Stick or Twist

How often do you check the performance of your investments?

How much are you paying in fees?

Do your current investments meet your objectives and are you on track to achieve them?

Has your attitude to risk changed and do your investments reflect that?

Quite often, in fact more often than not, the answer to these questions is probably not for a long time and I don’t know! This is not a criticism, we all live busy lives and let’s face it, have better things to do with our spare time. Also, for many of us we would not know where to start.

However, these are important questions and can have a big impact on the expected outcome in meeting your goals and aspirations. You have worked hard to make those savings and investments, so seeing them languish is no laughing matter.

We quite often take on new clients who have accumulated many pension plans from employer schemes over many years. My record is a client who had 13 pensions! Most of these workplace pensions have a default fund selection and the vast majority of people opt for this default fund, normally out of a lack of information on alternatives.

A large portion of these default funds can be what we call life styling funds. These funds are aimed at specific retirement ages and will gradually reduce the equity (growth) weighting in favour of low-risk assets like GILTS or cash in the run up to retirement. That could be fine if your retirement age is correct and if you intend to fully use your pension to purchase an annuity at retirement age. However, many people will have changed their retirement age prediction along the way and may also be considering other options to buying an annuity, such as flexi access drawdown, where long term investment in retirement is still necessary. If this is the case then that default fund is no longer meeting your objectives and that’s before we even consider performance, costs or risk.

Several older pensions and investments relied on profit funds. These are where annual bonuses are added, calculated on the underlying performance by the insurance companies. Although those with profit funds can shelter you for some of the volatility of markets, we have seen in the last decade or so that the annual bonuses have been somewhat low in comparison to investment in typical investment funds. Again, these may still meet your risk profile and objectives or there may be a better solution.

Simply being in the wrong fund or paying higher charges can have a detrimental impact when held over the longer term.

What should you do, stick or twist?

There are thousands of investment choices available across hundreds of investment managers, different sectors and geographical regions, passive trackers and active managers, discretionary managed model portfolios and a large and growing sector of sustainable funds to name just a few. This can seem a daunting and complicated process to select from. Where do you start?

At Crowe Financial Planning we help our clients understand what they have now, review their objectives, risk profile and preferences to check if their existing approach is still right for them and if not, we will use our expertise to independently research and recommend the most suitable options to meet their needs and objectives going forward. But also, more importantly we will continue to monitor their investments to make sure they keep on track and make changes when it is necessary to do so.

Why not get in touch with us, it may be one of the smartest decisions you ever make.

A pension is a long-term investment, and your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.