At somewhat short notice I was offered redundancy and early retirement. I was 57, had £40K worth of non mortgage debt and no savings at all - just a final salary scheme pension with 30+ years plus £16K AVC's . With no experience of investment or personal pensions I had to act quickly to avoid a large tax bill and then to put money away out of temptation to last me until state pension age in case I couldn't find another job.
My IFA was recommended to me by a work colleague who was also in that position a few months earlier - she in turn had the recommendation from one of her friends . They explained their charges upfront - generally 3% initial fee plus an annual review of the portfolio - OEIC x 2 plus ISA - about £66K . They also recommended a personal pension , which is excellent sense from a tax viewpoint but the charges here are not disclosed . I am Ok with the 3% - less so with the switch commissions . They have moved a few % in and out of the various funds making up the OEIC's & ISA every year so far . In the end would 1% here or there make a great difference to my returns after commission has been paid . Having said that the returns after 20 months aren't that bad ( OEIC 's 8% & 9.9% , ISA a disappointing 3.8% , Pension 7.4 % ). Possibly a bit misleading as I caught the tail end of a bull run in the second half of 2010/early 2011 .
The people I deal with seem straightforward & trustworthy- Ok they've taken £2K commission from me but so far they have made me money .
However I also decided to invest directly in a small portfolio - partly as I was in the company share scheme and was forced to withdraw from it . So with those shares plus some Barclays from the purchase of the Woolwich and £8K of my own - I now have my own self managed portfolio. My purchases have netted 5.6% in the same period (including dividends and expected selling costs) - although Barclays and my company shares have crashed , leaving an overall loss of around 3.7% . How do I feel ? Had I known about the world of investment - I might well have put most of the redundancy cash into a FTSE tracker plus a similar ISA every year . But so far the professionals are out performing me .
