Superannuation Discussion + market volatility

[tgh]

I have just one question… why ?

 

[Buzzard]

Has anyone invested into BT Portfolio Services (part of the BT Funds Management group) managed (administered) 'Wrap' investment platform? or have any comment about it (like : RUN!)

Without doing a Google, is this a LIC or ETF type investment?
Not sure what you are trying to achieve but have you looked at AFIC, Argo or Vanguard?

 

[RooFlyer]

Hey, I'm asking the questions . But I did google those terms, and its neither.

I can't say too much - i'm getting the low-down from my financial adviser later in the week. I'm trying to do some research before that.

But as i understand it, 'WRAP' is a platform that offers very numerous investment products. Its sort of like an accommodation consolidator I think. From it you can choose from umpteen managed funds, shares, fixed interest etc. The BT entity is the administrator of my choices - they take my choices from the platform and put the cash into the particular entities. I have access to a web portal where I can choose and swap the products I want. So I can have a 'fund of funds' if I want. I'm pretty sure that its not restricted to BT products.

Now, my financial advisor is recommending to me particular funds within the platform and that's the decision at the end of the day. They like diversification, and within what's offered on the platform, they suggest particular ones based on the client's personal circumstances/risk appetite.

Now, having run my SMSF totally hands-on for the past 15 years, this sort of investment is very different! And of course with so many links in the chain, fees may add up. We'll see.

But I've taken the decision to pay for and obtain professional advice (having researched various advisers) and this is what they are advising. I'm not locked into the platform thing (or the adviser for that matter). But would be good if anyone has actually pulled the levers on this thing and let me know if it actually works as advertised.

Edit: I think one of the touted things about going through the platform is that I get access to Wholesale funds, as it all goes into a pot and invested en mass.

 

[RooFlyer]

Great to see the CBA divi holding up.

 

[lovetravellingoz]

Great to see the CBA divi holding up.

Especially for me as I took a number of shares when they floated and went dividend reinvestment till recently. Two of my better financial decisions.

 

[tgh]

I picked up extra cba when they had a share issue at (iirc) $25 at the peak of the gfc
worst decision of my life.. didn't get enough….

 

[tgh]

retail-versus-wholesale-clients-why-the-distinction-matters

I was offered this wholesale linkage ages ago, but decided that it wasn't seminal to our investment objectives.
Wholesale will get lots of "offers and deals" (lights music drums) , we have already done the penny dreadful dance and it was not satisfying….
We are old and tired and content to preserve the capital for our kids.

 

[RooFlyer]

That was interesting, thanks.

I've been reading more about the 'WRAP' mega-product I noted above. Because the legal owner of the investments I make is the Wrap Entity (sort of BTFM) - the investor (me) is the beneficial owner - then the investment is classified as wholesale, and I don't get the retail protections such as cooling off period etc.

 

[lovetravellingoz]

retail-versus-wholesale-clients-why-the-distinction-matters

I was offered this wholesale linkage ages ago, but decided that it wasn't seminal to our investment objectives.
Wholesale will get lots of "offers and deals" (lights music drums) , we have already done the penny dreadful dance and it was not satisfying….
We are old and tired and content to preserve the capital for our kids.

Nearing 58 I must admit that I am getting less and less gungho about how aggressive my fund should be once I am actually retired.

I also just returned from a 3 month trip the thought is do I really want to be actively managing my super (and other investments) once retired as I plan to ramp up more long trips, including some that will be "off the grid".

There were certainly a few major share glitches wile I was away. Though my Cochlear and Resmed shares continue to shine.

The other aspect that I posted very early in this thread is that while my wife has many strengths that financial management is not one of them. So if something happens to myself before her then a more simple super arrangement is probably the more prudent move. I will also have to give some thought to simplifying the share portfolio (I am mainly intending to do that post retirement as with much reduced taxable income the selling shares over time will see little lost to capital gains. Though I am selling some under performing assets and moving the capital into what will be tax free super.) So taxable share income will be fine as the tax free threshold l be taxable will mean that little will be taxable.

 

[Buzzard]

I'm not a financial adviser @lovetravellingoz but if you want a more simplified share portfolio with low fees to boot, you should take a look at AFIC and Argo, both listed on the ASX. I have no Argo myself but do have AFIC.

 

[lovetravellingoz]

I'm not a financial adviser @lovetravellingoz but if you want a more simplified share portfolio with low fees to boot, you should take a look at AFIC and Argo, both listed on the ASX. I have no Argo myself but do have AFIC.

Thanks.. And yes I am aware of them, BUT I do not want to take the capital gains hit to move them across just for the sake of simplicity.

Plus any that I do sell at present I am moving the $$ moved into super instead.

Any spare $$ that I earn at present also goes into post tax contributions for my wife's and my super accounts.

In terms of shares I will mainly narrow down the number of shareholdings that I have. I have already exited some taking advantage of some tax losses I have had in the past, and will exit some under-performing ones (in effect transferring them to super).


Post retirement I will most like draw down the super at the minimum allowed and work at spending the shares progressively... So that will whittle it down eventually. On the other hand if the super funds increase in value I might find we are both at the super limit, in which case will have to spend the super instead

 

[Flying mermaid]

We have no desire to leave any money to the kids, so are spending as much as we can, while still trying to balance it so we don’t run out before our unfortunately unknown use by date.

Two of the ankle biters are in affluent circumstances (one a senior software developer with Google in the California, earning ridiculous amounts of money, the other an almost paediatrician, earning a comfortable salary). The other we are helping with bits and pieces - helping with a knock down and rebuild at the moment. We figure it is more use now, than after we die.

We currently take the maximum as a pension, plus lump sums from time to time.

I do all the investing myself and the super fund has the same balance now as it did when we retired, which means it has lost some value due to inflation. However I think we probably won’t travel as much in another 10 years or so, so drawdowns will ease. Also after the current assistance we feel the daughter will be able to manage without any more assistance from us, so that will help.

It would all be easier if you had a crystal ball knowing when you were going to die and what the market will do!

I am factoring in another downturn in the next year or so, maybe sooner if trade sanctions/tariffs start causing problems.

 

[Buzzard]

We have no intention of leaving anything to our daughter either but unless we die destitute she will certainly get something as it's useless to us post mortem. Our daughter and SIL are both very well paid but unfortunately bad money managers so have very little. +1 tends to feel a bit sorry for them. I keep reminding her about all the new cars they've had whilst we have an 18 & 14 year old, all the renovations they have done, $60k on a pool, etc etc etc.

 

[cove]

We all come in with quite different circumstances. I am hoping my children can drop a cheque into my casket to pay me back.
I will have some pretty good wine left in my cellar for the wake.

 

[Flying mermaid]

We have no intention of leaving anything to our daughter either but unless we die destitute she will certainly get something as it's useless to us post mortem. Our daughter and SIL are both very well paid but unfortunately bad money managers so have very little. +1 tends to feel a bit sorry for them. I keep reminding her about all the new cars they've had whilst we have an 18 & 14 year old, all the renovations they have done, $60k on a pool, etc etc etc.

yes - realistically you can’t spend it all as you don’t know when you are going to go . However we are having fun trying.

I have always said the amount of money people have often bears no realation to how much they earn.

Dr FM started off as a bit of a fritterer, but I verbally whacked her around the head and pretty much laid down rules for paying off extra on her town house. She has now discovered how much of a difference it makes to interest and is a total convert . It is about balance and I think she has it now, where she still enjoys eating out and travel, but is allocating money for the future, she is talking about buying a second place now. She also has an amazing accountant who is giving her some very sound advice.

 

[cove]

Some of our friends have enjoyed reading the Barefoot Investor and are now changing their ways.

 

[Buzzard]

Some of our friends have enjoyed reading the Barefoot Investor and are now changing their ways.

Scott Pape together with Mike Kemp have done very well for themselves. Never read any of their books, and SP is working on a new one, I'm sure many have benefited.

 

[RooFlyer]

For what its worth, an update on my coming to grips with BT's 'Wrap' product. (Professional super/adviser types here may care to look away to save some cringing or gagging ).

Seems most of the 'big providers' like Colonial First State etc have 'wrap' products. The wrap is a platform where they can tap into hundreds of individual investment products including their own firm's, but many others.

So an investor puts (say) $100K into the BT Wrap and then chooses their own collection of investments from the ~hundreds on offer in the supermarket (20% international share fund put out by A, 35% Australian equities fund sold by B, 10% specialist heath sold by C, 5% Bloggs fixed interest, 17% diversified fund X etc.). BT via subsidiaries then 'manage' and 'administer' investor's investments in the 'wrap' and give me a consolidated report on the totality of the products in the portfolio. So, rather than 10 different entities to look at, its one at tax time. I can put cash in and take cash - pension proceeds - out. The fundies of course take their cut before distributions. BT charges a fee of ~0.5% for the 'management'.

You might think of a 'wrap' as shopping in a supermarket, vs at a lamb butcher, then a beef butcher, than the apple stall, then the carrot guy, then the Aussie cheese merchant, the overseas cheeses etc. One place, one sales docket at the end.

I could invest in the Wrap as an individual. I do not need an adviser. If I invest direct, there are additional fees BT will charge me (predictably).

BUT if I do have an adviser, my one will recommend a particular mix of products within the wrap to meet my stated objectives. My own 'fund of funds'. At the moment there are 12 products in the mix. They will advise me at least twice a year to keep the mix in 'balance', and continuing advice for a fee of <0.5%. If I start off with them, I can get rid of them at any time and self manage.

The pitch is that this is a better situation than say an 'index fund' - cheap, but fund blindly has to have the index mix in the fund, irrespective of performance, yield etc - and managed funds (most expensive).

Contrary to what i thought, I will have retail investor protection, if my SMSF invest via my financial adviser - that's the key relationship and I'm retail. If the SMSF invests direct to BT/Wrap, it will be treated as a wholesale investment, as the Wrap is the owner of the investment products; the SMSF is the beneficial owner and the relationship is direct with BT.

So, as usual, its fees vs likely returns. I hate paying fees as much as the next person but I also believe in the (slightly altered) maxim "those who take their own advice have a fool for a client".

I've taken away some "light reading". A lot to digest. For someone who hasn't done badly managing their own investments in the SMSF, its a bit of a wrench to hand some of the hard-earned over and be charged for it.

My current thinking is to check the cost of exiting completely either during the cooling off period and after and then maybe give them 2/3 of the currently available dollop of cash and see how it goes. Vanguard ETFs may get the rest. My broker's gotta get fed as well.

"YMMV" as they say.

 

[tgh]

You have not explained "why"

It's Ok .. you don't have to tell me/us… but at least ask yourself the question.

What are all these people going to actually do to make your investments better and or easier to manage ?

I had cause to navel gaze the same question recently… really big bells and whistles presentation..
I failed to see the value… they were not pleased….at all…..

We will have to unload the management sometime , time is against us… but there is no way they will ever deliver a better outcome than I have managed.

 

[RooFlyer]

Sure, I asked 'why' during the meeting (I have 3 alternatives lined up and asked the guy to compare) and am still asking it. The promise is, of course, potentially better returns than a cheaper but passive index investment and an expensive managed investment. And diversification of investment while having control (via adviser) of what's in the portfolio.

Don't get me wrong, i'm not putting the farm on it. I still have most my SMSF funds under my direct control - the potential 'wrap' funds are part proceeds of an investment property sale that I'm rolling into the super fund. I think it prudent to put a proportion of total funds into managed hands. if it works, I may put more. If it doesn't I'll withdraw.