Far from retreating from the wealth management fray as we enter high summer, our users are taking the time to examine ways to boost their returns by trimming costs and saving on tax.
Investment costs and strategies are put under the microscope, amid a rush to review pension savings
The bill for COVID-19 has started to come in, and it looks like higher earners are going to take a big hit in the form of a savaging of the pension Lifetime Allowance. If leaks are to be believed, the next Budget will see the LTA fall from £1,073,100 to £800,000, leaving legions in line for punishing tax charges on savings in excess of this limit.
Our recent piece on alternative methods of saving for retirement outside of pensions clearly struck a chord with our users. Many have spoken of their surprise at learning just how many routes there are to explore.
Those who have used up their pension allowances (or are likely to before too long) have always made up a significant proportion of those coming to us to find professional wealth management advice. Their numbers just continue to grow as so many people are finding themselves hemmed in by frozen allowances and desultory interest rates on cash savings. We really enjoy helping them find alternative ways to put their money to work.
Family Investment Companies, ISAs, offshore bonds and venture capital may not be so familiar to the non-professional, but for the leading advisers on our panel these are workaday elements of the wealth management toolbox. We have numerous examples of investors just like you saving – and making – very much more than they ever imagined, so please get in touch to hear more about how we can help you meet the very best in the industry, fast and free.
DIY investors doubt investment principles
Ever since our inception, a large proportion of our users have been people who have been going it alone in managing their investments but who have realised that they no longer have the time, energy or confidence to manage their portfolio. While DOY investors can certainly do well for themselves, it is often the case that that the larger their portfolio becomes, the more inclined people become to calling in the experts – particularly when vital pots of money like retirement funds are concerned.
Something we’ve noticed recently is the number of conversations in which the “death of the 60:40” portfolio has come up. This refers to the classic balanced portfolio in which 60% comprises equities and 40% bonds to act as a ballast to risk assets. This may have served investors pretty well for decades, but now experts are lining up to offer grim prognoses for this oft-relied upon rule due to the threat of soaring inflation on top of already poor yields.
We now face a world that is greatly changed in a number of ways, and we’re hearing from many previously confident investors who now feel nervous about managing their own investments as a result
This issue forms part of a broader picture whereby the COVID-19 pandemic has turned traditional investor wisdom on its head. Bonds and equities plunged in unison during the dark days of March 2020, giving the lie to these asset classes’ negative correlation. We now face a world that is greatly changed in a number of ways, and we’re hearing from many previously confident investors who now feel nervous about managing their own investments as a result.
As we always tell people weighing up their options, not only can investors get great comfort from having a professional manage their investments, they will invariably achieve superior returns too. Complete our short matching questionnaire and we will help you compare wealth managers’ performance, fees and service offerings side by side to ensure you get the very best deal.
Shock as costs rise on “cheap” funds
Another driver bringing disillusioned DIY investors to the site is the fact that the cheap tracker funds which make up the bulk of many of their portfolios have actually represented far greater expense than they may have expected.
It has emerged in media reportsi that investors have ended up paying fees almost five times higher than their advertised rates amid a surge in transactions prompted by the wild volatility seen over the pandemic crisis. Some fund investors have been hit by trading fees of almost 0.7%.
While passive funds doubtless play an important part in investors’ portfolios, offering cheap and easy exposure to a range of regions, markets and sectors, we’ve heard from many people keen to get guidance on which vehicles are the best value for money
While passive funds doubtless play an important part in investors’ portfolios, offering cheap and easy exposure to a range of regions, markets and sectors, we’ve heard from many people keen to get guidance on which vehicles are the best value for money. It is often underappreciated how much of an impact costs and charges has on returns, and just how much of focus this is for wealth managers. Many people do not know, for instance, that by accessing institutional share classes through a wealth manager, rather than the retail class available to amateurs, they can save very significant sums indeed.
How you invest is as important as what you invest in, and over the long term seemingly small differences can compound to make a very great difference indeed. This is just one of the many reasons why it pays to get started with professional wealth management as early as possible.
i As first reported by The Telegraph
Appreciate the difference professional advice could make
Managing wealth effectively is certainly about maximising returns, but all too often people don’t appreciate just how many facets to this there are. Trimming investment costs and management fees, while also mitigating tax as far as you can, are all hugely important elements of a robust strategy.
When you meet with a wealth manager for the first time (or interview a new one) you will effectively get a “wealth MOT” where a professional eye will be run over your strategy to see where things can be improved. There is often a lot more that could still be done to improve your financial position.
You may have a great deal to gain, and you certainly have nothing to lose since we arrange free, no-obligation discussions with a shortlist of firms perfectly matched to you.
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security. We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.