'Cautious' investor

[calyxx]

Advice on advice needed! I took financial advice about a large sum I inherited (from an IFA) and my risk profile has come out as conservative, which leads to a recommendation for lots of bonds and fixed interest funds. But I've been putting my isa investments in global trackers and over the last couple of years that's been a much safer bet. And even without the crash last year the returns on bonds and 'conservative' investments are projected to be lower than current savings rates.
I don't need the money immediately. I feel really reluctant to follow the advice (which of course I will have to pay for anyway). Would much appreciate any thoughts!

If you don't need the funds in the short-term, then presumably you are quite risk averse if you have been profiled as a conservative investor. Try and forget about how well equities have done over a certain time period and think how you would feel if your investments dropped by, say, 10% in a short time. Presumably you were asked questions like this during the risk profiling process. There is also a middle ground of course, you could consider investing in balanced/medium risk type funds.

The OPs point is that low risk people have always been told to buy bonds, but in the past couple of years bonds have actually turned out to be riskier than equities.

As OP is cautious I would question why they wouldn’t just get themselves 5.5% guaranteed in a normal savings account. Yes it’ll be less than inflation so losing in real terms, but they could re-assess in a years time or in 2 years time after the lock-in period has ended.

Good point. I'm not sure I am cautious though! I mean I come out as cautious in the risk profile but I don't want the low levels of gain associated with a cautious portfolio, especially if it's costing me .75% plus platform fee. I need to be less cautious or I will just lose money.

The risk appetite levels (cautious, balanced, adventurous, etc) aren't just about chasing gains though. They are also about your tolerance for losses as well. Risk-based funds will have target gains but they'll also look to invest in things that have certain volatility parameters, with the theory that in a bad year a cautious fund should lose less than a more adventurous one.

There is a lot to be said for Cash based savings and investments at the moment, depending on your own personal circumstances and objectives.

A risk profiler is only there to support your discussions with the adviser.
if you feel differently, this should have been discussed with the adviser and they could have advised on a more suitable risk level.

What risk profile model did they use?

Why do you think you came out as cautious considering you have investment experience with a more moderate risk level?
Has something changed in your attitude?

Really helpful points thanks. I guess, I'm
used to the last 10 years of fairly smooth gains and last year shook me as it's the first time I'd seen large(to me) losses- on a bond heavy fund (vanguard ls60).
Most of my discussion with the ifa so far has been planning based rather than details of investments- like most they use a standard set of portfolios. I do have fixed rate savings accounts at 4-5% so maybe can afford more equity with investments, at least while those accounts are available.

If we believe central banks are reaching the end of the rate hiking cycle then a bond fund with intermediate duration may be a reasonable investment now, if interest rates fall then the price of bonds will rise and you be getting coupons of around 4%

You might find it useful to investigate the differences between risk and volatility.

Risk profiling conflates these together for simplicity, but they are somewhat different. Once understood, particularly over a long time frame, it can enhance investment decisions and fund choices.

.75% platform fee is ridiculously high.
I pay .35% with Hargreaves Lansdown.
Short term money market funds or a Bond maturing in the next 3-5 years isn’t a bad idea at the moment with interest rates so high.
I’ve put all the dividend income in our Sipps in the Royal London Short term Money Market fund which costs 0.10% , it’s a far better rate than they pay on cash held.

.75 would indeed be a high platform fee, that's the adviser fee, seems pretty standard.