Those two things combined make the concept of paying for professional investment advice more likely than not to be an expensive mistake.
Anyway, here's a question for amateurs and professionals alike. Are you actually likely to be better off putting your retirement savings in a SIPP (taking the upfront tax relief but paying tax on your income in your dotage) or instead drip-feeding your pot of money into an ISA (getting any capital gains and future income entirely tax-free when the golden slippers of retirement slide on to your feet)? I am assuming your pot of money is not big enough to do both in any meaningful way. In particular I mention this because of the life-time pension cap imposed by this parsimonious and sneaky Government.
Now back to fees. The concept of paying a very large up-front fee as a percentage of your investment pot is an anathema to me. Surely with all other circumstances similar, attitude to risk, etc, etc, the advice should be broadly the same and cost the same whether the pot size is £250k or £1mn? Anyone who pays an upfront fee of the levels talked about here may want to reconsider their options. Then there's the question of whether you want on-going annual advice at all? What will it achieve for you? Would you be better off just paying an hourly rate for your up-front advice and then keeping a weather eye on your investments' performance from time to time? Because please don't be fooled into thinking that your friendly investment adviser will be doing any more. You'll get an annual health check but that would be about it!
Well then how about instead paying a financial adviser say, £350 per hour (that's top-level by the way, you could easily get away with paying £150) for the initial fact-find and recommendation and that's it? You can always go back for some ad hoc input if you really wish.
Now, we all know, don't we, that past performance is no guarantee of future results. (Just google Neil Woodford if you want a glaring example of that.) But, in my view there is an exception to that and that is with dog funds. Once a dog probably always a dog.) I won't mention names but if you are interested do a search on dog funds.
Sorry that was long-winded but I hope those that stuck with it to the end found some food for thought.
I’d have to agree with you re performance being the main
driver, that’s why it is only when markets are struggling that people question
charges. The private investors v professional element tends to go in phases. In
the last 2 years for example the average private investor will have a lot more
equity weighting in their portfolio and therefore a lot of professionally
managed portfolio’s have been hammered as all the
lower-risk stuff has had a stinker over that period. The opposite was true
during covid. What tends to damage the private investor over the medium to
longer-term is poor risk management and irrational decision making. I believe
there is a place for both approaches.
I’m not sure you truly appreciate where the value lies in
having an Adviser, if it was a case of paying an up-front charge and say 2-3 x
the charges of a DIY portfolio to simply have an annual chat about the funds, then I agree with you that this would represent
poor value. The investment bit is only one part of the overall value that a
quality adviser should bring to the table. For those that have the time, knowledge
and inclination then absolutely they can do it themselves, although the problem
is you don’t know what you don’t know.
With regards to ’life-time pension cap’, other than the
tax-free cash element don’t forget that the Lifetime Allowance was quietly
removed, albeit I expect a labour government would bring it back in some way or another
eventually.
You’ve hit the nail on the head re large up-front fees. I
think we are slowly seeing the end of this with average initial charges coming
down. Having spoken with a number of advisers over the last 12 months the focus
has definitely shifted to the importance of ongoing charges and being much more
selective with the clients we work with due to increasingly onerous regulation.
I think fee-based advice is ideal in certain cases. Where someone has a good
level of knowledge I think they would benefit from the occasional check-in with
an Adviser to sense check their work and hopefully bring some additional value
to the table. I also think it’s a great entry point for people who either don’t
have a very big portfolio or don’t know if they need advice. There is no doubt
that there are a lot of people paying ongoing charges who are not receiving the
equivalent value from their adviser and the regulator are finally doing
something about it. I’ve started working with a fairly young tech guy recently,
he has done such an excellent job of organising his financials and planning
that we have agreed to a fee-based approach which will mean a couple of initial
sessions and then some form of regular contact to check in and keep him accountable.
He must have seen value in the meetings as he requested quarterly meetings (and
was willing to pay handsomely) but I just didn’t feel that there was a need for
such regular meetings at this stage.
The issue with “dog funds” is;
1.
Who is compiling the data?
2.
What is their purpose for compiling the data?
3.
Is the comparison being done on a fair and
accurate basis?
The answer is often that it’s a hook for a marketing
funnel for the likes of Yodelar (evidencable con-artists) or companies that
sell expensive client leads to Advisers. The comparisons are often riddled with
mistake and as with all statistics set up to deliver the desired outcome. There
is a worryingly low amount of genuinely independent research.
Overall, I agree with a lot of what you are saying certainly
if you look at the investment aspect in isolation. That certainly would encompass poor quality
Advisers who bring little else to the table, but I still believe in the value
of quality ongoing advice. I’d have to dig them out but there are several
studies that put the value of advice at around the 2% pa mark. I suppose the
problem is that the proof is in the pudding and you don’t know until you’ve
paid for the pudding and eaten it whether you liked it!
"If you had £1,000,000 pension transferred to SJP (and again let's assume full charges to keep it simple) every single penny of the Pension would be invested at the front-end. I.e. £100,000,000"
Just because you give a client a piece of paper that says they have £1m in their account doesn't mean their account is worth £1m. Disinvest the next day and it's worth £940K a profit of £60K. The zero charge after 6 years simply means that through its annual charges, SJP has had time to recover the upfront commissions paid to associates for getting the business.
So yes the whole £1m might be invested, but it's not all invested for the benefit of the client, it usefully obscures the fact that upfront charges are significant. It means a nice profit is guaranteed for each new client without needing to ensure persistency of business.
My daughter had a neighbour who knew naff all about finance before joining SJP. She had a wide circle of wealthy friends and made a fortune from selling them the SJP propaganda over coffee and cakes after getting some 11+ level paper qualifications.
Latest on SJP fees:
The firm has been in talks [with FCA] to further reform its fees, including the removal of early withdrawal charges for new clients by mid-2025 and simplifying various advisory and administrative fees.The company's complex fee system includes upfront and ongoing annual charges, with certain clients facing early withdrawal fees.
About £47 billion, or 30%, of SJP's assets under management, were subject to these exit penalties as of June this year, according to the Financial Times.
So SJP's model means it makes more money by getting clients on board and losing them than charging modest annual fees and retaining business through good service and performance. That's the only reason why SJP has happy shareholders and is held up as a successful business.
The fact is that fees have a far more negative impact on outcomes than performance and clients haven't the faintest idea how to benchmark performance and value for money. Instead, clients are mesmerised with nonsense about the breadth of funds that can be accessed and quality of managers, when in reality most of the industries funds are managed by a handful of the same managers under different platforms, branding and charges.
In my defence that was in direct response to the claim that on day 1 £940,000 would be left invested, which clearly isn't true. I've already agreed with a lot of the rest of what you've said so won't go over old ground, I welcome the changes and wish they'd come a lot sooner as it's left a lot of room for misinformation.
Again, are you going to judge 4500 businesses, (representing the highest collection of the highest qualified individuals in the country) on a daughters neighbour? That's no more fair or accurate than judging all IFA's on the one IFA that messed up your planning. Do they exist? Yes, especially in the very large practices.
Absolutely, SJP retained the exit penalty because it made them more money, we all know that.
It's also true that the average client who engages with financial advice is clueless. I could have charged a lot more over the years because most of the time you say a figure and the client says OK. Personally, I just couldn't do it morally. There are a lot of IFA's and other SJP advisers that would. One of the best things about the recent consumer review is that companies have to evidence good client outcomes. What you will increasingly see is where a complaint is made, as standard firms will have to do a comparison return against an appropriate index (such as the private investors index). Where firms have under performed this they are going to need either a very good explanation or they will have to refund the difference with a healthy level of interest. Long way to go, but I've seen a good level of progress in the last 10 years in the financial advisory world and it's gradually getting more difficult for sh*t advisers.
I think the FCA need to set up a separate arm solely for the purpose of helping clients at the point of seeking advice or deciding whether they need advice. The FCA register should be extended to allow for direct reviews by clients and firms should be obliged to write to clients each year and remind them of their ability to do so. It could also for example show the average Initial and Ongoing charges that the firm have levied across all clients. It is a long way off, but as the technology improves I see no reason why this visibility shouldn't be available to potential clients.
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
Trying to follow all of this whilst flat out at work and struggling a little . How would you characterise or describe outfits like Fishers and their model of investment and charges as compared to some of the approaches discussed above
Trying to follow all of this whilst flat out at work and struggling a little . How would you characterise or describe outfits like Fishers and their model of investment and charges as compared to some of the approaches discussed above
Strangely I’m yet to come across them directly but one thing I respected them for was their dismantling of Yodelar.
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
You might not have paid an "upfront" charge but as sure as hell the adviser didn't work for nothing. I expect he got his 3% from the 5% charge they levy on the way in.
Only way to ever be sure is to read your personalised illustration. It will be spelt out in black & white what the charges are - maybe only in the reduction in yield figures but it's there.
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
You might not have paid an "upfront" charge but as sure as hell the adviser didn't work for nothing. I expect he got his 3% from the 5% charge they levy on the way in.
Only way to ever be sure is to read your personalised illustration. It will be spelt out in black & white what the charges are - maybe only in the reduction in yield figures but it's there.
Assuming it was on a full-charge basis (it was probably a little lower) he would have received 3% at the front-end and 0.5% ongoing.
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
That's what I mean Rob, just another example of FT simply commenting on an article as a easy content and as they are only quoting the results of the report, they carry no responsibility. If they had any journalistic integrity they would have considered the accuracy of the data and whether the source has any ulterior motive.
Some of the key points from SJP's response were as follows;
We’ve been made aware that the latest Spot the Dog annual survey from Bestinvest will be published on Saturday 12 August. This report ‘names and shames poor performing funds’, based on two quantitative performance filters:
Funds that have underperformed the benchmark index over three consecutive 12-month periods
Funds that have underperformed the benchmark index by 10% or more over the entire three-year period
Six of our funds - Continental European, Global Emerging Markets, Global Growth, Global Quality, Greater European Progressive, and International Equity - will feature in the report. This may generate increased press coverage over the weekend.
All performance analysis of our funds - whether it's Spot the Dog, Yodelar, or even our own Value Assessment Statement - is inclusive of our single Ongoing Charges Figure, which includes the charges for the external fund manager, administration, advice and platform.
This means that any performance assessment is rarely an apples with apples comparison. The majority of other asset managers' performance does not include the charges for these additional services (advice and admin).
Page 25 of our Value Assessment Statement shows a clear breakdown of these charges, and you can see the charges for ongoing advice and administration account for 77.5bps of the Ongoing Charge Figure. Advice is not included in any of our peers’ performance results. If we adjust our fund performance by 77.5bps to create a more level playing field, then 65% of our funds are outperforming competitors (measured against the fund’s respective IA peer group) over 5 years to the end of June.
> So, in short, they release this report every year with an unfair comparison of charges to generate the outcome they desire. Setting that aside for a moment, this notion of Dog Funds & 5-star funds is just nonsense. When you re-compare the performance of those funds 12 months later you'll often see the "5-star" fund is now bottom quartile.
Making decisions based on past performance is well proven to lead to worse outcomes, not better. The table below shows how the best-performing fund in one year can quickly become the worst performing the following year, and vice versa. Outperformance in a single year does not automatically create a consistently performing fund.
Naturally FT aren't going to publish SJP's response.
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
That's what I mean Rob, just another example of FT simply commenting on an article as a easy content and as they are only quoting the results of the report, they carry no responsibility. If they had any journalistic integrity they would have considered the accuracy of the data and whether the source has any ulterior motive.
Some of the key points from SJP's response were as follows;
We’ve been made aware that the latest Spot the Dog annual survey from Bestinvest will be published on Saturday 12 August. This report ‘names and shames poor performing funds’, based on two quantitative performance filters:
Funds that have underperformed the benchmark index over three consecutive 12-month periods
Funds that have underperformed the benchmark index by 10% or more over the entire three-year period
Six of our funds - Continental European, Global Emerging Markets, Global Growth, Global Quality, Greater European Progressive, and International Equity - will feature in the report. This may generate increased press coverage over the weekend.
All performance analysis of our funds - whether it's Spot the Dog, Yodelar, or even our own Value Assessment Statement - is inclusive of our single Ongoing Charges Figure, which includes the charges for the external fund manager, administration, advice and platform.
This means that any performance assessment is rarely an apples with apples comparison. The majority of other asset managers' performance does not include the charges for these additional services (advice and admin).
Page 25 of our Value Assessment Statement shows a clear breakdown of these charges, and you can see the charges for ongoing advice and administration account for 77.5bps of the Ongoing Charge Figure. Advice is not included in any of our peers’ performance results. If we adjust our fund performance by 77.5bps to create a more level playing field, then 65% of our funds are outperforming competitors (measured against the fund’s respective IA peer group) over 5 years to the end of June.
> So, in short, they release this report every year with an unfair comparison of charges to generate the outcome they desire. Setting that aside for a moment, this notion of Dog Funds & 5-star funds is just nonsense. When you re-compare the performance of those funds 12 months later you'll often see the "5-star" fund is now bottom quartile.
Making decisions based on past performance is well proven to lead to worse outcomes, not better.
The table below shows how the best-performing fund in one year can quickly become the worst performing the following year, and vice versa. Outperformance in a single year does not automatically create a consistently performing fund.
Naturally FT aren't going to publish SJP's response.
I'd have to try and find the full report and delve into it, but I think what you are saying is you build into your fund pricing/performance all fee's. But on the assumption that charge (%) doesn't change year on year, then the year to year comparison would be relevant would it not?
i.e. say in Jan 2022 the fund price was £1 a unit AFTER all your fee's, then a year later it was £0.90 AFTER fee's that's a 10% real value drop isn't it. If neither the Jan 2022 or Jan 2023 figures included fee's it would still show a 10% drop, It may just be its 105p in Jan 2022 and 95p in Jan 2023.
Not sure that is what the table shows, it'd need more data to properly evaluate and model, just because the bottom one's have gone up 24.5% you'd need to know what they had gone down by previously, if that was greater than 20% you'll still be negative. The fact they are so lowly ranked in 2020 will likely mean their performance was really poor so I'd guess you would indeed be negative over the 2019-2021 period. A 20% drop followed by 20% growth is still less (100*80%*120% is less than the original 100)
The top ten in 2020 70% have continued to achieve growth in 2021 and the compounding of that could be massive in comparison. I know which table I'd rather have my money in (longer term).
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
That's what I mean Rob, just another example of FT simply commenting on an article as a easy content and as they are only quoting the results of the report, they carry no responsibility. If they had any journalistic integrity they would have considered the accuracy of the data and whether the source has any ulterior motive.
Some of the key points from SJP's response were as follows;
We’ve been made aware that the latest Spot the Dog annual survey from Bestinvest will be published on Saturday 12 August. This report ‘names and shames poor performing funds’, based on two quantitative performance filters:
Funds that have underperformed the benchmark index over three consecutive 12-month periods
Funds that have underperformed the benchmark index by 10% or more over the entire three-year period
Six of our funds - Continental European, Global Emerging Markets, Global Growth, Global Quality, Greater European Progressive, and International Equity - will feature in the report. This may generate increased press coverage over the weekend.
All performance analysis of our funds - whether it's Spot the Dog, Yodelar, or even our own Value Assessment Statement - is inclusive of our single Ongoing Charges Figure, which includes the charges for the external fund manager, administration, advice and platform.
This means that any performance assessment is rarely an apples with apples comparison. The majority of other asset managers' performance does not include the charges for these additional services (advice and admin).
Page 25 of our Value Assessment Statement shows a clear breakdown of these charges, and you can see the charges for ongoing advice and administration account for 77.5bps of the Ongoing Charge Figure. Advice is not included in any of our peers’ performance results. If we adjust our fund performance by 77.5bps to create a more level playing field, then 65% of our funds are outperforming competitors (measured against the fund’s respective IA peer group) over 5 years to the end of June.
> So, in short, they release this report every year with an unfair comparison of charges to generate the outcome they desire. Setting that aside for a moment, this notion of Dog Funds & 5-star funds is just nonsense. When you re-compare the performance of those funds 12 months later you'll often see the "5-star" fund is now bottom quartile.
Making decisions based on past performance is well proven to lead to worse outcomes, not better.
The table below shows how the best-performing fund in one year can quickly become the worst performing the following year, and vice versa. Outperformance in a single year does not automatically create a consistently performing fund.
Naturally FT aren't going to publish SJP's response.
I'd have to try and find the full report and delve into it, but I think what you are saying is you build into your fund pricing/performance all fee's. But on the assumption that charge (%) doesn't change year on year, then the year to year comparison would be relevant would it not?
i.e. say in Jan 2022 the fund price was £1 a unit AFTER all your fee's, then a year later it was £0.90 AFTER fee's that's a 10% real value drop isn't it. If neither the Jan 2022 or Jan 2023 figures included fee's it would still show a 10% drop, It may just be its 105p in Jan 2022 and 95p in Jan 2023.
Not sure that is what the table shows, it'd need more data to properly evaluate and model, just because the bottom one's have gone up 24.5% you'd need to know what they had gone down by previously, if that was greater than 20% you'll still be negative. The fact they are so lowly ranked in 2020 will likely mean their performance was really poor so I'd guess you would indeed be negative over the 2019-2021 period. A 20% drop followed by 20% growth is still less (100*80%*120% is less than the original 100)
The top ten in 2020 70% have continued to achieve growth in 2021 and the compounding of that could be massive in comparison. I know which table I'd rather have my money in (longer term).
All that said number 3 fund looks interesting!
The table does seem to imply that a good investment strategy would be to annually move your investment into last year's ten worst performing funds!
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
That's what I mean Rob, just another example of FT simply commenting on an article as a easy content and as they are only quoting the results of the report, they carry no responsibility. If they had any journalistic integrity they would have considered the accuracy of the data and whether the source has any ulterior motive.
Some of the key points from SJP's response were as follows;
We’ve been made aware that the latest Spot the Dog annual survey from Bestinvest will be published on Saturday 12 August. This report ‘names and shames poor performing funds’, based on two quantitative performance filters:
Funds that have underperformed the benchmark index over three consecutive 12-month periods
Funds that have underperformed the benchmark index by 10% or more over the entire three-year period
Six of our funds - Continental European, Global Emerging Markets, Global Growth, Global Quality, Greater European Progressive, and International Equity - will feature in the report. This may generate increased press coverage over the weekend.
All performance analysis of our funds - whether it's Spot the Dog, Yodelar, or even our own Value Assessment Statement - is inclusive of our single Ongoing Charges Figure, which includes the charges for the external fund manager, administration, advice and platform.
This means that any performance assessment is rarely an apples with apples comparison. The majority of other asset managers' performance does not include the charges for these additional services (advice and admin).
Page 25 of our Value Assessment Statement shows a clear breakdown of these charges, and you can see the charges for ongoing advice and administration account for 77.5bps of the Ongoing Charge Figure. Advice is not included in any of our peers’ performance results. If we adjust our fund performance by 77.5bps to create a more level playing field, then 65% of our funds are outperforming competitors (measured against the fund’s respective IA peer group) over 5 years to the end of June.
> So, in short, they release this report every year with an unfair comparison of charges to generate the outcome they desire. Setting that aside for a moment, this notion of Dog Funds & 5-star funds is just nonsense. When you re-compare the performance of those funds 12 months later you'll often see the "5-star" fund is now bottom quartile.
Making decisions based on past performance is well proven to lead to worse outcomes, not better.
The table below shows how the best-performing fund in one year can quickly become the worst performing the following year, and vice versa. Outperformance in a single year does not automatically create a consistently performing fund.
Naturally FT aren't going to publish SJP's response.
I'd have to try and find the full report and delve into it, but I think what you are saying is you build into your fund pricing/performance all fee's. But on the assumption that charge (%) doesn't change year on year, then the year to year comparison would be relevant would it not?
i.e. say in Jan 2022 the fund price was £1 a unit AFTER all your fee's, then a year later it was £0.90 AFTER fee's that's a 10% real value drop isn't it. If neither the Jan 2022 or Jan 2023 figures included fee's it would still show a 10% drop, It may just be its 105p in Jan 2022 and 95p in Jan 2023.
Not sure that is what the table shows, it'd need more data to properly evaluate and model, just because the bottom one's have gone up 24.5% you'd need to know what they had gone down by previously, if that was greater than 20% you'll still be negative. The fact they are so lowly ranked in 2020 will likely mean their performance was really poor so I'd guess you would indeed be negative over the 2019-2021 period. A 20% drop followed by 20% growth is still less (100*80%*120% is less than the original 100)
The top ten in 2020 70% have continued to achieve growth in 2021 and the compounding of that could be massive in comparison. I know which table I'd rather have my money in (longer term).
All that said number 3 fund looks interesting!
The table does seem to imply that a good investment strategy would be to annually move your investment into last year's ten worst performing funds!
Don't know why, but your comment reminded me of this!
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
That's what I mean Rob, just another example of FT simply commenting on an article as a easy content and as they are only quoting the results of the report, they carry no responsibility. If they had any journalistic integrity they would have considered the accuracy of the data and whether the source has any ulterior motive.
Some of the key points from SJP's response were as follows;
We’ve been made aware that the latest Spot the Dog annual survey from Bestinvest will be published on Saturday 12 August. This report ‘names and shames poor performing funds’, based on two quantitative performance filters:
Funds that have underperformed the benchmark index over three consecutive 12-month periods
Funds that have underperformed the benchmark index by 10% or more over the entire three-year period
Six of our funds - Continental European, Global Emerging Markets, Global Growth, Global Quality, Greater European Progressive, and International Equity - will feature in the report. This may generate increased press coverage over the weekend.
All performance analysis of our funds - whether it's Spot the Dog, Yodelar, or even our own Value Assessment Statement - is inclusive of our single Ongoing Charges Figure, which includes the charges for the external fund manager, administration, advice and platform.
This means that any performance assessment is rarely an apples with apples comparison. The majority of other asset managers' performance does not include the charges for these additional services (advice and admin).
Page 25 of our Value Assessment Statement shows a clear breakdown of these charges, and you can see the charges for ongoing advice and administration account for 77.5bps of the Ongoing Charge Figure. Advice is not included in any of our peers’ performance results. If we adjust our fund performance by 77.5bps to create a more level playing field, then 65% of our funds are outperforming competitors (measured against the fund’s respective IA peer group) over 5 years to the end of June.
> So, in short, they release this report every year with an unfair comparison of charges to generate the outcome they desire. Setting that aside for a moment, this notion of Dog Funds & 5-star funds is just nonsense. When you re-compare the performance of those funds 12 months later you'll often see the "5-star" fund is now bottom quartile.
Making decisions based on past performance is well proven to lead to worse outcomes, not better.
The table below shows how the best-performing fund in one year can quickly become the worst performing the following year, and vice versa. Outperformance in a single year does not automatically create a consistently performing fund.
Naturally FT aren't going to publish SJP's response.
I'd have to try and find the full report and delve into it, but I think what you are saying is you build into your fund pricing/performance all fee's. But on the assumption that charge (%) doesn't change year on year, then the year to year comparison would be relevant would it not?
i.e. say in Jan 2022 the fund price was £1 a unit AFTER all your fee's, then a year later it was £0.90 AFTER fee's that's a 10% real value drop isn't it. If neither the Jan 2022 or Jan 2023 figures included fee's it would still show a 10% drop, It may just be its 105p in Jan 2022 and 95p in Jan 2023.
Not sure that is what the table shows, it'd need more data to properly evaluate and model, just because the bottom one's have gone up 24.5% you'd need to know what they had gone down by previously, if that was greater than 20% you'll still be negative. The fact they are so lowly ranked in 2020 will likely mean their performance was really poor so I'd guess you would indeed be negative over the 2019-2021 period. A 20% drop followed by 20% growth is still less (100*80%*120% is less than the original 100)
The top ten in 2020 70% have continued to achieve growth in 2021 and the compounding of that could be massive in comparison. I know which table I'd rather have my money in (longer term).
All that said number 3 fund looks interesting!
The table does seem to imply that a good investment strategy would be to annually move your investment into last year's ten worst performing funds!
Haha! Would seemingly be better than moving all of your money into last years best performing funds. That’s basically what the likes of Yodelar encourage because, a bit like picking the lottery numbers the day after the draw, they create a portfolio based on funds that have done well then compare the performance against other companies. Funny thing is they do a 5 year performance comparison despite having not existing for 5 years haha!
I saw that @BrentwoodMark is happy because - "my adviser rebalances my portfolio each year so that my portfolio is better positioned for the following year. I also have received numerous changes to fund managers throughout the year."
If it are me, I would ask why the need for changing managers if a manager selected previously is now no good but was selected in the first place.
Also, by definition you can only 're-balance" a portfolio if it started out being "balanced". A "balanced" portfolio normally means it has a range of different risk rated funds that create a blend to match a medium/long term objective against a benchmark.
Re-balancing is only required if selected funds are not achieving expected performance or the risk profile of selected funds has changed so that the investments are not following the path of the benchmark. If you don't have a benchmark you don't have a balanced portfolio to re-balance. What you have is a portfolio of funds with random outcomes not measurable for success or failure.
Given all statistics prove that fund managers cannot consistently produce out-performance through only selecting out-performing funds, the notion that an adviser has the knowledge to "better position" funds for the next year is wishful thinking.
What I accept is that people are happy to pay for peace of mind that the problem of investing is not theirs. It means advisers tell you what keeps you happy, not what is best for you.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
@Dippenhall made a lot of useful points though don't you think?
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
I used to read the FT and thought it was head and shoulders above the other publications. In respect of FT online at least it’s a shame to see how far they have fallen. Rather than their own journalists writing a thought-provoking piece, it’s often now a freelance journalist (with skin in the game) opinion piece or they simply report on “analysts” whom they clearly undertake absolutely zero due diligence on. I suppose, much like all social media, they have to go for what gets clicks and engagement.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
The problem with all of this, is how on Earth can you know who to trust?
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
That's what I mean Rob, just another example of FT simply commenting on an article as a easy content and as they are only quoting the results of the report, they carry no responsibility. If they had any journalistic integrity they would have considered the accuracy of the data and whether the source has any ulterior motive.
Some of the key points from SJP's response were as follows;
We’ve been made aware that the latest Spot the Dog annual survey from Bestinvest will be published on Saturday 12 August. This report ‘names and shames poor performing funds’, based on two quantitative performance filters:
Funds that have underperformed the benchmark index over three consecutive 12-month periods
Funds that have underperformed the benchmark index by 10% or more over the entire three-year period
Six of our funds - Continental European, Global Emerging Markets, Global Growth, Global Quality, Greater European Progressive, and International Equity - will feature in the report. This may generate increased press coverage over the weekend.
All performance analysis of our funds - whether it's Spot the Dog, Yodelar, or even our own Value Assessment Statement - is inclusive of our single Ongoing Charges Figure, which includes the charges for the external fund manager, administration, advice and platform.
This means that any performance assessment is rarely an apples with apples comparison. The majority of other asset managers' performance does not include the charges for these additional services (advice and admin).
Page 25 of our Value Assessment Statement shows a clear breakdown of these charges, and you can see the charges for ongoing advice and administration account for 77.5bps of the Ongoing Charge Figure. Advice is not included in any of our peers’ performance results. If we adjust our fund performance by 77.5bps to create a more level playing field, then 65% of our funds are outperforming competitors (measured against the fund’s respective IA peer group) over 5 years to the end of June.
> So, in short, they release this report every year with an unfair comparison of charges to generate the outcome they desire. Setting that aside for a moment, this notion of Dog Funds & 5-star funds is just nonsense. When you re-compare the performance of those funds 12 months later you'll often see the "5-star" fund is now bottom quartile.
Making decisions based on past performance is well proven to lead to worse outcomes, not better.
The table below shows how the best-performing fund in one year can quickly become the worst performing the following year, and vice versa. Outperformance in a single year does not automatically create a consistently performing fund.
Naturally FT aren't going to publish SJP's response.
I'd have to try and find the full report and delve into it, but I think what you are saying is you build into your fund pricing/performance all fee's. But on the assumption that charge (%) doesn't change year on year, then the year to year comparison would be relevant would it not?
i.e. say in Jan 2022 the fund price was £1 a unit AFTER all your fee's, then a year later it was £0.90 AFTER fee's that's a 10% real value drop isn't it. If neither the Jan 2022 or Jan 2023 figures included fee's it would still show a 10% drop, It may just be its 105p in Jan 2022 and 95p in Jan 2023.
Not sure that is what the table shows, it'd need more data to properly evaluate and model, just because the bottom one's have gone up 24.5% you'd need to know what they had gone down by previously, if that was greater than 20% you'll still be negative. The fact they are so lowly ranked in 2020 will likely mean their performance was really poor so I'd guess you would indeed be negative over the 2019-2021 period. A 20% drop followed by 20% growth is still less (100*80%*120% is less than the original 100)
The top ten in 2020 70% have continued to achieve growth in 2021 and the compounding of that could be massive in comparison. I know which table I'd rather have my money in (longer term).
All that said number 3 fund looks interesting!
Re the SJP aspect the issue is they they compare our fund (after the deduction of ALL charges) against funds being shown without the deduction of all charges. They should either show the performance of all funds after all charges, or if that’s not possible then a like-for-like comparison.
It’s like comparing the cost of a flight with Airline A ( who for example charge for the flight and include everything from luggage to Wi-Fi) and comparing it against airline B’s initial flight ticket cost, knowing full well that luggage etc is extra. It’s a deliberate strategy and due to the lack of scrutiny it works.
re the table, that isn’t SJP specific. I think it’s from an analysis of the top x amount of funds available in the UK. What it’s showing you is simply that judging a fund on its last 12 months performance and giving it a rating based solely on that is a fools game. Again, that’s the hook that these companies use to attract business.
Neither Golfie nor I would be allowed to attract new business in this way with the irony being the less regulated you are, the more you get away with.
Thanks for being unhappy on my behalf, you really don’t need to be. Fund performance is quite often cyclical, this can be due to region, sector, assets, or the characteristics of the manager style, which could be value, growth, contrarian, quality etc.There are exceptions but fund performance reflects a moment in time in the economic cycle. We saw this over the last 12 -18 months as rate sensitive bonds came under pressure due restrictive global monetary policy in essence the higher for longer narrative.
The opposite could be true in 2024 as rate cuts are predicted in the US, the 10 year treasury is off its 5% recent peak and corporate bonds and fixed interest will do more heavy lifting in the typical 60/40 portfolios and hopefully next year will bring broader returns from the different sectors in equities rather than the mega caps (tech) doing all the work.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
It is far to simplistic to say why was a no good manager selected in the first place because it is not all apart chasing past performance.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
I apologise for being patronising.
I have spent my career challenging advisers on their advice, but professional advisers expect it and it is necessary.
The approach being taken by SJP, and many other retail advisers, on the surface, is what a corporate investor might seek from an institutional investment consultant. But the degree of engagement with a corporate client to set and manage targets, create bespoke portfolios and take discretionary decisions on the fly and to provide detailed reporting and monitoring, is a World away from what a retail adviser can provide for the fees charged.
Your annual SJP review and "re-balancing" would be akin to tactical changes in the relative weighting of the range of asset classes within a corporate portfolio. In truth, the random nature of short term relative performance of the main asset classes makes such a strategy extremely challenging. If you were able to monitor the effect on returns you would find it adds little, if any, long term value. The butterfly effect invariably intervenes and messes up the economic and market analysis that has come from the brains of the operation.
It is ironic that the only part of the advisory advice that relies on predicting relative short term market movements is proven to be the least useful, yet retail advisers and customers, expect that to be a core service. Human nature persists in believing it must be possible to rely on the experts to offer a better than 50% chance of choosing the winners next year.
What i am getting at is that SJP, and others, are offering a service that gives the impression of being sophisticated but in reality is too superficial to either add value or allow the customer to find out if value has been added.
A much less sophisticated approach is justified for a private investor without having to expect a worse relative outcome than a corporate investor. Problem is you can't justify the higher fees for a simple service.
There are a few basic historical statistics that tend to drive informed investment decision making 1. Over 90% of the impact on investment returns is derived from asset class selection, not stock selection 2. Relative asset class performance from year to year is often unpredictable, but they have long term observable patterns 3. Over the long term, paying higher charges for active management is not rewarded. 4. Investors as a body, invariably disinvest from active managers prior to an improvement in performance and invest in managers prior to a drop in performance so never optimising returns.
To put point 4 another way, the combined returns of all investors is less than the published returns of all managers, so clearly changing managers according to what tier they are in is sub-optimal. Chasing performance by chasing managers doesn't work.
Informed investors change managers on the basis of the reason for under-performance, to see if it is systemic or an explainable glitch, not on the basis of what tier they are in. it's a cheap and easy ride for advisers to be able to justify a change by showing their client tables.
Conveniently, the industry has never produced data that would allow core advice to be compared across different firms of advisers, and customers have no data to deduce the success or otherwise of taking advice. So no one can say whether SJP customers are better or worse off than being anywhere else.
So I'm not saying anyone investing with SJP is a dummy, but SJP is an outfit set up by Margaret Thatcher's advisor Mark Weinberg to facilitate pensions mis-selling in a free market. So I have an historical bias.
800,000 clients is a testament to the excellent training of accomplished financial services salesmen.
SJP's shares fell by 15% when it was feared the exit penalties were to be outlawed by FCA, perhaps they know something we don't about where SJP derives its profits.
Does anybody have experience of BT pensions and the 4 options that they provide?
A friend is trying to work out the best option and as the figures are fairly lowly (first job decades ago), thought to ask his network before seeking financial advice (I know, I know). No private data, just numbers. Any help or steers be very much appreciated:
Does anybody have experience of BT pensions and the 4 options that they provide?
A friend is trying to work out the best option and as the figures are fairly lowly (first job decades ago), thought to ask his network before seeking financial advice (I know, I know). No private data, just numbers. Any help or steers be very much appreciated:
Speaking as an ex-financial adviser (and even if I wasn't) one would presume your friend would want to minimise the amount of tax he pays and therefore it looks like option 4 is best, with option 2 2nd choice.
In the context of a BT (British Telecommunications) pension, "PIE" likely refers to "Pension Increase Exchange." Pension Increase Exchange (PIE) is a scheme offered by some pension providers, including BT, where a pensioner can choose to exchange part of their annual pension increase in return for a larger initial pension payment.
Here's how it generally works:
Annual Pension Increase: Pensions often come with annual increases to help keep up with inflation. This increase ensures that the purchasing power of the pension remains relatively stable over time.
Exchange Offer: With a Pension Increase Exchange (PIE), the pensioner may be offered the choice to sacrifice some or all of their annual pension increases in exchange for a higher starting pension payment.
Higher Initial Payment: By choosing the exchange, the pensioner receives a larger pension payment upfront. However, they forgo future increases to their pension, meaning their pension won't rise in line with inflation in the future.
Considerations: Pensioners considering a PIE offer should carefully evaluate their financial situation, future needs, and the potential impact of forgoing future increases. Factors such as health, expected lifespan, and other sources of income should also be taken into account.
It's important for individuals to thoroughly understand the terms and implications of any pension scheme, including a PIE offer, before making a decision. Consulting with a financial advisor or pension specialist can be beneficial in understanding the potential outcomes and risks associated with such decisions.
Really depends on HIS personal circumstances. How much other pension income does he have ? Will he be a 20% taxpayer in retirement? 40% taxpayer ? Does he have other cash sitting around or does he need £10k cash ?
As @Covered End says, usually it's better to take the tax free lump sum, but they are pretty low figures so I doubt whatever he chooses will make much of difference.
1. Option1 is a standard BT pension without any of it being exchanged for cash. This pension increases each year - don't know the exact terms, but typically CPI limited to a figure like 3% 0r 5%, you should ask the administrators what the increase rules are.
2. This is the pension in option 1 reduced in exchange for a cash sum. (Note that the pension surrendered for a cash sum i.e £464, is good value if you could buy a pension with the same features in the market for the cash sum of £9,403. I suspect you couldn't because the factors are either unlikely to be current market related or they are fixed and skewed in favour of the scheme finances). It's tax free whereas the higher pension is taxable, but if it's worse value then only makes sense if you have a wish or need for capital - like repaying mortgage or buying a Chelsea season ticket. Taking the cash and putting it in a savings account just because it's tax free and for no other reason isn't financially sensible.
3. Is BT trying to improve the funding position of the scheme by encouraging you to give up future pension increases (or part of) in return for a higher starting pension. If you think you have worse mortality prospects than the average it might be worth doing, but if you live beyond the average then you will win by not taking this option.
All I will say about the PIE factor is couple of friends of mine took advice regarding National Grid /L.E.B pension. They accepted a 1% annual increase and took a larger starting pension. The advice was that the average increase would likely be 2-3 per annum. So would take years for them to be losing out.
However, last 3 years the pension has gone up 4.9% in 2022 12.6% in 2023 and will be 8.9% in 2024. Absolutely destroying the 2-3 % average.
Their pension like bloody Civil Servants goes up by RPI without any CAP. I wouldn’t mind guessing that the BT pension is the same, as an ex nationalised industry.
But with such a small pension, I would go with what those more in the know than me have said above.
Look at the fee's of each as they vary wildly in that list,
Interactive investor gives you pretty good market access and low fee's, especially once your pot gets to a certain size. Ditto Fidelity, but fee's will be higher longer term.
Do not touch St James place!
Or the apostrophe key if you don’t know how to use it.
On a more generic note, does anybody have any tips for pensions (workplace, Sipp) or lump sums, annuity, etc that they look back now and with they may have done something differently?
I'm going to add personal contributions to my workplace pension and consider salary sacrifice, but thought I'd ask this very handy board.
My only regret re: pension is not starting earlier in life and not putting more into it. The impact of compound interest is astonishing over a lengthy period and the tax efficiencies (especially for higher rate tax payers) mean it is a very efficient vehicle for savings, the only caveat being, you need to live long enough to get your hands on it. At least on that last point, it defers to next of kin if the worst happens.
On a more generic note, does anybody have any tips for pensions (workplace, Sipp) or lump sums, annuity, etc that they look back now and with they may have done something differently?
I'm going to add personal contributions to my workplace pension and consider salary sacrifice, but thought I'd ask this very handy board.
Salary sacrifice is well worth doing, saves NI, sometimes employers give you a little bit of their saving as well, so worth considering and asking. We can also salary sacrifice bonuses and we get half the NI saving back from the company as well as 10% uplift.
as @BalladMan has said, the earlier you start the better. I was fortunate that ever since I reached 21 my employers had pensions and I always took them.
Can't honestly say I'd do anything much different over the years by way of pensions. Certainly for me the main decision was back in 2014 when I cashed out an old final salary scheme, always felt it was the right decision at the time and has proved massively so since! It helped at the time Barclays were giving a ridiculous multiplier of near 40x so at aged 40 as I was then it was pretty low risk and I liked the fact I was in control and it didn't disappear on death.
If anything, our personal circumstances mean in hindsight I would have started topping up my wife's earlier than I did, my salary is 10x + hers so the result being my pension pot is very large hers is very small, but I'm trying to balance that out as much as possible. Reason being when we retire no point me being a 40% tax payer and her barely paying any tax.
Comments
I’d have to agree with you re performance being the main driver, that’s why it is only when markets are struggling that people question charges. The private investors v professional element tends to go in phases. In the last 2 years for example the average private investor will have a lot more equity weighting in their portfolio and therefore a lot of professionally managed portfolio’s have been hammered as all the lower-risk stuff has had a stinker over that period. The opposite was true during covid. What tends to damage the private investor over the medium to longer-term is poor risk management and irrational decision making. I believe there is a place for both approaches.
I’m not sure you truly appreciate where the value lies in having an Adviser, if it was a case of paying an up-front charge and say 2-3 x the charges of a DIY portfolio to simply have an annual chat about the funds, then I agree with you that this would represent poor value. The investment bit is only one part of the overall value that a quality adviser should bring to the table. For those that have the time, knowledge and inclination then absolutely they can do it themselves, although the problem is you don’t know what you don’t know.
With regards to ’life-time pension cap’, other than the tax-free cash element don’t forget that the Lifetime Allowance was quietly removed, albeit I expect a labour government would bring it back in some way or another eventually.
You’ve hit the nail on the head re large up-front fees. I think we are slowly seeing the end of this with average initial charges coming down. Having spoken with a number of advisers over the last 12 months the focus has definitely shifted to the importance of ongoing charges and being much more selective with the clients we work with due to increasingly onerous regulation. I think fee-based advice is ideal in certain cases. Where someone has a good level of knowledge I think they would benefit from the occasional check-in with an Adviser to sense check their work and hopefully bring some additional value to the table. I also think it’s a great entry point for people who either don’t have a very big portfolio or don’t know if they need advice. There is no doubt that there are a lot of people paying ongoing charges who are not receiving the equivalent value from their adviser and the regulator are finally doing something about it. I’ve started working with a fairly young tech guy recently, he has done such an excellent job of organising his financials and planning that we have agreed to a fee-based approach which will mean a couple of initial sessions and then some form of regular contact to check in and keep him accountable. He must have seen value in the meetings as he requested quarterly meetings (and was willing to pay handsomely) but I just didn’t feel that there was a need for such regular meetings at this stage.
The issue with “dog funds” is;
1. Who is compiling the data?
2. What is their purpose for compiling the data?
3. Is the comparison being done on a fair and accurate basis?
The answer is often that it’s a hook for a marketing funnel for the likes of Yodelar (evidencable con-artists) or companies that sell expensive client leads to Advisers. The comparisons are often riddled with mistake and as with all statistics set up to deliver the desired outcome. There is a worryingly low amount of genuinely independent research.
Overall, I agree with a lot of what you are saying certainly if you look at the investment aspect in isolation. That certainly would encompass poor quality Advisers who bring little else to the table, but I still believe in the value of quality ongoing advice. I’d have to dig them out but there are several studies that put the value of advice at around the 2% pa mark. I suppose the problem is that the proof is in the pudding and you don’t know until you’ve paid for the pudding and eaten it whether you liked it!
Again, are you going to judge 4500 businesses, (representing the highest collection of the highest qualified individuals in the country) on a daughters neighbour? That's no more fair or accurate than judging all IFA's on the one IFA that messed up your planning. Do they exist? Yes, especially in the very large practices.
Absolutely, SJP retained the exit penalty because it made them more money, we all know that.
It's also true that the average client who engages with financial advice is clueless. I could have charged a lot more over the years because most of the time you say a figure and the client says OK. Personally, I just couldn't do it morally. There are a lot of IFA's and other SJP advisers that would. One of the best things about the recent consumer review is that companies have to evidence good client outcomes. What you will increasingly see is where a complaint is made, as standard firms will have to do a comparison return against an appropriate index (such as the private investors index). Where firms have under performed this they are going to need either a very good explanation or they will have to refund the difference with a healthy level of interest. Long way to go, but I've seen a good level of progress in the last 10 years in the financial advisory world and it's gradually getting more difficult for sh*t advisers.
I think the FCA need to set up a separate arm solely for the purpose of helping clients at the point of seeking advice or deciding whether they need advice. The FCA register should be extended to allow for direct reviews by clients and firms should be obliged to write to clients each year and remind them of their ability to do so. It could also for example show the average Initial and Ongoing charges that the firm have levied across all clients. It is a long way off, but as the technology improves I see no reason why this visibility shouldn't be available to potential clients.
So of course there is no guaranteed way to generate better returns but I do believe that adapting to the external environment makes sense and altering allocations or changing underperforming funds or managers is part of this. Many funds can fall from 1st quartile to say 3rd quartile over a period of time a deeper dive into the analytics will shine a light as to why.
The SJP investment committee provide allocation updates to partners on their portfolios, these are risk and performance adjusted and discussed at my review. For example my exposure to Emerging Markets has gone up as after a period of regional underperformance there is potential upside in there, whilst other funds have been pruned back a little. These changes keep me in my desired risk profile/model and follow a select, monitor and change approach.
I do not know why you would be so critical of another company that a fellow lifer uses, and imply that I am dummy to be happy with SJP.
Just for clarity again I paid no upfront charge to consolidate my pensions, the full value was invested. If I would have used an IFA I would have paid 3-2% upfront golfie knows this is to be correct in the industry and therefore I would not have benefited from the original gross accumulation. I only pay an exit penalty if I transfer the pension elsewhere in 6 years, which I do not intend to do. What is so bad about that?
I know it doesn’t suit the narrative, but £150 billion under management and 800,000 clients but we are all wrong and your right.
https://www.fisherinvestments.com/en-gb/yodelar-review
They’ve toned it down a bit, but still good to see a company go after the conmen.
One question I had was when you said you'd received "numerous changes to fund managers throughout the year."
Are you in the standard SJP Product, i.e. were all the funds SJP funds? I seem to recall an article in the FT a couple of years ago about SJP having the largest number of what they referred to as 'in the dog house' funds, SJP's response in part was they were and had changed a number of their fund managers.
The main thing is your with SJP and are happy, that's all that really matters in that respect.
Only way to ever be sure is to read your personalised illustration. It will be spelt out in black & white what the charges are - maybe only in the reduction in yield figures but it's there.
Re the “dogs” list, I think you are referring to Bestinvest “spot the dog” report. Always worth considering the intentions of a company that are compiling an “independent” analysis. Its often, as with them, simply a marketing funnel and the FCA “clear, fair and not misleading” rules don’t seem to apply.
https://www.ftadviser.com/investments/2023/08/14/more-than-half-of-dog-assets-are-held-in-sjp-funds/
Seems to be one of their own reporters (FT), but yes was from the BestInvest report. SJP didn't seem to challenge or deny it, but gave outcomes as to what they had done such as change fund managers on some.
Tom Beal, director of investments at St James’s Place, said: “It’s important to note that the performance of these funds is inclusive of our single ongoing charge which includes the cost for the external fund manager, administration and advice.
“We continually monitor, review, and update our investment proposition to make sure we’re delivering the right outcomes for our clients. In the past two years four of the funds mentioned have undergone a change in manager and performance benefits of these changes will take time to filter through.
Some of the key points from SJP's response were as follows;
We’ve been made aware that the latest Spot the Dog annual survey from Bestinvest will be published on Saturday 12 August. This report ‘names and shames poor performing funds’, based on two quantitative performance filters:
Six of our funds - Continental European, Global Emerging Markets, Global Growth, Global Quality, Greater European Progressive, and International Equity - will feature in the report. This may generate increased press coverage over the weekend.
All performance analysis of our funds - whether it's Spot the Dog, Yodelar, or even our own Value Assessment Statement - is inclusive of our single Ongoing Charges Figure, which includes the charges for the external fund manager, administration, advice and platform.
This means that any performance assessment is rarely an apples with apples comparison. The majority of other asset managers' performance does not include the charges for these additional services (advice and admin).
Page 25 of our Value Assessment Statement shows a clear breakdown of these charges, and you can see the charges for ongoing advice and administration account for 77.5bps of the Ongoing Charge Figure. Advice is not included in any of our peers’ performance results. If we adjust our fund performance by 77.5bps to create a more level playing field, then 65% of our funds are outperforming competitors (measured against the fund’s respective IA peer group) over 5 years to the end of June.
> So, in short, they release this report every year with an unfair comparison of charges to generate the outcome they desire. Setting that aside for a moment, this notion of Dog Funds & 5-star funds is just nonsense. When you re-compare the performance of those funds 12 months later you'll often see the "5-star" fund is now bottom quartile.
I'd have to try and find the full report and delve into it, but I think what you are saying is you build into your fund pricing/performance all fee's. But on the assumption that charge (%) doesn't change year on year, then the year to year comparison would be relevant would it not?
i.e. say in Jan 2022 the fund price was £1 a unit AFTER all your fee's, then a year later it was £0.90 AFTER fee's that's a 10% real value drop isn't it. If neither the Jan 2022 or Jan 2023 figures included fee's it would still show a 10% drop, It may just be its 105p in Jan 2022 and 95p in Jan 2023.
Not sure that is what the table shows, it'd need more data to properly evaluate and model, just because the bottom one's have gone up 24.5% you'd need to know what they had gone down by previously, if that was greater than 20% you'll still be negative. The fact they are so lowly ranked in 2020 will likely mean their performance was really poor so I'd guess you would indeed be negative over the 2019-2021 period. A 20% drop followed by 20% growth is still less (100*80%*120% is less than the original 100)
The top ten in 2020 70% have continued to achieve growth in 2021 and the compounding of that could be massive in comparison. I know which table I'd rather have my money in (longer term).
All that said number 3 fund looks interesting!
https://www.facebook.com/VWGolfUnity/videos/this-is-the-man-who-put-a-million-on-black-and-it-came-up-red-this-is-the-man-wh/611384165632238/
It’s like comparing the cost of a flight with Airline A ( who for example charge for the flight and include everything from luggage to Wi-Fi) and comparing it against airline B’s initial flight ticket cost, knowing full well that luggage etc is extra. It’s a deliberate strategy and due to the lack of scrutiny it works.
re the table, that isn’t SJP specific. I think it’s from an analysis of the top x amount of funds available in the UK. What it’s showing you is simply that judging a fund on its last 12 months performance and giving it a rating based solely on that is a fools game. Again, that’s the hook that these companies use to attract business.
Neither Golfie nor I would be allowed to attract new business in this way with the irony being the less regulated you are, the more you get away with.
I apologise for being patronising.
I have spent my career challenging advisers on their advice, but professional advisers expect it and it is necessary.
The approach being taken by SJP, and many other retail advisers, on the surface, is what a corporate investor might seek from an institutional investment consultant. But the degree of engagement with a corporate client to set and manage targets, create bespoke portfolios and take discretionary decisions on the fly and to provide detailed reporting and monitoring, is a World away from what a retail adviser can provide for the fees charged.
Your annual SJP review and "re-balancing" would be akin to tactical changes in the relative weighting of the range of asset classes within a corporate portfolio. In truth, the random nature of short term relative performance of the main asset classes makes such a strategy extremely challenging. If you were able to monitor the effect on returns you would find it adds little, if any, long term value. The butterfly effect invariably intervenes and messes up the economic and market analysis that has come from the brains of the operation.
It is ironic that the only part of the advisory advice that relies on predicting relative short term market movements is proven to be the least useful, yet retail advisers and customers, expect that to be a core service. Human nature persists in believing it must be possible to rely on the experts to offer a better than 50% chance of choosing the winners next year.
What i am getting at is that SJP, and others, are offering a service that gives the impression of being sophisticated but in reality is too superficial to either add value or allow the customer to find out if value has been added.
A much less sophisticated approach is justified for a private investor without having to expect a worse relative outcome than a corporate investor. Problem is you can't justify the higher fees for a simple service.
There are a few basic historical statistics that tend to drive informed investment decision making
1. Over 90% of the impact on investment returns is derived from asset class selection, not stock selection
2. Relative asset class performance from year to year is often unpredictable, but they have long term observable patterns
3. Over the long term, paying higher charges for active management is not rewarded.
4. Investors as a body, invariably disinvest from active managers prior to an improvement in performance and invest in managers prior to a drop in performance so never optimising returns.
To put point 4 another way, the combined returns of all investors is less than the published returns of all managers, so clearly changing managers according to what tier they are in is sub-optimal. Chasing performance by chasing managers doesn't work.
Informed investors change managers on the basis of the reason for under-performance, to see if it is systemic or an explainable glitch, not on the basis of what tier they are in. it's a cheap and easy ride for advisers to be able to justify a change by showing their client tables.
Conveniently, the industry has never produced data that would allow core advice to be compared across different firms of advisers, and customers have no data to deduce the success or otherwise of taking advice. So no one can say whether SJP customers are better or worse off than being anywhere else.
So I'm not saying anyone investing with SJP is a dummy, but SJP is an outfit set up by Margaret Thatcher's advisor Mark Weinberg to facilitate pensions mis-selling in a free market. So I have an historical bias.
800,000 clients is a testament to the excellent training of accomplished financial services salesmen.
SJP's shares fell by 15% when it was feared the exit penalties were to be outlawed by FCA, perhaps they know something we don't about where SJP derives its profits.
In the context of a BT (British Telecommunications) pension, "PIE" likely refers to "Pension Increase Exchange." Pension Increase Exchange (PIE) is a scheme offered by some pension providers, including BT, where a pensioner can choose to exchange part of their annual pension increase in return for a larger initial pension payment.
Here's how it generally works:
Annual Pension Increase: Pensions often come with annual increases to help keep up with inflation. This increase ensures that the purchasing power of the pension remains relatively stable over time.
Exchange Offer: With a Pension Increase Exchange (PIE), the pensioner may be offered the choice to sacrifice some or all of their annual pension increases in exchange for a higher starting pension payment.
Higher Initial Payment: By choosing the exchange, the pensioner receives a larger pension payment upfront. However, they forgo future increases to their pension, meaning their pension won't rise in line with inflation in the future.
Considerations: Pensioners considering a PIE offer should carefully evaluate their financial situation, future needs, and the potential impact of forgoing future increases. Factors such as health, expected lifespan, and other sources of income should also be taken into account.
It's important for individuals to thoroughly understand the terms and implications of any pension scheme, including a PIE offer, before making a decision. Consulting with a financial advisor or pension specialist can be beneficial in understanding the potential outcomes and risks associated with such decisions.
As @Covered End says, usually it's better to take the tax free lump sum, but they are pretty low figures so I doubt whatever he chooses will make much of difference.
So many questions.....
2. This is the pension in option 1 reduced in exchange for a cash sum. (Note that the pension surrendered for a cash sum i.e £464, is good value if you could buy a pension with the same features in the market for the cash sum of £9,403. I suspect you couldn't because the factors are either unlikely to be current market related or they are fixed and skewed in favour of the scheme finances). It's tax free whereas the higher pension is taxable, but if it's worse value then only makes sense if you have a wish or need for capital - like repaying mortgage or buying a Chelsea season ticket. Taking the cash and putting it in a savings account just because it's tax free and for no other reason isn't financially sensible.
3. Is BT trying to improve the funding position of the scheme by encouraging you to give up future pension increases (or part of) in return for a higher starting pension. If you think you have worse mortality prospects than the average it might be worth doing, but if you live beyond the average then you will win by not taking this option.
4. Same principles as for 2.
But with such a small pension, I would go with what those more in the know than me have said above.
I'm going to add personal contributions to my workplace pension and consider salary sacrifice, but thought I'd ask this very handy board.
as @BalladMan has said, the earlier you start the better. I was fortunate that ever since I reached 21 my employers had pensions and I always took them.
Can't honestly say I'd do anything much different over the years by way of pensions. Certainly for me the main decision was back in 2014 when I cashed out an old final salary scheme, always felt it was the right decision at the time and has proved massively so since! It helped at the time Barclays were giving a ridiculous multiplier of near 40x so at aged 40 as I was then it was pretty low risk and I liked the fact I was in control and it didn't disappear on death.
If anything, our personal circumstances mean in hindsight I would have started topping up my wife's earlier than I did, my salary is 10x + hers so the result being my pension pot is very large hers is very small, but I'm trying to balance that out as much as possible. Reason being when we retire no point me being a 40% tax payer and her barely paying any tax.