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ChasnotRobert
I posted a couple of weeks ago after meeting with an IFA who was recommending that I move the vast majority of my defined contribution pension to abrdn wrap, into a fund that their firm manages.
After getting some good advice from a couple of you on here, I emailed them to ask the following:
Can you tell me more about why you recommended abrdn wrap, especially given the terrible reviews I’ve seen on Trustpilot?
Can you tell me more about why you’ve recommended putting 100% in this fund, and why I wouldn’t be better off as an example, 60% in a low-cost all-world equities tracker (some which are up 70% over the same 5 years for an 0.15% fee), and the rest in bonds, in a low-fee SIPP such as ii?
Here’s my paraphrase of their response.
You as the customer wouldn’t be using abrdn wrap, I would be as the IFA. I’ve used them for many years, they’ve won many awards for many years, and the 141 review on Trustpilot likely aren’t representative of a product used by 408k clients to invest £75bn.
The product I recommended is an investment portfolio that our firm runs for our clients. This means we can tweak it as we need in the future to match your target level of risk. They’ve sent me a full breakdown of what is in this investment portfolio to show the diversification of asset classes and regional exposure. They said that if you want to invest heavily into a world equity tracker then we can discuss it, but it wouldn’t have been right for me to recommend something like that given the information you have provided previously.
They also said that it’s important to remember that pension and investments are just 1 part of the process, and they’re also looking to control your tax position (I’m looking to put more into my pension over the next couple of years to take my adjusted income under 100k so I can retain some free childcare hours). There are further recommendations in the report that will restore my personal allowance in the future and see further tax relief through my tax code. This will effectively increase my take home pay each month.
Those answers seem sensible and reasonable to me. I think I’m gonna go meet with them, but will say that I want to increase the risk of the pension investments and want to do everything possible to decrease the fees for any product my pension is invested in. I’m 34 so a long way from retirement, and I think high fees is the best way to erode any gains you make on investments. We can then obviously reduce risk as I get closer to retirement.
I’ll ask if they could baseline whatever their new recommendation is against just putting 100% into the HSBC FTSE All World Index fund over the last 5 years.
The literature about their own fund that they’ve recommended is all about wealth preservation and inflation beating returns over the medium to long term. At this stage in my life, I think I should be looking for my investments to grow my wealth rather than maintain it! Over the last 5 years the fund has had 15-20% in cash, 35-40% in bonds, and 40-45% in stocks. I definitely think those percentages are too conservative, and could do with a decent chunk more moving to stocks. Equities are 44% in the US, 23% in the UK, 19% in tech, 17% in financial services. It seems fairly standard and western world weighted to me.
I happened to read an interesting article on model portfolios recently, after signing up to the Monevator newsletter: https://www.morningstar.com/personal-finance/ask-these-questions-before-investing-model-portfolios. Thanks for the recommendation, @Matt101 !
If anyone has other thoughts after hearing the above, I’d very much like to hear them. I’m very new to all this, so I welcome different perspectives.