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Draw down
Biddy
Posted: 07 February 2018 12:24:58(UTC)
#1

Joined: 07/02/2018(UTC)
Posts: 1

Hi any comments/feedback on this. Husband wants to retire at xmas when we are both 59. Will have nearly 1 million jointly in pensions. Getting advice from st James palace but yearly fees of 1.5 seem a bit steep. Any comments greatly received
Joe 90
Posted: 08 February 2018 18:28:36(UTC)
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Avoid IFAs and do a bit of homework yourself. Open a low cost investment platform (I use iWeb) buy a good spread of equity and bond funds and keep 2 years of cash in case the market falls.

Most investment websites will give you guidance on the balance of your portfolio (maybe 70:30 equity funds : bond funds) and suggestions. Diversify across jurisdictions.

The market is very volatile at present so if you’re not in yet, buy slowly over the next 12 months.

Most contributors to this forum (myself included) like Fundsmith and Lindsell Train.

You can probably draw 4% annually without affecting capital too much. This puts the IFA’s 1.5% into true perspective!

Finally, I strongly recommend teaching yourself how to use Google Sheets and the functions that allow you to forecast the future values using assumed growth and drawdown. It’s fun and you’re in control.

Bon chance
1 user thanked Joe 90 for this post.
Tim D on 08/02/2018(UTC)
Mr Helpful
Posted: 08 February 2018 18:46:31(UTC)
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Biddy;56672 wrote:
Hi any comments/feedback on this. Husband wants to retire at xmas when we are both 59. Will have nearly 1 million jointly in pensions. Getting advice from st James palace but yearly fees of 1.5 seem a bit steep. Any comments greatly received


Double-check that management fee.
If really only 1.5%, then might just might be worthwhile if otherwise struggling with investing.
Others may have direct experience of St James Place?
Then we can get a better handle on options.
Tug Boat
Posted: 08 February 2018 19:14:11(UTC)
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FFS get away from st jame's palace.

Their charges are ridiculous.

It's not just the 1.5% it's the ontop charges for the funds and the initial entry charges.

Go anywhere else.

I'm with HL, but there are a number of others just as good and better depending on how you invest.

Palace wasn't a cut and paste error, it's what they build from your charges.
2 users thanked Tug Boat for this post.
Tim D on 08/02/2018(UTC), Jim S on 14/02/2018(UTC)
kWIKSAVE
Posted: 08 February 2018 20:48:45(UTC)
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Is SJP's fee of 1.5% before VAT ?

Take The Times and Telegraph at the weekend until now and Xmas where fund/share recommendations will be made and then make up your own mind with an execution only firm.

Decide how much of tax-free cash ( up to a max 25% of fund unless there are protected rights/ transfers in from comany schemes where max may be different) you need.

Leave some of residual fund in cash for drawdowns and then look to spread balance in different asset classes/ sectors/geographical regions over 12 months as you are still young.

Tim D
Posted: 08 February 2018 21:17:20(UTC)
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Alas, SJP have their vampire suckers into a relative of mine. Besides oldschool (pre-RDR) levels of management charges on their funds (1.5% or more) I was amazed when they said they'd taken a 5% initial charge... good grief, I thought those had gone out the window after the 1990s were done with... and SJP had the gall to claim that was an incentive to remain invested for longer to amortize the hit (think the reasoning was their steep fund charges would have to be even higher if they didn't take the 5%). Subsequently heard they'd been thinking about putting even more money in and at least managed to negotiate the initial charge down slightly. Avoid at all costs.

Simple fact: the less money you pay in charges, the more money there is for you as retirement income. "In Investing, You Get What You *Don't* Pay For".
2 users thanked Tim D for this post.
gillyann on 14/02/2018(UTC), Sara G on 14/02/2018(UTC)
chubby bunny
Posted: 08 February 2018 21:18:43(UTC)
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I would question the accuracy of the 1.5% figure you were given by SJP. As far as I am aware, on top of the adviser charge, they also charge an initial fee of 5% on whatever you invest. Then you pay the annual charges of the SJP branded funds they invest your money in. These funds aren't managed by SJP themselves, but by other managers working for other fund houses e.g. Woodford, First State and Aberdeen. Here's an example of two funds, both managed by the same person (Neil Woodford) in a very similar style:

Woodford Equity Income - OCF 0.75%
St. James’s Place UK High Income - OCF 1.66%

So you're paying more than double for what exactly? This wouldn't be the first time that SJP has mislead customers over charges - https://www.which.co.uk/...g-customers-on-charges/



3 users thanked chubby bunny for this post.
Tim D on 08/02/2018(UTC), Mr Helpful on 09/02/2018(UTC), Mostly Retired on 14/02/2018(UTC)
Malcolm Beaton
Posted: 08 February 2018 22:40:23(UTC)
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Hi Biddy
St James Place seem to be an outfit for people with a lot of money-millions-who have better things to do and just want their large pile of cash kept safe
For this they pay premium rates .They have so much money that it doesn’t matter
The rest of us not being in this fortunate position have to be a little more aware of costs
This means educating oneself-reading these boards etc
Try Monevator boards too
Might be a year or two of self education but you will save yourself a lot of money
xxd09
AJW
Posted: 09 February 2018 10:18:54(UTC)
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OP's question relates to drawdown and no-one seems to have addressed this?
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Mr Helpful on 09/02/2018(UTC)
Tim D
Posted: 09 February 2018 11:02:31(UTC)
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AJW;56782 wrote:
OP's question relates to drawdown and no-one seems to have addressed this?


It's a huge subject; hard to know where to start without knowing more about what the OP already knows, what level of income the want and how they'd balance income vs risk, whether they want dividend/interest income or whether a total-return approach works for them. Any inheritance goals too.

A good starting point for any DIY planning would be having an understanding of the notion of a "safe rate of withdrawl"... how much of the portfolio value you can hope to take as income every year without risking pauperising yourself in the long run. There's a good UK-oriented morningstar paper here (or via coverage here). If you believe the numbers there then from a one-million portfolio you could presumably hope to take something like a 30-40K income indefinitely if you can keep costs to a minimum.
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Mostly Retired on 14/02/2018(UTC)
Mr Helpful
Posted: 09 February 2018 12:00:25(UTC)
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AJW;56782 wrote:
OP's question relates to drawdown and no-one seems to have addressed this?


Good point !!!

Strongly recommend 'The Informed Investor' by Frank Armstrong, (chapter 18 covers retirement investing and drawdown), incl recommendations to side-step 'Sequence of Returns Risk', the number 1 nightmare for the retiree.

OP would probably benefit overall from the book as a starting point, inter-alia to develop an Investment Plan.
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North Star on 14/02/2018(UTC)
S_M
Posted: 09 February 2018 18:47:01(UTC)
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Joe 90;56739 wrote:
Avoid IFAs and do a bit of homework yourself. Open a low cost investment platform (I use iWeb) buy a good spread of equity and bond funds and keep 2 years of cash in case the market falls.

Most investment websites will give you guidance on the balance of your portfolio (maybe 70:30 equity funds : bond funds) and suggestions. Diversify across jurisdictions.

The market is very volatile at present so if you’re not in yet, buy slowly over the next 12 months.

Most contributors to this forum (myself included) like Fundsmith and Lindsell Train.

You can probably draw 4% annually without affecting capital too much. This puts the IFA’s 1.5% into true perspective!

Finally, I strongly recommend teaching yourself how to use Google Sheets and the functions that allow you to forecast the future values using assumed growth and drawdown. It’s fun and you’re in control.

Bon chance


Lots of good pointers as usual, however, St James Place is NOT an IFA firm. They are restricted advisers, big difference.
2 users thanked S_M for this post.
Tim D on 12/02/2018(UTC), North Star on 14/02/2018(UTC)
banjofred
Posted: 14 February 2018 07:05:03(UTC)
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Best advice i can give is not to waste your money on advisors.

Check out options online and go for it


i am in drawdown with HL.
Catch The Pigeon
Posted: 14 February 2018 09:59:18(UTC)
#14

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Can we please never refer to SJP as IFAs! They are not independent and charge extremely high fees.

I am an IFA and my ongoing Financial Planning fee is 0.5% p.a.

Contrary to some views on here, IFAs can add real value to your Financial Planning and you shouldn't disregard this option immediately. Of course you can manage your financial affairs yourself but if you are unsure on the best option, seek advice.

Best of luck.
7 users thanked Catch The Pigeon for this post.
Mostly Retired on 14/02/2018(UTC), Keith Cobby on 14/02/2018(UTC), Mickey on 14/02/2018(UTC), Mr Helpful on 14/02/2018(UTC), Guest on 14/02/2018(UTC), Sara G on 14/02/2018(UTC), Bellabeck on 14/02/2018(UTC)
Mostly Retired
Posted: 14 February 2018 10:15:32(UTC)
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A note of caution from an increasingly cynical investor of advancing years.. The 4% rule is an old standard rule of thumb, but I think that it needs serious challenge in the current world.

For the OP I would also add in some other questions to think about, echoing Tim D's very relevant post. Certainly before parting with cash to any advisor its is worth having most of the answer yourself. You may or may not seek support from an IFA in the end, but armed with your own homework it is an easier task.

The core questions are on the face of it simple: 1) Attitude to risk, 2) other sources of capital/income, 3) Expectations of inflation and 4) Health (or longevity) The answers do of course get a bit messier :)

The FTSE 100 has a "pure" dividend yield of close to 4% so a 4% drawdown rate may see erosion of capital, the "safe withdrawal rate" is considerably lower. Morningstar back in October last year ran an article suggesting that 2.5% was closer to the "right" rate. However, even that depends entirely on investment allocation choices. A huge topic and no "right" answer, at least until the final outcome is known which is not all that helpful :)

A good basic use of spreadsheets helps enormously but arithmetic is not the whole answer. For example, how much stress would the OP like to have, watching equities do their usual roller coaster rides, or how upset would they be to miss out on large possible gains? Attitude to risk and volatility play a very relevant role and sometimes people are way happier foregoing top end income in exchange for sleeping better :)

If the OP wants to head into a drawdown plan then the analysis of the 4 questions is a first step. If however, having got those answers the portfolio construction feels daunting then an IFA can be a benefit.

However, I personally would never use an IFA or any investment firm who is tied to a single source of investments, the market is too diverse and rich in choice to tie one's hands in that way in my view. As to SJP, I also think that they are vastly too expensive when you take into account the fees they get on the products on top of their "advisory fee", but one can not deny that they have been successful, so they have a place.

For many of us in this forum the quandaries and volatility are meat and drink, we enjoy it; but I am painfully aware that some find it a little less "fun" :)
2 users thanked Mostly Retired for this post.
Tim D on 14/02/2018(UTC), Mr Helpful on 14/02/2018(UTC)
colin overton
Posted: 14 February 2018 14:41:22(UTC)
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Congratulations on your pension pot and (nearly) decision to retire.
No one can know what the future will bring, although death and taxes seem probable.
I took a similar decision to retire as the queues to withdraw money from Northern Rock formed, i.e. during or really just before the initial consequences of the "credit crunch". I had been planning an "early exit" for a few years and didn't let the world's financial foibles stop me, neither should you.
As to whether you stay with your current pension advisor or not, it is your choice, I did stay with mine and have not regretted it. I take no other financial advise from anyone and "manage" stocks and shares outside my pension. Beware of financial advice, particularly from unattributed sources such as these threads. I had some non-pension experience of SJP years ago and eventually moved my money elsewhere, believing I could do better.
I would advise you to take the 25% "tax free" cash immediately and invest it as you feel best. This will stop any future government interference and reduce any % charges on your pension. My post-retirement experience has been good. I have taken my "tax free" money (actually in tranches, but this can/does involve ending up with more than one pension) and a small yearly pension for the last ~9 years. Yet my pension is over 40% more in pounds than when I retired. For me and the last ~9 years draw down experience has been excellent.
You'll face challenges in retirement, but given your "stated financial basis" money may not be the first.
Actually resigning from work you mostly enjoy, may be somewhat traumatic, the action more than the thought? I would also advice some structure to your week, volunteer to a good cause, join a club etc. These are the areas that will need thought and invention. Good Luck!


2 users thanked colin overton for this post.
Sara G on 14/02/2018(UTC), Tim D on 14/02/2018(UTC)
Catch The Pigeon
Posted: 14 February 2018 16:57:05(UTC)
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colin overton;57149 wrote:
Congratulations on your pension pot and (nearly) decision to retire.
No one can know what the future will bring, although death and taxes seem probable.
I took a similar decision to retire as the queues to withdraw money from Northern Rock formed, i.e. during or really just before the initial consequences of the "credit crunch". I had been planning an "early exit" for a few years and didn't let the world's financial foibles stop me, neither should you.
As to whether you stay with your current pension advisor or not, it is your choice, I did stay with mine and have not regretted it. I take no other financial advise from anyone and "manage" stocks and shares outside my pension. Beware of financial advice, particularly from unattributed sources such as these threads. I had some non-pension experience of SJP years ago and eventually moved my money elsewhere, believing I could do better.
I would advise you to take the 25% "tax free" cash immediately and invest it as you feel best. This will stop any future government interference and reduce any % charges on your pension. My post-retirement experience has been good. I have taken my "tax free" money (actually in tranches, but this can/does involve ending up with more than one pension) and a small yearly pension for the last ~9 years. Yet my pension is over 40% more in pounds than when I retired. For me and the last ~9 years draw down experience has been excellent.
You'll face challenges in retirement, but given your "stated financial basis" money may not be the first.
Actually resigning from work you mostly enjoy, may be somewhat traumatic, the action more than the thought? I would also advice some structure to your week, volunteer to a good cause, join a club etc. These are the areas that will need thought and invention. Good Luck!




No personal dig at you, but I find it ironic that you say to be careful with taking from Financial Advice from this thread but then go onto give Financial Advice.

You don't know enough about the OP circumstances to advise this. Pension money is outside of your estate from an IHT point of view and taking all of your 25% tax free cash will bring money into your estate. If you have no planned capital expenditure for this money, keep it within a pension wrapper, where you will benefit from tax free growth and be able to pass these assets on free from IHT on death.
1 user thanked Catch The Pigeon for this post.
Tim D on 14/02/2018(UTC)
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