£4 million. Help please.

[BikerintheDales]

Lucky me! I'm due to inherite £3.8 million.
Do l first see.
A) A solicitor.
B) Bank manager.
C) Money advisor.

Or someone else all together?
I'm widowed and just became an OAP.
Kids grown up.. own houses.
Thankyou.

No, firms will not run portfolios for free, but 0.75% of £4 million is still £30,000 / year, Whereas 2% is £80,000 / year. Unless the client needs are incredibly complex, the all-in cost to the client should be closer to £30k than £80k.

The annual fee should be compared against the annual return, not the assets, to understand its impact. If a balanced portfolio returns 6% pre-tax, then a 2% fee takes away 1/3 of the return. Another 1/3 of the pre-tax and pre-fees return will probably go to taxes, so that would leave only 2% for the investor. If that fee can be lowered to 1%, that leaves 3% for the investor, which is 1.5 times more. Compounded over time that would really add up!

I once (briefly) considered working for SJP. The advisors are, to a certain extent, independent in how they operate.

But the advisor does not control the fees nor the set of available investment options, and the SJP fees are simply too high, plus they mostly restrict their advisors to their own products, so even if you get a good advisor you are stuck with that. They have training programs, etc. so a reasonable, ethical person who needs training and does not know the industry well might consider working for them, but an SJP advisor cannot get around the fees and investment restrictions. 15 minute of research were enough for me to decide not to work for them.

Don't wealth managers just enrich themselves???

Yep, if they were any good they wouldn’t be wasting their time with other people’s money.

It would be worth spending some time reading up on investing and the different options and products that will be available to you. Not so that you can do it yourself but so that you understand what advisors will be telling you.

I’m not saying attention to fees is not sound advice but ime the well established companies like HL, BD etc - have fairly comparable fees as they’re all competing with each other. I wouldn’t suggest chasing the lowest fees and ending up with a less reliable firm.

I take 3% post tax and fees and I’m happy with that.

I agree with the leaning towards well-established firms, but the fee levels can be extremely different even though they are all competing, perhaps because once people get comfortable with a particular advisor or platform, they do not like to change.

Last time I checked, Hargreaves Lansdowne’s platform was meaningfully more expensive than, for instance, AJ Bell. They are both platforms.

On the advice side, last time I checked, St James Place was particularly expensive. Unfortunately I cannot name a “well established firm” on the advice side that is reasonable on fees, but they are out there. For a balanced portfolio in traditional asset classes, it should easily be possible to limit fees including advice, fund fees and platform fees to no more than 1.5%, and preferably 1.0% or below.

Actually with £4 million, or even “only” £1-2 million, it should possible to get a lower all-in fee than 1.5%. I would aim for 1% or less, for a full-service firm, not a discount firms.

Afaik HL for £1-2 million is 0.1%, presumably lower for 2 million+

I’ve not heard good things about St James Place.

A building society offers advice with financial advisors. www.skipton.co.uk/financial-advice

This. Fund Manager/ Investment Manager with in house knowledge to know when to involve a solicitor or accountant etc. don’t go to an independent IFA as you are too large and have different needs. I would recommend Cazenove on personal experience - great service, sensible pricing and knowledge and experience if the markets.

I wouldn't bother with any of that. At your age you surely know what you would or would not spend money on. You've so much money if some gets wasted so what? If it feels like a burden, give some away.

They don’t hold it in cash, they invest it. And if they do hold it in cash it’s often with one of the private banks so it’s guaranteed against the wealth of the banking family that owns the bank.

A decent qualified accountant. They don't work on commission and will give you independent advice.

A solicitor. You will need to re-think your own Will and plan for Inheritance Tax.

We bank with a private bank and, to the best of my knowledge, the guarantee is exactly the same FSCS £85,000 as at any other bank.

Thats why people pay others to manage their money - a portfolio includes investments and savings across multiple accounts.

Also bear in mind NS&I - secure state backed savings guaranteed by the Treasury - up to any amount.

I would do a rough estimation as to how I would like this ££ to pan out.
e.g in my case:
Move house: nothing mad, but a 3 bed with garden and off road parking in the nicer part of my current area of London. That uses £1m.

Calculate running costs on that for 30 years, including having the heating on more than I do.

Plan a spending budget per year: to include good holidays, going out, clothes.

Create security for Dc. Address any current struggles. Some cash for best friend and sister. (Say £50k each)

Budget for repairs and replacements. 2 or 3 more cars, boilers, new roof over 30 years.

How much you want to spend immediately (in next year) on a house move, for example, how you want to live your life, how much you would like to give to or leave your Dc, a find for care, all will influence how you manage the balance and help make sure you get the best out of available advice.

Some great ideas on here.

I've been in a very similar situation to you quite recently. I would say:

Think carefully about how much of this money you actually want or need. Consider deeds of variation in favour of other people and/or charities.

For the remainder, yes find a great Wealth Management company (and yes avoid St James Place at all costs). For me personally it is not about wringing the last pound of return - it is about finding someone good to work with and who understands your priorities. And for me it is someone who understands that I don't want my life to be dominated by wealth management.

Someone else upthread talked about Trusts being the bane of their lives and I would concur with this. Think carefully about the value of your time v extra pounds.

Just my views! Good luck.

Yes, agree with this and also what @MrsCat1 says.

For us, it's been worth it to pay someone decent fees to do the legwork and put the thought into how to best diversify. What we wanted was a good mix of high yield higher risk and steadier, lower risk, and to invest in such a way that we will be able to provide our children with down payments or buy them property outright while leaving us to have a very comfortable retirement without ever needing to eat into our capital. We're also dual citizens, so pay tax in two countries, and give quite a lot to charities, so needed someone to structure things to maximise efficiency.

Just another thought. Obviously I don't know anything about your circumstances, other than your rough age. But you may like to think about what you could achieve with the money. What changes to your lifestyle would you want? Think carefully about who you are. Do you want a better house, designer dresses, diamonds or exotic holidays? Or do you want something else that this money might help facilitate?

I 'gave away' a very large chunk of my inheritance via a deed of variation. This included gifts to five charities. Three were large, household name charities. Two were much smaller local charities and through my gift I have become heavily involved in both these charities and see the good that my gift has achieved. It was an 'unintended consequence' of the gift but one which has enriched me more than pounds on their own would have done.

Food for thought!

You still get the FSCS security, but the likes of Hoare & Co use the family wealth security point as an additional comfort. It’ll obviously depend on the terms and set up of the private bank. (And for the avoidance of doubt, I mean privately owned banks rather than banks who offer private banking facilities).

Rather than gift to charities via a DOV, you might improve your position via regular annual donations if a higher rate taxpayer. This can also be effected via Share Aid if you inherit quoted shares, ie gift to charity in specie (via something like CAF).

We bank with them, and I admit to not having paid much attention to that specifically, but I'm not aware of any additional security due to their family wealth. Overall, we're very happy with them (much better than Coutts), but in my experience (law) families tend to be pretty good at scuttling away with their assets if the shit hits the fan, so I wouldn't put too much stock in that.

Kerr Henderson Group set up a couple of excellent overseas trusts for me - one is exempt from IHT after 7 years - the growth in the other is IHT and income tax free. I'd also look into a deed of variation for any dependents to save on I HT later.

Avoid Coutts. I speak from personal experience.