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Post by Fletchsmile on Dec 3, 2015 14:41:04 GMT 7
one thing you could do to help is see whether they have any "model portfolios". While these won't be tailored to you they can be useful reference points. However, do be aware that these model portfolios are designed for people living in the UK - that is to say, they are heavily biased towards the investor's home market and home currency. For someone living in Thailand temporarily this may or may not be appropriate, depending upon investment objective. However, for someone planning to use the end fruit of their investment here (e.g. to fund their retirement) it most definitely won't be appropriate, and investments will probably need to be biased towards (in decreasing order of importance), Thailand, the Asian region, the rest of the world. Wholeheartedly agree, and it's a point many people overlook
This is sometimes also where a solid UK based IFA sometimes fall short of what's needed for someone in Thailand. Unless they've real first hand experience of expats, and ideally been one themselves, it can get missed. Hence a very similar comment:
That's another few posts though  |
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Post by Fletchsmile on Dec 9, 2015 10:12:25 GMT 7
...... As for cost: a 3% up front charge to establish the above is not unduly onerous in my world, in fact it's a small price to pay considering the nature and scale of it all, others of course may not share that view so each to their own. I'm currently working my way through an analysis of a likely product mix and it's a real slog although I will get there at some point. One point that I don't understand in the process is the source for the wrapper and what determines a good one, it seems to me it's mostly fee driven, perhaps somebody can comment on this? I'll report back when I have something concrete, in the meantime I hope the above helps build a better picture. For wrappers you really need to think about what you are getting for that wrapper and whether it is really needed. Then look at the fees in this context. Some of the more common ones you may come across: In the UK, ISAs and Pensions/SIPPs are some of the most common wrappers and beneficial for tax. As they're so common these days though and competition from a large number of providers there really shouldn't be any need to pay anything extra above their normal charges for their services. (Unless perhaps they are a very low charge provider who replaces this with a flat fee, so you are trading one for the other) In Thailand, similarly for Long Term Equity Funds (LTFs) and Retirement Mutual Funds (RMFs) which are common investment wrappers, similar in some respects to ISAs and SIPPs, there should again be no need to pay extra for that wrapper. Occasionally their fund charges are a bit higher, often not. Insurance based products, such as endowments, whole of life policies, with profit funds etc, are generally less transparent on fees, and the wrapper while often being of some use tends to get used for the benefit of the provider so they can lock in commissions over guaranteed periods, so they make sure they get their money. In the days when I had a mortgage in the UK, I hated endowments, knowing something like the first 12 month's payments went in commission. The only reason I took it out was they offered a lower mortgage rate and net net seemed better. Often while insurance based products can be structured to protect you from tax, and provide insurance + investment combined, it can be better to purchase life assurance and investments separately. Probably the one exception for insurance products I like in some cases is single premium products designed for legacy/ estate planning. Offshore portfolio Bonds (OPBs) are probably my most disliked of products, and they often have similar flaws to endowment policies, just with extra costs/ commission levels on top. Because you're going offshore, they think they can just charge you for it. USD 50k is often a minimum entry level for these. For that amount if it is someone's main savings/ investments, then they probably don't need a tax wrapper in the first place so why pay for it? In addition admin fees, management fees and other fees on top of the underlying fund fees can severely eat into returns on USD 50k, in percentage terms. Skandia, Generali, Scottish Provident etc sell these, and this is where the notorious offshore FAs come in. There are often penalty structures in place, with high fee structures, locking you in for X number of years. For many people the wrapper adds very little value to the investor, and they'd be better just picking the underlying funds or similar themselves. Now if someone is significantly above inheritance tax thresholds (including any spouse allowance) there can be more of an argument for them, otherwise as you hint, the fee structures (even adjusting for all the marketing bonuses and gimmicks) often benefit the seller and agent more than the investor They can seriously damage your wealth  As an expat you will likely be able to avoid income tax and capital gains tax anyway just by investing outside UK. You don't need a fancy wrapper for these. Inheritance tax is a bit different though as mentioned. Another thing to bear in mind with wrappers in addition to do you really need it? is that if you're getting charged extra for it, would it make sense to just invest your money without paying for the wrapper, and then switch later into a wrapper based product when you actually need the wrapper. So while your pot is smaller you don't hamper it with all these extra fees and commissions which can kill a lot of the potential growth. Then when you really need it (or are anticipating needing it) then switch |
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AyG
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Post by AyG on Dec 9, 2015 12:28:41 GMT 7
For wrappers you really need to think about what you are getting for that wrapper and whether it is really needed. Then look at the fees in this context. It's important to distinguish between wrappers and wrap accounts here. A wrap account holds all your investments in a single account so you don't have lots of individual accounts with fund providers. It conveys no tax advantages - just offers convenience. I would always hold UK funds within a wrap account since (a) it offers much lower initial charges (often zero) than buying directly from the fund manager, and (b) it's convenient to have everything in one place for reporting purposes and ease of switching between funds. In the UK, ISAs and Pensions/SIPPs are some of the most common wrappers and beneficial for tax. As they're so common these days though and competition from a large number of providers there really shouldn't be any need to pay anything extra above their normal charges for their services. (Unless perhaps they are a very low charge provider who replaces this with a flat fee, so you are trading one for the other) Not sure this is correct. Lots of providers make additional charges for ISAs and (particularly) SIPPs to reflect the additional administrative costs. There's a decent cost comparison at boringmoney.co.uk/platforms/Platforms---your-choices/ISA |
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Post by Fletchsmile on Dec 9, 2015 14:07:01 GMT 7
Boringmoney is worth a look, but tends to be a bit simplistic in its analysis and only covers a few providers. Also not that easy to actually compare actual GBP cost numbers on portfolio sizes (you need to do the maths on each one individually), and they seem to ignore discounts, loyalty rebates etc and don't even mention them as factors to consider. It's true more and more companies are charging extra for SIPPs and ISAs since the new regulations came in 2014. There's still quite a few decent ones where there's no need to pay any extra, particularly if your investments are mainly funds. Here's a couple more that go into a bit more detail around additional considerations to think of, as well as a wider range of providers. If someone were considering different platforms is worth reading a few, as they can give different perspectives/ thoughts... www.thisismoney.co.uk/money/diyinvesting/article-1718291/Pick-best-cheapest-investment-Isa-platform.htmlwww.moneywise.co.uk/investing/funds/which-fund-platform-the-cheapest |
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Post by Fletchsmile on Dec 9, 2015 14:26:13 GMT 7
For wrappers you really need to think about what you are getting for that wrapper and whether it is really needed. Then look at the fees in this context. It's important to distinguish between wrappers and wrap accounts here. A wrap account holds all your investments in a single account so you don't have lots of individual accounts with fund providers. It conveys no tax advantages - just offers convenience. I would always hold UK funds within a wrap account since (a) it offers much lower initial charges (often zero) than buying directly from the fund manager, and (b) it's convenient to have everything in one place for reporting purposes and ease of switching between funds. For UK, most of my investments are now held within tax wrappers otherwise I've moved them. Hate paying tax to the UK government and their grubby little fingers Then in turn within a single provider (or wrap account) covering multiple fund management and other investments. As you say very useful to have consolidated them in a single place. |
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