Is My Financial Adviser Managing My SIPP Well?
Discussion
Impossible to answer without knowing what you've got in that SIPP and why you've got it in that SIPP.
I'd start with the questions of,
P.S. Most probably you've got a big slug of bonds in there and, due to soaring inflation, bonds have tanked. However, that doesn't necessarily mean bonds aren't right for you.
I'd start with the questions of,
- why you think you need the Financial Adviser, and
- how much are you paying him.
P.S. Most probably you've got a big slug of bonds in there and, due to soaring inflation, bonds have tanked. However, that doesn't necessarily mean bonds aren't right for you.
I don't want to use this as an opportunity to rant, but FAs are a bit of a red-rag as far as I am concerned. I had an FA who claimed my investments which he managed had increased by 8% pa but when I checked the actual increased value of the holdings at each year's end was nothing close. What he had included of course was the fees (another 'transparent" source of misinformation) which taken overall came to nearly 2%. The FA was going to collect those regardless as to how well or badly my investments had fared.
My considered view now is that there may be a place for an FA to give advice on tax planning, inheritance tax and suitability of pension funds or generally to take an overview of your financial situation - but NOT to manage the investments themselves. Mostly they buy into collectives, gilts etc and it sometimes very difficult to know what you have actually got - plus some of the holdings may well embed additional fees.
My considered view now is that there may be a place for an FA to give advice on tax planning, inheritance tax and suitability of pension funds or generally to take an overview of your financial situation - but NOT to manage the investments themselves. Mostly they buy into collectives, gilts etc and it sometimes very difficult to know what you have actually got - plus some of the holdings may well embed additional fees.
Beggarall said:
I don't want to use this as an opportunity to rant, but FAs are a bit of a red-rag as far as I am concerned. I had an FA who claimed my investments which he managed had increased by 8% pa but when I checked the actual increased value of the holdings at each year's end was nothing close. What he had included of course was the fees (another 'transparent" source of misinformation) which taken overall came to nearly 2%. The FA was going to collect those regardless as to how well or badly my investments had fared.
My considered view now is that there may be a place for an FA to give advice on tax planning, inheritance tax and suitability of pension funds or generally to take an overview of your financial situation - but NOT to manage the investments themselves. Mostly they buy into collectives, gilts etc and it sometimes very difficult to know what you have actually got - plus some of the holdings may well embed additional fees.
I’m inclined to agree. I could transfer the SIPP to say Hargreaves Lansdown and manage it myself. I already have ISA and Investment accounts with them. My considered view now is that there may be a place for an FA to give advice on tax planning, inheritance tax and suitability of pension funds or generally to take an overview of your financial situation - but NOT to manage the investments themselves. Mostly they buy into collectives, gilts etc and it sometimes very difficult to know what you have actually got - plus some of the holdings may well embed additional fees.
i am no IFA, i retired 2 years ago @63 wish i had done it at 60 latest. have you been doing it wrong ? who knows , you have managed for 10 years so far do you feel you needed more , different IFA different advice may be ?, i have a IFA who yes gets paid no matter what my pension does, but i have to say he does cover his cost and then some, but he does not like me spending it which is part of his job to ensure i don't run out of money while i live and also manage it so the wife is ok after i m gone and kids may get something! trouble is IFAs think long term and we know life is not like that you can go at anytime .
all i would say is its your money do with it as YOU want even if its against advice i don't take my IFA advice on everything he suggests . if i want something to change like monthly income, or a lump sum i get it , i have put up with a lot of s
t in my career so i am going to enjoy the money while i can 
all i would say is its your money do with it as YOU want even if its against advice i don't take my IFA advice on everything he suggests . if i want something to change like monthly income, or a lump sum i get it , i have put up with a lot of s
t in my career so i am going to enjoy the money while i can bad company said:
I retired in 2012 so 10 years ago. I have a Sipp managed by a FA and started drawing at what I thought was a very reasonable 3.6%. Over the years I haven’t increased my drawings which now equate to nearer 3.7% of my pot.
That doesn’t sound great to me, or do I have it very wrong?
A level (i.e. not inflation-adjusted) 3.6%pa from 2012 onwards would still have allowed a "typical" retirement pot to grow given the tailwinds we've had over the last 10 years, so it might be worth asking further questions.That doesn’t sound great to me, or do I have it very wrong?
Edited by Derek Chevalier on Monday 4th April 15:24
In the ten years since you invested Equity markets have delivered impressive returns, in most years way in excess of your 3.6%pa since retirement. However, global bond markets have delivered more than 3.6% in only 4 of the ten years you've been invested and actually lost you money in 3 of the ten.
Your FA is working to a brief that you agreed with him. It's likely that as you are in retirement with modest income requirements that he will have invested your money cautiously (in order to protect on the downside) and probably with a decent exposure to bonds both as a diversifier against equities and to provide an income. Any diversified portfolio will contain equities and bonds (and other assets). For those in retirement the portfolio will usually be more heavily invested in bonds and pick only lower risk equities. The performance of your portfolio will almost certainly reflect this exposure to bonds and lower risk equities, which is not necessarily a bad thing.
It is impossible to tell whether your FA is doing a good or bad job without knowing what you have agreed for him to provide and without knowing what it is in your portfolio. Of course you could have made more money if you'd added more risk, but is that what you wanted or agreed with your FA? I would massively caution agains managing your own portfolio until you have fully understood how, and most importantly, why your SIPP has performed as it has. For context your FA should be able to illustrate how he has performed against some kind benchmark and you, with him/her, can decide whether that is a relevant benchmark or not and how well the performance stacks up.
With 30 years experience of working in asset management I often am faced with people who wanted to take on little risk and then complain that they don't get stella returns. Check that your FA is doing what you asked (risk profile-wise) and ask him/her to contextualise the results and then decide whether he/she has done a good job.
Your FA is working to a brief that you agreed with him. It's likely that as you are in retirement with modest income requirements that he will have invested your money cautiously (in order to protect on the downside) and probably with a decent exposure to bonds both as a diversifier against equities and to provide an income. Any diversified portfolio will contain equities and bonds (and other assets). For those in retirement the portfolio will usually be more heavily invested in bonds and pick only lower risk equities. The performance of your portfolio will almost certainly reflect this exposure to bonds and lower risk equities, which is not necessarily a bad thing.
It is impossible to tell whether your FA is doing a good or bad job without knowing what you have agreed for him to provide and without knowing what it is in your portfolio. Of course you could have made more money if you'd added more risk, but is that what you wanted or agreed with your FA? I would massively caution agains managing your own portfolio until you have fully understood how, and most importantly, why your SIPP has performed as it has. For context your FA should be able to illustrate how he has performed against some kind benchmark and you, with him/her, can decide whether that is a relevant benchmark or not and how well the performance stacks up.
With 30 years experience of working in asset management I often am faced with people who wanted to take on little risk and then complain that they don't get stella returns. Check that your FA is doing what you asked (risk profile-wise) and ask him/her to contextualise the results and then decide whether he/she has done a good job.
Gixer968CS said:
It is impossible to tell whether your FA is doing a good or bad job without knowing what you have agreed for him to provide
100% this. If, in 2012, you said to him "no matter what you do, I do not want to run out of money, because this pot is everything I have, and I have no other assets to fall back on", then 10 years on from then, and after 10 years of talking cash out, you have very slightly less in your pot than you started with. Seems like he's done a great job. Gixer968CS said:
It's likely that as you are in retirement with modest income requirements
I'm not sure a 3.6% starting withdrawal rate is that modest, albeit it's not clear why withdrawals haven't increased with inflation. Gixer968CS said:
For those in retirement the portfolio will usually be more heavily invested in bonds and pick only lower risk equities.
If anything, the "typical" retirement portfolio will have a slightly greater weighting of equities vs bonds.I've not seen filtering out of higher risk equities (if anything, portfolios have a tilt towards emerging markets and small-cap value to improve sustainability), but maybe some do it.
Benbay001 said:
Correct me if i am wrong, but in an ideal world you should die with no pension pot remaining, so your % withdrawn should increase as you age, and as the pot gets smaller.
That's better than the pot running out before you die, but in an ideal world surely you would aim to live off growth and dividends and retain as much of, if not all, of the capital?That is certainly my approach, and I'm aiming to pass the lot to my son to set him up for his own retirement.
Derek Chevalier said:
Gixer968CS said:
It's likely that as you are in retirement with modest income requirements
I'm not sure a 3.6% starting withdrawal rate is that modest, albeit it's not clear why withdrawals haven't increased with inflation. Gixer968CS said:
For those in retirement the portfolio will usually be more heavily invested in bonds and pick only lower risk equities.
If anything, the "typical" retirement portfolio will have a slightly greater weighting of equities vs bonds.I've not seen filtering out of higher risk equities (if anything, portfolios have a tilt towards emerging markets and small-cap value to improve sustainability), but maybe some do it.
Also, small-cap value??? Not many investors would use small companies to achieve a value tilt, they're usually a growth option. Small and mid-caps (as well as large-caps) will offer the growth style and would be diversified by adding value stocks like Banks and Utilities to neutralise style unless one wanted a tilt.
Thanks for the help all. I remember going for a fairly aggressive attitude to risk but I was only 56 when I retired so that may not have helped. I just sent this to my fa.
It’ll soon be 10 years since I retired and started drawing my pension. At the time we set the drawings at a very reasonable 3.6% of the fund value. I haven’t increased my drawings in the 10 years though they did reduce for a while when the market reacted to Covid. Based on the current valuation I’m drawing around 3.7%.
It’s pretty much the same for **Mrs BC**.
Does that sound like a good or reasonable performance to you?
It’ll soon be 10 years since I retired and started drawing my pension. At the time we set the drawings at a very reasonable 3.6% of the fund value. I haven’t increased my drawings in the 10 years though they did reduce for a while when the market reacted to Covid. Based on the current valuation I’m drawing around 3.7%.
It’s pretty much the same for **Mrs BC**.
Does that sound like a good or reasonable performance to you?
Gixer968CS said:
Derek Chevalier said:
Gixer968CS said:
It's likely that as you are in retirement with modest income requirements
I'm not sure a 3.6% starting withdrawal rate is that modest, albeit it's not clear why withdrawals haven't increased with inflation. Gixer968CS said:
For those in retirement the portfolio will usually be more heavily invested in bonds and pick only lower risk equities.
If anything, the "typical" retirement portfolio will have a slightly greater weighting of equities vs bonds.I've not seen filtering out of higher risk equities (if anything, portfolios have a tilt towards emerging markets and small-cap value to improve sustainability), but maybe some do it.
Also, small-cap value??? Not many investors would use small companies to achieve a value tilt, they're usually a growth option. Small and mid-caps (as well as large-caps) will offer the growth style and would be diversified by adding value stocks like Banks and Utilities to neutralise style unless one wanted a tilt.
If you look at those that have crunched the historical data to death you will see how tilts to EM and small-cap value have historically enhanced retirement portfolio sustainability.
Tim Hale discusses it in his book and also offers it via his consultancy
https://www.amazon.co.uk/Smarter-Investing-Simpler...
https://www.albionstrategic.com/
Ditto Abraham Okusanya
https://www.betafolio.co.uk/
https://www.amazon.co.uk/Beyond-4-Rule-retirement-...
Abraham's tool, Timeline, allows you to evaluate these tilts using historical data.
Derek Chevalier said:
bad company said:
Does that sound like a good or reasonable performance to you?
As Gixer968CS points out, it's tough to know for sure without a lot more info.I’ve also been looking at transferring to Hargreaves Lansdown but it looks like that would mean selling all of the investments and being out of the market for a few weeks until I could re invest the money. That all sounds dangerours.
Given you are in retirement, it would seem reasonable to be in lower risk, lower return funds, such as those concentrated on dividend paying ftse100 companies.
If so, I'd question whether you need an advisor. But having said that, if you would be 'investing' your entire pension on the share gamble thread here, you probably do!
I guess its down to whether your plan is being achieved?
..Eta, I read much of this thread but somehow missed gixxers reply, which I think is excellent
If so, I'd question whether you need an advisor. But having said that, if you would be 'investing' your entire pension on the share gamble thread here, you probably do!
I guess its down to whether your plan is being achieved?
..Eta, I read much of this thread but somehow missed gixxers reply, which I think is excellent
Edited by covmutley on Monday 4th April 23:24
I just cannot understand why people pay these FAs 1-2% to manage their money.
Buy a tracker or two from Vanguard and you are up and running for a fraction of a percent.
Use FAs for advice but there is no way on gods Green earth I would pay their management fees. It would kill your returns as we are seeing here.
Buy a tracker or two from Vanguard and you are up and running for a fraction of a percent.
Use FAs for advice but there is no way on gods Green earth I would pay their management fees. It would kill your returns as we are seeing here.
covmutley said:
Given you are in retirement, it would seem reasonable to be in lower risk, lower return funds, such as those concentrated on dividend paying ftse100 companies.
If you look at how dividend paying/high yield performed in 08-09 it's hard to see how this can be seen as a low-risk approach. For example, the MSCI UK High Div Index was down 60% in 2008.Edited by covmutley on Monday 4th April 23:24
https://www.msci.com/documents/10199/1ba2dcd0-887e...
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