vand wrote:It's a big responsibility managing someone else's money. Even though you may be very comfortable making your own investing decisions you have to err on the side of caution if doing so for someone else. That said, almost any sensible strategy will surely be better than going with SJP.
What are her income expectations, and does she expect to preserve any capital for estate planning, or is she happy running it down to (near) zero?
If it were me I suggest something splitting between a few simple strategy like:
1/3 into a vanilla 60/30/10 global stocks/bonds/gold portfolio
1/3 into a widows & orphans trust - either CGT and/or PNL
1/3 towards an annuity - she is at the age now where the benefits of an annuity are considerable given the increasing uncertainty over her remaining years
It's really difficult to predict. At the moment, with her dementia, she can live at home with some 'electronic' support, but there will come a time when she will have to move into supported living accommodation. Her income expectations/requirements are relatively modest now, but who knows what they might be in six, twelve or eighteen months' time. She's in Wales, so the cap on social care is unlikely to apply unless the WG come up with its own version. I don't doubt that the costs of a care home would erode that capital pretty quickly, so trying to maintain it as long as possible will be the key. She does have her house too, which is likely to be needed down the line. She's early/mid seventies so potentially 20+ years to consider.
I'm interested to know why you've suggested the strategy that you have. I guess I had in my mind that it would simply just be a Vanguard Lifestrategy - and probably the 100% equity one given the potential length of time that it will be invested for. My investing has mainly been in individual shares along the HYP principles and is relatively modest in value. Whilst I'm comfortable with that strategy for me, I certainly wouldn't be investing on that basis for her - so looking for safer, better diversified ITs instead. I was thinking Vanguard simply because of the low fees. I couldn't reliably pick which IT is going to outperform, and wouldn't really know where to start - so low fees with a globally renowned company seems the best option. An annuity seems like it would be a disaster - I don't know what £170k or so would buy a 7X year old woman, but I bet it's not much. I think flexibility to meet unpredictable care home fees - at least for the first few years would be far better than a modest annuity that wouldn't get close to what she needs when she does go into a care home.
But writing that has just given me another wobble. I'm struck that I'm proposing to advise someone else to move their entire life savings that they are going to need to fund their healthcare, yet I "wouldn't really know where to start" where to look for a fund.
Yet to do nothing would mean that SJP would continue to take the p*ss. The annual statement is worse than useless in explaining how the fees work - from what I can see, I think annual fee for existing investments is 2.23% - but this may exclude another 0.5% annual "maintenance charge". She's going to need all the money she has and it boils my blood that SJP would continue to exploit elderly, vulnerable people in that way.
That probably takes me back to finding a good whole of market IFA who can give some proper advice at a reasonable cost. Or is "good" and "IFA" a contradiction in terms? But even then - I can't believe that the initial fee will be less than 1% - that would be £5k to do little more than say, why don't you consider these ITs that may do better or worse than some others?
.fisher wrote:Is it possible to find out what she already holds with SJP and find similar funds with largely the same or similar holdings elsewhere that have lower charges? That way you'd not be increasing her risk just saving on fees. It might take a bit if work but I presume the SJP funds must produce annual reports with a fuĺl list of holdings, sectors and countires as other funds do.
You mention the ongoing charges are opaque but don't SJP have to produce an annual breakdown of the charges levied?
Yes, I've got the list and I guess I could try and find similar funds, but the descriptions are pretty vague "UK Equity", "Global High Yield Bond" etc etc (and there are a load of them). I also don't think that SJP has the "right" answer necessarily, so if I was to recommend, I would want to simplify it to something both understandable for me and my mother-in-law/wife/wife's brother.
Plenty to ponder - thanks again all.