What is the point in having a choice of funds?

[Duke of Marmalade]

The Straw Man proposes a choice of three funds - Low, Moderate and Medium.

The idea of asking a 23 year old or even a 60 year old which is the correct choice for them is arrant hubris.

Again we see that for those punters who have the sense to recognise that they haven't a clue what is the correct investment strategy for them, they will be defaulted into a preferred fund. It is estimated that over 90% will be so defaulted.

So what is the point in having a specious choice of funds which will inevitably invoke the need for costly financial advice.

One provider, One fund.

 

[RETIRED2017]

unless they are going to put it all into the one pot and start moving enough into low risk funds to cover people coming up to retirement age, so the fund management will be making the decisions ,

like a well run defined benefit scheme only in this case it will be a defined benefit ran along the lines of a group scheme (not sure I explained it very well)

 

[Jimmy Dee]

Open the market to investors to look after themselves. Ask the government to get Vanguard and Blackrock to establish simple products (just as they have abroad including the UK) which don't require much thought. Ask the government to reform the punitive taxes on ETF's and provide incentives to individual investors. Dismantle the pension industry and their high costs. Then we wouldn't need any advisers. This would start to get the government off the hook for pensions.

 

[Duke of Marmalade]

unless they are going to put it all into the one pot and start moving enough into low risk funds to cover people coming up to retirement age

I'm glad you brought that up. The greatest fallacy in this space is the idea that the point of retirement represents a cliff in investment strategy. This goes back to the compulsory requirement to purchase an annuity.

The way I see it retirement age in this context is simply the age at which it is permitted (but not compulsory) to make withdrawals from your fund. On average you have another 25 years to go. No need for a stepped change in investment strategy - the standard fund still suits perfectly well. Of course for different people and at different times the standard fund will no longer be suitable. It should be permitted to transfer into a conventional ARF at that stage. But the central AE proposition should not be contaminated with multiple choices of funds and providers.

 

[Jimmy Dee]

Good points.
I am an advocate of continuing your investment life well after your retirement age. This is essential to maintain a decent lifestyle. In fact if you have a good pot and perhaps a private pension (or if you are one of the lucky ones with a publicly funded pension) then you can have a superior lifestyle, and in addition look at increasing your risk levels by re-balancing towards equities and look to leave some interesting legacy or (even pretend that you are a rock star and) make charitable donations or what ever else floats your boat.
Arf arf!


Arf arf!

 

[RichInSpirit]

I'd be pro choice on this. Even if enrollment is compulsory it's still your own money that's getting squirreled away. It's nice to have a say where it gets squirreled away.
Like the way even though car insurance is compulsory you still get to choose which ever insurance provider suits you best.
Choice is good to keep the providers on their toes, make them work for you.
A one fund suits all would lead to mediocrity in service.