Article by Phil
We are often asked what the best financial advisors think are the best investments.
That’s a question we can never answer because it always depends on individual circumstances. But as we once again take a look at the Best Invest Dog Funds list you might want to make your own mind up. Published every six months, Best Invest list the worst performing funds on the market. To qualify, the fund has to have underperformed the market for three years on the trot.
The good news back in August 24 was that the value of funds on the list had fallen from £95 billion to £53 billion. A 45% fall.
Back in August our old friend St James Place (SJP) had improved and only had three funds on the list worth £12.6 billion!
What a difference six months can make though! The value of underperforming funds has risen again to £67 billion, up by over 25%. The 15 biggest funds known as the “Great Danes” account for 60% of the total.
25% of the funds are in the Environmental, Sustainable, Governance (ESG) category. Suggesting that green is not always best where fund performance is concerned.
St James Place have not fared well again. They currently have the two biggest “dog” funds in their Global Equity and Sustainable and Responsible Equity funds. Together holding over £14 billion in client investments and underperforming the market by a whopping 25% over the last three years.
Never ceases to amaze me how SJP continue to be the biggest advice firm in the UK when their clients are investing in the worst possible funds. Truly baffling.
You could be invested in a worse performing fund, however. The current leader in that category according to Best Invest is the Artemis Positive Future Fund which has underperformed the market by a staggering 63% over the last three years.
What do the best financial advisors charge for advice?
For years many firms were less than transparent about their pricing. However, with the onset of the Consumer Duty last year things have improved. It has also forced some of the bigger firms to bring down their pricing.
We have always been upfront about our charges and have published them on our website for years. It always seemed to us that letting people know how much advice would cost made sense.
In terms of our ongoing advice, it is tiered according to the service level chosen. Our Gold Service includes up to four reviews a year and costs 0.75% of the assets under advice, with a minimum fee of £5,000. Our Silver Service includes two reviews a year and costs 0.7% with a minimum fee of £2,750 and a maximum fee of £4,500. Our Bronze Service includes one annual review and costs 0.65% with a minimum fee of £1,500 and a maximum fee of £2,500. We also offer an online only Digital Service at a fixed cost of £750.
Major national advice firm Ascot Lloyd have recently announced a reduction in their fees. They too have now moved to a tiered ongoing advice charging system based on the client’s assets under advice.
For clients with over £2 million their charge is 0.65%, 0.75% for assets between £1.5 million and £2 million, 0.85% for assets between £500k and £1.5 million, down to 1.00% for assets below £250k. It’s not clear if this covers more than one annual review, but it continues to demonstrate the value of our client proposition.
St James Place the market leader have also announced a significant reduction in their fees. They will now charge clients 3% for the first £250,000 of investments, 2% on the next £250,000 and then 1% on anything over £500,000. This is for the initial advice.
This is big drop from their previous 4.5% fee. They will now charge 0.8% for ongoing advice, still more than we charge for our Gold Service.
In terms of initial advice fees, we are also more cost effective than SJP. Our initial advice fees are 3% for the first £150,000, then 2% up to £500,000 and 1% after that. However, most importantly we have a maximum fee of £15,000.
Price is not everything of course, but it’s worth considering when you are looking for the best financial advisors.
Advice is worth it.
Regardless of the cost of advice, figures from SJP show that people with the best financial advisors create more wealth for themselves than those who don’t use an advisor.
Their research found that someone in the £20,000 to £40,000 income group has an average wealth of £83,000, but those with an advisor had on average £17,000 more wealth than those without an advisor. This rises significantly in the over £80,000 income bracket. Their average wealth is £617,000 but those with an advisor had over £340,000 more wealth. These figures show that the cost of advice is more than covered by the value of advice in terms of results.
- 65% of those using an adviser said that made them confident about their finances.
- 50% said they felt comfortable about their finances, and
- 76% said that they felt financially secure.
But there is a big difference between men and women. Only 10% of women say that they use a financial adviser. But up to 35% of women said they might want to use an adviser in the future.
Christina is always available as one of the best female financial advisors. That’s according to Vouched For and her clients.
