Vanguard LifeStrategy
Discussion
I'm looking to do something with circa £200k cash I have sat in a SIPP. I don't want it just sat there and feel like it's losing money in real terms. I already have a commerical property in there.
Vanguard LifeStrategy has come up in all my reading and is what my IFA has suggested. They've suggested 40% or 60% options as being safe / riskier. It seems like lots of people go 80% though from forum reading.
The IFA wants £4k to put the £200k into where it's supposed to go (2%) and then 0.5% to manage it ongoing. I understand they take liability here but I'm otherwise confused as to what the £4k and 0.5% really covers. It seems to be "advice" but that is mainly a thing that Vanguard seem to have generated and me picking one of high, medium and low based on my appetite for risk.
I'm really not trying to undervalue the IFA here but feel I must be missing something. I've already paid some kind of fee to get it into SIPP in 1st place (I think £600 one off). That seemed to at least cover working out allowances etc. It seemed ok for a bit of professional advice.
If my 40% fund nosedives do I really have any comeback against the IFA?
Could I open a Vanguard account myself and transfer money in?
Vanguard LifeStrategy has come up in all my reading and is what my IFA has suggested. They've suggested 40% or 60% options as being safe / riskier. It seems like lots of people go 80% though from forum reading.
The IFA wants £4k to put the £200k into where it's supposed to go (2%) and then 0.5% to manage it ongoing. I understand they take liability here but I'm otherwise confused as to what the £4k and 0.5% really covers. It seems to be "advice" but that is mainly a thing that Vanguard seem to have generated and me picking one of high, medium and low based on my appetite for risk.
I'm really not trying to undervalue the IFA here but feel I must be missing something. I've already paid some kind of fee to get it into SIPP in 1st place (I think £600 one off). That seemed to at least cover working out allowances etc. It seemed ok for a bit of professional advice.
If my 40% fund nosedives do I really have any comeback against the IFA?
Could I open a Vanguard account myself and transfer money in?
I think it's reports and annually meeting to "review" our "portfolio". I don't understand and at first assumed maybe just normal and I need to pay something. Feels a bit like it could be £1k a year so I can be sold more things!
Over 5 years it will have cost £9k just to have it in there - and how it performs doesn't really seem to be down to the IFA or some cleverness there.
From what I've seen I can have an app that gives me as much reporting as I needed from Vanguard.
It's more the DIY setup I guess - is that "normal" and can I even do that myself?
Sorry, a bit out my depth on terminology.
Over 5 years it will have cost £9k just to have it in there - and how it performs doesn't really seem to be down to the IFA or some cleverness there.
From what I've seen I can have an app that gives me as much reporting as I needed from Vanguard.
It's more the DIY setup I guess - is that "normal" and can I even do that myself?
Sorry, a bit out my depth on terminology.
orbit123 said:
If my 40% fund nosedives do I really have any comeback against the IFA?
I could be wrong, but I would doubt very much whether any IFA has ever been liable to any losses of that nature! They have no more of a crystal ball than anyone else.....Funds go up & funds go down.....all your IFA would be doing is executing your instructions.
The only comeback might be if you said (for example) "I want no risk" & they recommended a fund which comes with risk.
Could you do it yourself? Only you can say that......'cos if we gave you advice, we'd have to charge for it!!
OR....just an idea....you could checkout the sticky IM thread at the top & consider their funds......
You can use someone like interactive investor, they charge £9.99 a month no % and do it all yourself. I have never had decent investment advice from an IFA they may know the rules but I would not pay them to make investment decisions.
There is no justification for paying 2% for them to hold your hand and 0.5% for an annual review.
When you invest in passive funds half the point is keeping costs as low as possible.
There is no justification for paying 2% for them to hold your hand and 0.5% for an annual review.
When you invest in passive funds half the point is keeping costs as low as possible.
I suppose the 2 separate issues are that IFAs need to charge fees to make a living from offering impartial advice., but I am pretty certain that if the market falls 40%, then your portfolio will probably fall 40%ish. It is not a risk that you can insure against at reasonable cost.
Providing your savings objectives are longer term - 3-5years - then putting money into a Vanguard LifeStrategy is about as low risk as things can get. But it’s value is definitely not guaranteed.
You can look online to see what your portfolio value is each day, but you can also be certain that if the market were to suddenly fall, you would not be able to liquidate the fund quickly enough. See Woodford.
So, It is not a good investment for you, or an IFA, to actively manage. It does not have sufficient liquidity to protect all of its clients.
Providing your savings objectives are longer term - 3-5years - then putting money into a Vanguard LifeStrategy is about as low risk as things can get. But it’s value is definitely not guaranteed.
You can look online to see what your portfolio value is each day, but you can also be certain that if the market were to suddenly fall, you would not be able to liquidate the fund quickly enough. See Woodford.
So, It is not a good investment for you, or an IFA, to actively manage. It does not have sufficient liquidity to protect all of its clients.
Thanks all. From looking at Vanguard site it looks like I can just open an account there direct.
If cash was in my bank vs SIPP I think I could just pay it there direct - assuming I stick within my annual allowances which my accountant knows.
It feels like I could be paying £4k to have someone tell my SIPP provider to move the money to Vanguard, then £1k a year "management fee" for nothing really. I don't believe I'd have any comeback against IFA.
I'm also not putting everything I have into this and have a mix of assets and cash etc. - it just seemed like a fairly safe place to stick it vs it just sat doing nothing at all in the SIPP.
If cash was in my bank vs SIPP I think I could just pay it there direct - assuming I stick within my annual allowances which my accountant knows.
It feels like I could be paying £4k to have someone tell my SIPP provider to move the money to Vanguard, then £1k a year "management fee" for nothing really. I don't believe I'd have any comeback against IFA.
I'm also not putting everything I have into this and have a mix of assets and cash etc. - it just seemed like a fairly safe place to stick it vs it just sat doing nothing at all in the SIPP.
rdjohn said:
You can look online to see what your portfolio value is each day, but you can also be certain that if the market were to suddenly fall, you would not be able to liquidate the fund quickly enough. See Woodford.
So, It is not a good investment for you, or an IFA, to actively manage. It does not have sufficient liquidity to protect all of its clients.
Care to provide evidence on the liquidity of Lifestrategy funds? I'm not sure why you feel it is related to Woodford?So, It is not a good investment for you, or an IFA, to actively manage. It does not have sufficient liquidity to protect all of its clients.
Derek Chevalier said:
springfan62 said:
When you invest in passive funds half the point is keeping costs as low as possible.
The choice of investing style (active or passive) isn't related to whether to use an adviser or not, IMO.AllyM said:
Paying someone to invest your money in VG LS funds for you is beyond stupid.
I know lots of decent financial planners that use Vanguard funds - both they and their clients appreciate that the investment side of their role is a commodity offering and the planner adds value in numerous other areas (for the right clients).Derek Chevalier said:
Care to provide evidence on the liquidity of Lifestrategy funds? I'm not sure why you feel it is related to Woodford?
https://documentscdn.financialexpress.net/Literature/2C771383E2B81CEC1F6C0C1BF3745745/105256116.pdfhttps://www.trustnet.com/factsheets/o/acdt/vanguar...
The 2018 report suggests that the fund holds about 1% of assets as cash (much less in 2017), so if there was a big financial shock to the market, like October 87, and if say 20% of fundholders want to suddenly cash out, the managers are unable to meet their requests - they also need to protect the other 80%. In this respect all equity funds tend to operate in this manner.
However, during normal trading conditions, if the OP wanted to switch / cash out then there would not be a problem.
On the positive side, the wide spread of funds invested in makes it highly unlikely that a Woodford scenario would happen as this was primarily caused by poor stock picking.
orbit123 said:
Thanks all. From looking at Vanguard site it looks like I can just open an account there direct.
If cash was in my bank vs SIPP I think I could just pay it there direct - assuming I stick within my annual allowances which my accountant knows.
It feels like I could be paying £4k to have someone tell my SIPP provider to move the money to Vanguard, then £1k a year "management fee" for nothing really. I don't believe I'd have any comeback against IFA.
I'm also not putting everything I have into this and have a mix of assets and cash etc. - it just seemed like a fairly safe place to stick it vs it just sat doing nothing at all in the SIPP.
That's correctIf cash was in my bank vs SIPP I think I could just pay it there direct - assuming I stick within my annual allowances which my accountant knows.
It feels like I could be paying £4k to have someone tell my SIPP provider to move the money to Vanguard, then £1k a year "management fee" for nothing really. I don't believe I'd have any comeback against IFA.
I'm also not putting everything I have into this and have a mix of assets and cash etc. - it just seemed like a fairly safe place to stick it vs it just sat doing nothing at all in the SIPP.
I manage my own SIPP. I opened an account with H&L, transferred the funds in, then purchased the funds I wanted. Every now and then I review and generally sell the worst performing one and buy something else.
If you are new to investing providers like H&L have tools for choosing investments based on your appetite for risk.
I don't see what value you would get from an IFA.
mikeiow said:
OR....just an idea....you could checkout the sticky IM thread at the top & consider their funds......
Thanks for the mention Mike.OP - If you want to post on the Intelligent Money thread at the top I can give you a lot more information comparing your options.
You currently are paying SIPP fees plus expensive commercial property fees (and I assume adviser fees on your other investments). You will be adding to that further adviser fees, platform fees and the Vanguard fees.
If you were to invest the £200k in Vanguard yourself you would still have all the SIPP fees and any adviser fees you are currently paying and would also have platform fees (as has been highlighted, Vanguard do not have a SIPP/pension so you would need to pay for a platform that does) and the Vanguard fees.
IM offers an alternative you may wish to consider (even if only to dismiss).
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