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Ask Justin

Ask Justin

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Do you recommend Bestinvest?

Investment | ISAs Helpful? 60

Asked by daverussell, submitted 05 January 2010.

Open Quote I notice that Bestinvest appears as one of the adverts on your pages. Do you recommend their products?End Quote

Answered by Justin on 05 January 2010

I should start by re-iterating: a company’s decision to advertise on the site makes no difference to my opinion of them. Advertising is important as the site needs to generate revenue in order to be a viable long term proposition (I can’t afford to continue funding it myself indefinitely), but if push came to shove I’d rather close the site than let commercial pressures influence my views. After all, my motivation for building the site was to ‘tell it how it is.’

I should also point out I worked at Bestinvest between April 2003 and September 2007.

Would I recommend Bestinvest’s products?

I’m not in a position to comment on their customer service as I’m not a client (Bestinvest clients, please let us know by leaving a user review!) However, I’m happy to give my opinion of their proposition.

Bestinvest offers three key products: fund discount broking, discretionary investment management and their own funds of funds - all backed by their in-house research team.

The fund discounts are plain vanilla, i.e. Bestinvest waives initial commission and takes annual (trail) commission (usually 0.5%). Where they differ from other discount brokers is by offering ‘free’ annual portfolio reviews (funded by the trail commission) if you have at least £50,000 invested. This seems a pretty good deal to me if you need advice (unless you have a very large portfolio). If you don’t need advice, or don’t qualify for the reviews, then you could save money by using a discount broker that rebates some, or all, of the trail commission. In that instance I guess you’d need to compare the savings elsewhere to the value you place on Bestinvest’s research and website client portfolio tools.

The discretionary management service targets portfolios of £250,000 and above. They charge 1% a year plus any dealing costs and rebate any trail commissions, which is on a par with most other high end discretionary managers. The bottom line is performance and because discretionary managers rarely publish this (as each client’s portfolio is usually different) it’s hard to make comparisons. If you discuss this service with Bestinvest, or any other discretionary manager for that matter, I’d suggest asking to see a sample portfolio (including past performance) belonging to a client with similar objectives to you and compare to others.

Bestinvest’s funds of funds, called Multi-Asset Portfolios, are relatively expensive with total expense ratios of 2.24%. Compared with a conventional fund at around 1.6% you’re paying an extra 0.6%+ each year for active management. Because the funds have been running for less than two years it’s too soon to cast a sensible judgement on whether the extra cost is worthwhile. I’m not a fund of funds fan, but if you really want one then I’d look elsewhere until the manager has built up a decent track record, including a good score on Bestinvest’s own Manager Record Index (MRI) rating.

The business changed hands in 2007 when John Spiers, its founder and driving force, sold to 3i. He took a break afterwards, but I’m re-assured that he’s since returned as Chief Executive because he’s a big believer in research and giving clients’ value for money.

Overall I think Bestinvest are worth considering for discount broking and discretionary investment management. But, as ever, look at alternatives too and choose the company, proposition and deal that work best for you.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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