Investor Views: “Comparing Financial Advice Costs is Tricky”

Private investor Brian Hargreaves, who has recently retired, tells Morningstar about the difficulties of managing his own pension

Emma Simon 23 March, 2016 | 11:19AM
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During his working life Brian Hargreaves says his focus was on building a successful business, not managing his own money.

Since he retired two years he’s had to get to grips with investments and pensions, which he says has not been an easy process.

Pensioner Brian Hargreaves with two of his four grandchildren

Hargreaves ran an advertising agency and rather than invest in the stock market the employees used their pension scheme, a SSAS or small self-administered scheme, to purchase the building they worked in.

On retirement this was then sold, and the proceeds reinvested into individual SIPPs, or self-invested personal pensions.

“It has been quite a steep learning curve thinking about how best to invest these funds,” said Hargreaves.When he retired Hargreaves took out a tax-free lump sum from the SIPP, which has been reinvested under his wife’s name. He says: “We’ve gone down the route of discretionary fund management, and these funds are now with Brewin Dolphin where they are invested largely in portfolio of equity funds.”

Hargreaves says that he liked the way both him and his wife could specify how they wanted their money to be invested.

“For example, my wife wanted some of the money to be invested in ecological funds and we wanted to avoid defence stocks, or funds that were heavily invested in this area,” he explained.

As a result he they have money in the investment trust Bluefield Solar (BSIF).

Technology Funds for a Growth Portfolio

Hargreaves is also interested in technology funds as well as broader exposure funds that can produce a decent income.  To this end he has money invested in Artemis Global Income and Polar Capital Global Tech Fund.

Artemis Global Income has a five-star rating from Morningstar, and it’s manager Jacob de Tusch-Lec has a Bronze Rating. Morningstar analysts said de Tusch-Lec was aware of the strong correlations between different stocks that arise within the equity income sector, and has made an effort to limit these in his portfolio construction. As a result the fund has a greater bias towards small and mid-cap stocks. This may have helped boost performance in recent years, although it can lead to greater volatility.

Polar Capital Global Tech is described by Samuel Meakin, a Morningstar analyst, as “a compelling offering for investors seeking long-term benefit from the growth prospects in this sector”. As a tech fund it is obviously likely to be volatile, but the managers, Nick Evans and Ben Rogoff, have a good track record in this field and as a result have Bronze ratings.

Comparing Costs Proves Tricky

The remainder of Hargreaves’ SIPP was invested with another wealth management firm but he says he has been less happy with this arrangement, and is taking this business to Cazenove Capital Management.

He says: “I’ve found quite frustrating how difficult it is to compare the costs and services between different providers. I don’t mind paying advice, but I want to know that it is sound.

“Obviously, the last couple of years haven’t been ideal for many equity investments, but it’s somewhat galling to see those managing your money walking off with generous fees when the size of our investments has fallen.”

To help him get a better grip on his finances, he’s joined the UK Shareholders’ Association, which he says has been “fantastic” at helping him understand both the jargon and principles of investment. “I feel they’ve helped me understand the complexities of investing in equities. The organisation has also done a sterling job in standing up for the rights of the private investors by lobbying the regulatory authorities,” he adds.

“I feel a lot more confident now. I don’t want the responsibility of running my entire pension fund, but I’ve started to make more active decisions about other investments.”

Investing for the Next Generation

Hargreaves is also considering stepping up investments he makes for his grandchildren. Until now he’s been making small contributions to the Child Trust Funds of his eldest grandsons, aged 13 and 10m and the Junior ISA of his youngest grandson, aged almost two.

He says: “The investments for the oldest two go into an HSBC stocks and shares tracker, while the youngest one is in a Halifax cash Isa.” He’s shortly expecting a fourth grandchild so is reviewing these options.

He says: “You can now invest up to £4,000 in Junior ISAs which, if we can make more substantial savings will hopefully help them all through higher education.”

He says he’s been looking at a number of options, including the Orbis Global Equity fund, which has the added attraction of not charging management fees if the fund does not perform. This fund has a five star rating from Morningstar, and the manager William Gray has a coveted Silver rating. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Artemis Global Income R Acc1.96 GBP-0.40Rating
Polar Capital Global Tech Inc116.98 USD0.78Rating

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk

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