Financial advisers are putting your money in tracker funds – so why are you paying them?
Financial advisers are facing pressure to justify their fees after putting customers’ money into tracker funds run by Vanguard. This is what this article in The Telegraph says.
Vanguard, which launched its advice service earlier this month, runs £42bn of funds in Britain.
Boring Money’s Holly Mackay, however, says people will start to question why they are paying their adviser double the fees to Vanguard’s new advice proposition, which costs just 0.79%.
We firmly believe it is not worth paying any adviser who sees their primary role as guessing which funds might perform better than others. You can read more on the value we believe we provide here.
RIP gold-plated pensions. Now a generation suffers
The Times covers how final salary, or Defined Benefit (DB), pension schemes will be only available to public sector workers in the future.
The benefits on offer from these schemes are a function of your earnings. They are far more expensive to run than the other style of pension, Defined Contribution (DC) plans. With these, the benefits on offer are based on a variety of factors. The most important of these is how much you pay in.
The average rate of contributions to a DB pension scheme is 15.8% pa. With a DC scheme, it is just 6.2% pa. This shows for those who do not have access to a DB pension need to make the most of their retirement savings.
Risk strategies to adopt when markets turn mad
The Financial Times has an opinion piece about what investors can do when market shocks become more likely. Even though a shock is, almost by definition, hard to predict, there is one but of sound practice.
The article talks about rebalancing. This is where the asset allocation, the exposure of the portfolio to asset classes such as UK Equities, US Equities Corporate Bonds etc., is reset to its original makeup. This can reduce risk and potentially increase returns. You can read more about rebalancing here.