Trustnet Magazine Issue 43 September 2018 | Page 40
In the back
[ PLATFORMS & PENSIONS ]
42 / 43
AltRetire’s John Blowers weighs up the pros and cons of bypassing
platforms and advisers and investing directly with an asset manager
Cutting out
the middlemen
D
uring the long, hot
summer, I took a bit of
time to think over my
investment strategy. This
stemmed from a conversation I had
with a friend over a lazy sundown
beer at a lovely country pub on the
Romney Marsh.
He had just transferred his company
defined benefits pension into a defined
contribution scheme after it made him
“an offer he couldn’t refuse”.
Of course, I was too polite to ask
how much it was worth.
He planned to entrust half of his
money to Brewin Dolphin and half to
Charles Stanley and wanted to know
my opinion.
Both of his choices were sound and
the two wealth managers have a long
history of decent client outcomes,
even if that comes at a price.
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Like many people in the UK,
he didn’t feel confident enough
to invest his own money, so
he immediately discounted
opening his own SIPP, even
though he was likely to save
around 1 per cent a year on fees.
I then tried to persuade him to put
a little money aside to try his hand
at DIY investing. Nothing taxing,
just £10,000 in a low-cost, simple-to-
understand portfolio and I offered up
the Vanguard LifeStrategy funds as a
case in point.
The annual charges for
my favourite 100% Equity
version of the range are
just 0.22 per cent a
year if you
invest
It’s not as if you have
to spend much time
researching funds to invest
in. Vanguard constantly
adjusts the underlying
investments of the portfolio
to keep its asset allocation
within set parameters
directly on its platform.
And it’s not as if you have to spend
much time researching funds
to invest in. Vanguard
constantly
adjusts the
Significant impact
I tried – in vain – to persuade him
to reconsider, explaining the
significant impact of paying 1
per cent plus fund and other
charges, which was likely to
wipe 2 per cent each year from
the value of his portfolio. He
argued that he was expecting
his wealth managers to do
such a good job that these fees
would be eradicated in a sea of
good performance and, to some
extent, he had a point.
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