General advice needed re strategy to manage ARF/stocks/cash +costs

[2blacklines]

Hi all,

My dad passed away recently and we are now at the stage that we need to consider how to manage finances moving forward. He had always managed the family finances and luckily they are in a good state, securing their retirement through the combined approach of an ARF, equities and a decent size rainy day fund of cash. His strategy was always long term investments and he rarely sold any just consistently investing through the years.

The current split of the wealth is as follows:
- 20% PPR
- 20% Cash
- 25% Equities
- 35% ARF

My mam is keen to ensure that the wealth that they built up is not lost through poor decisions. None of our family now have any experience with the stock market but do understand the ups and downs of direct residential property investment.

She is at a crossroads regarding what should be done and based on a few conversations with friends in the financial industry she's being steered towards using a company like Goodbody to manage her investments and ARF through a discretionary arrangement - indicative fee is 1.2-1.5%/annum. The aim is to maintain current wealth level, i.e. the portfolio generates a return to meet the 4/5% minimum ARF withdrawal level each year. Regarding the cash in reserve, there are no pressing or predicted needs for cash in the next 5 years so she is considering buying a couple of investment properties and keeping a decent cash buffer.

Main question is - does this seem like a bad idea? The alternative is to leave the ARF with one of the life companies to manage and invest the money currently in equities into property (I know that property will have generally better returns but also brings with it more work and cost risk). Of course the obvious answer may be an independent financial advisor/planner however also nervous that bad "good" advice is very dangerous so would welcome recommendations on that front if that's the best approach.

 

[Gordon Gekko]

Hi,

Sorry to hear about your Dad.

How much is the total pot? e.g. what’s the value of the ARF, etc?

 

[2blacklines]

Thanks. Total pot include PPR is around €3m. Additional income I didn't mention is state pension and small define benefits pension.

 

[Sarenco]

My condolences on the loss of your father.

I can understand the logic of appointing a discretionary manager over what is clearly a large equity portfolio. One alternative would be to liquidate the entire portfolio and invest the lot in a global equity index fund. However, I suspect that would trigger significant CGT liabilities so maybe a discretionary manager is the way to go.

I don't see any compelling reason to move the ARF away from the life company. Again, that could all be invested in a global equity index fund, although I personally would inclined to allocate roughly 25% of the ARF to a Eurozone Government Bond fund given the large equity portfolio held outside the ARF.

I would transfer a good chunk of the cash holdings into (tax-free) 4 and 5-year State Savings Certs. Perhaps keep a few years' worth of expenses on deposit.

Personally, I wouldn't be inclined to move into the residential letting business at your mother's stage of life. I just don't think it's worth the hassle but I'm sure others would take a different view.

Hope that helps.

 

[Itchy]

Condolences for your loss.

Assuming the wealth has passed to your mum. Perhaps she would consider exercising some of her estate planning wishes now. If she passed on some of her wealth now e.g. to all her children up to the tax free threshold. It may leave the overall sum to be less intimidating, her lifestyle wouldn’t be affected given your father was a shrewd investor and the money would meaningfully impact her family. Rather than having it invested, give it her family to invest for themselves. Obviously the PPR and ARF would rest with her. Just a suggestion,