you to come to your own decision on any given matter, then you may wish to consider becoming an Intelligent Money Private Client.

We offer this without any fee and with no obligation to become a Private Client - that would be your decision, not ours.

[boyse7en]

What is the minimum amount required to start investing?


Local Financial Advisors won't even talk to me because I'm basically not worth their time, so I've got no idea what to do with my meagre savings.

[JulianPH]

boyse7en said:

What is the minimum amount required to start investing?


Local Financial Advisors won't even talk to me because I'm basically not worth their time, so I've got no idea what to do with my meagre savings.

The minimum is usually £100,000 but for PHers there is no minimum whatsoever and no initial charge either. Your need to put the code PH2607 in the notes box on the application page.

So you can start with any amount you like and still get all the same benefits.

Cheers

[Beggarall]

Interesting thread. Where would one go to have a truly independent review of an existing portfolio? The portfolio has been created through an Independent Financial Advisor but with Brexit looming just how good has the advice been? For example, what sectors should one be investing in, what percentage of a portfolio should be in UK stock and are there any really good indices to benchmark against. Is it better to be in stock traded on multiple markets and in multiple currencies. Juggling this is quite impossible for the amateur no matter how knowledgeable and well-informed. I think it is very difficult to know where to go - perhaps you can make suggestions?

[PaoloMey]

7 % is per annum is quite good in the EU.
No bank gives you more, only way to make more is by doing it yourself.
Pick the stock which is stable and you could make more.

[JulianPH]

Beggarall said:

Interesting thread. Where would one go to have a truly independent review of an existing portfolio? The portfolio has been created through an Independent Financial Advisor but with Brexit looming just how good has the advice been? For example, what sectors should one be investing in, what percentage of a portfolio should be in UK stock and are there any really good indices to benchmark against. Is it better to be in stock traded on multiple markets and in multiple currencies. Juggling this is quite impossible for the amateur no matter how knowledgeable and well-informed. I think it is very difficult to know where to go - perhaps you can make suggestions?

Thank you. Some very good questions.

We (or a financial adviser) could give you a truly independent review of an existing portfolio. With us it would be a factual exercise based upon the appropriate benchmark (which may not be the benchmark the IFA is actually using). With a financial adviser this would take into account your personal circumstances.

What sectors one should be investing and what percentage of a portfolio should be in which asset classes are initially dependent to two factors. The first is if you are looking for an objective answer - based upon hard facts. This is what we can offer. The second is if you are looking for a subjective subjective answer - based upon personal feelings and perspectives.

It is the same when it comes choosing a benchmark. We can tell you about appropriate benchmarks for different objective, but we cannot recommend one in particular that suits your personal circumstances.

After this the field opens up with what exactly it is you are looking for from your investments and what level of risk/reward you should be taking to achieve this.

So in a nutshell, we can provide you with information and guidance to better enable you to make an informed choice, but we do not make personal recommendations as to which course of action you should take.

A financial adviser will make such a personal recommendation, but quite obviously there will naturally be a charge for this and in most cases it will involve you moving to another recommended portfolio that switches fees from the original adviser to the new one.

If you want factual information then please feel free to contact us. If you want factual information coupled with a personal recommendation then you need to speak to a good financial adviser such as Derek Chevalier (who I have always found to be extremely knowledgeable, honest and open - there is no financial connection between us, BTW!).

I hope my answer does not come across as being evasive of your question, it is simply that there are so many factors to consider. Short quick answers are great for short quick questions. This is a deep and dependent one (though that doesn't me we can't address it with further information).

Cheers

[JulianPH]

PaoloMey said:

7 % is per annum is quite good in the EU.
No bank gives you more, only way to make more is by doing it yourself.
Pick the stock which is stable and you could make more.

I am sorry, but I don't think I have quite understood what you are saying here.

If you could elaborate I would be more than happy to respond.

Cheers

[DibblyDobbler]

Hello IM.

I currently have a modest SIPP pot with HL which I will be adding to with a large lump sum when I cash in my DB pension at some point in the next few years (don't want to get into whether that is a good idea or not - I'm a big boy and have made my own mind up based on a lot of thought and research). So my default position is that I'll make all the investment decisions myself and have it all with HL - probably take max TFC then invest the rest in corporate bond funds to generate an income.

Couple of questions if I may:

1. I reckon 5% is a pretty safe estimated rate of return to give me an income whilst maintaining my pot - what do you think?
2. I think I have a fair idea what what I am doing but if I'm honest I don't really enjoy it as I'm a worrier and don't want to making investment decisions when I'm old so your proposition has some appeal. Am I correct that you would manage my pot for me for a modest fee (how much?) and how much of an income in percentage terms could I safely assume?
3. One of the things I like about HL is that they are big and therefor not liable to disappear in a hurry (I hope to be retired for 20/30 years God willing!) - so in the nicest possible way are you likely to be around for the long term?
4. I'll be needing an Adviser to help themselves to many thousands of pounds of my money when I come out of my DB scheme - do you provide this service?

Cheers, Mike.

[JulianPH]

DibblyDobbler said:

Hello IM.

I currently have a modest SIPP pot with HL which I will be adding to with a large lump sum when I cash in my DB pension at some point in the next few years (don't want to get into whether that is a good idea or not - I'm a big boy and have made my own mind up based on a lot of thought and research). So my default position is that I'll make all the investment decisions myself and have it all with HL - probably take max TFC then invest the rest in corporate bond funds to generate an income.

Couple of questions if I may:

1. I reckon 5% is a pretty safe estimated rate of return to give me an income whilst maintaining my pot - what do you think?
2. I think I have a fair idea what what I am doing but if I'm honest I don't really enjoy it as I'm a worrier and don't want to making investment decisions when I'm old so your proposition has some appeal. Am I correct that you would manage my pot for me for a modest fee (how much?) and how much of an income in percentage terms could I safely assume?
3. One of the things I like about HL is that they are big and therefor not liable to disappear in a hurry (I hope to be retired for 20/30 years God willing!) - so in the nicest possible way are you likely to be around for the long term?
4. I'll be needing an Adviser to help themselves to many thousands of pounds of my money when I come out of my DB scheme - do you provide this service?

Cheers, Mike.

Hello Mike

Some very good questions and given the 3rd one I thought I would be best placed to answer myself. I'll try and be as detailed as possible.

1. The industry standard tends to be 4% but the rate you take depends upon other factors, principally charges and investment returns. Our charge is 0.87% a year (more on that below) so this makes for a good starting point.

You mention investing everything in corporate bonds to generate an income. I would caution against that approach. You could be drawing down an income for 3 decades in retirement and will want to preserve the spending power of your capital (and therefore income) against the long term impact of inflation over this time by generating capital growth as well as income.

I would consider looking at total returns from a mixture of equities and bonds (and other assets, such as property) given the long time frame hopefully ahead of you. This is what our Global Growth & Income Portfolio does and it has averaged 9.09% a year over the last 10 years. After charges and inflation this would have enabled you to withdraw an average income of 5.72% a year whilst growing your capital in line with inflation.

However these are historic averages and in the real world you have excellent, average and bad years. This is why the perceived wisdom is to draw down slightly less than you my able able to take. Obviously past performance is not a guide to future performance, this goes without saying.

2. Yes. We manage everything for you (your portfolio and your pension itself) for an all inclusive fee of 0.87% with no additional costs whatsoever. This can be cheaper than you managing everything yourself using HL.

Whilst there are some hardcore DIY investors (which I think is a good thing) it sounds like you fall into the camp most people do, in that whilst you could do this yourself you would always be worrying you were doing the right thing.

The downfall with many DIY investors is they buy the current popular funds which are usually popular due to past performance that has been and gone. They are looking in the wrong direction (backwards rather than forwards).

As this is PH a car based analogy would be to compare this to going on a journey to somewhere you have never been before and only looking in the rear view mirror for direction based upon where you have already been.

This is why we buy the markets directly (using high quality trackers selected for their low costs and strong tracking correlation) and then weigh these assets to meet the requirements of each portfolio whilst regularly rebalancing to ensure nothing runs away with itself and detracts from each portfolio's objectives.

As I have said, given enough time and research this is nothing that people can't do themselves. We simply take the hassle and worry off people and ensure this is all done professionally and properly for you (whilst providing you with a named account manager to assist you with over financial matters, such a planning, tax mitigation and IHT mitigation).

3. I don't think HL will be disappearing anywhere! I knew Peter back in the day when he was still growing hie empire and he tried to get me onboard, but I wanted to launch IM and grow my own! He was also kind enough to write an article on IM in one of the financial papers when we launched.

We will certainly also be around for the long term. We are already approaching our 20th anniversary in business, have no debt and a completely privately owned by our directors, with me still having the majority shareholding. Whilst of course not being the giant that is HL we have attracted £2bn of asset without once advertising (all word of mouth recommendations) so we are not exactly small either!

Whilst we are well known in the industry this lack of advertising means we are not as well known to the public, so your question is perfectly legitimate. This is also why we are now advertising and I decided to sponsor this thread here.

4. Our Private Client Account Managers are all qualified IFAs, but we don't offer (and therefore charge for) financial advice. We have considered doing this (and a few years ago I went as far as personally buying out a couple of IFA businesses with this in mind) but after undertaking client market research we considered that this blurred the lines that defined us and made us attractive to clients in the first place.

We can certainly put you in touch with a suitability qualified adviser who can do this for you at a low or even flat fee though to save you considerable expense.

I hope I have been thorough in my answers. If there is anything else let me know here or contact the team directly, whatever you prefer.

Cheers

Julian

[Derek Chevalier]

JulianPH said:

1. The industry standard tends to be 4% but the rate you take depends upon other factors, principally charges and investment returns. Our charge is 0.87% a year (more on that below) so this makes for a good starting point.

Just to add to what Julian has said - if you want to learn more about the safe withdrawal rate I would suggest having a read of this - clearly written and not as tough going as some of the other retirement books out there.

https://www.amazon.co.uk/Beyond-4-Rule-retirement-...

I'm not sure if his tool (Timeline) will ever be available to the public but you should be able to get sufficient information from the book and this will stand you in good stead whichever option you choose going forward. Best of luck

[selmahoose]

JulianPH said:

You mention investing everything in corporate bonds to generate an income. I would caution against that approach. You could be drawing down an income for 3 decades in retirement and will want to preserve the spending power of your capital (and therefore income) against the long term impact of inflation over this time by generating capital growth as well as income.

Well you simply take some of the drawn down income every year and buy more bonds with it.

[Derek Chevalier]

selmahoose said:

JulianPH said:

You mention investing everything in corporate bonds to generate an income. I would caution against that approach. You could be drawing down an income for 3 decades in retirement and will want to preserve the spending power of your capital (and therefore income) against the long term impact of inflation over this time by generating capital growth as well as income.

Well you simply take some of the drawn down income every year and buy more bonds with it.

Och groak if we get a big inflationary spiral ye pot will be worth a bawbee and ye will nae be able to afford tae get blootered.

[selmahoose]

Derek Chevalier said:

selmahoose said:

JulianPH said:

You mention investing everything in corporate bonds to generate an income. I would caution against that approach. You could be drawing down an income for 3 decades in retirement and will want to preserve the spending power of your capital (and therefore income) against the long term impact of inflation over this time by generating capital growth as well as income.

Well you simply take some of the drawn down income every year and buy more bonds with it.

Och groak if we get a big inflationary spiral ye pot will be worth a bawbee and ye will nae be able to afford tae get blootered.

Aye but kin ye gie pubs doon sooth 'growth' furra roon ?

Translation for Ruperts: "Yes, but do English pubs accept "growth" as payment for a round of drinks"?

Edited by selmahoose on Saturday 2nd February 13:18