The Coming Gilded Age and Vanguard’s mustelid indigestion

Diversification is  a decent principle with bank accounts and the like, particularly given the tendency of financial organisations to freeze people’s accounts without due process due to the money laundering regulations. Then there’s the Madoff risk of the unknown unknowns cratering a business. So much to worry about.

1+1 redundancy is a good principle in many things-when I did a parachute jump there was a main and standby. Whether I’d have had the presence of mind to pull the standby1 before becoming a grease spot is another thing, but main and standby is A Good Thing.

To that end I have a second ISA with Charles Stanley as well as the main one with iWeb. The aim here is damage limitation, and you get most of the win with the first standby system you introduce. In theory I could get better security against providers going titsup by balkanising my ISA to try and stay under the FSCS compensation limit. Life is too short for that. Main and standby – and stop there.

My main ISA with iWeb is pretty spit-and-sawdust. Their win is not charging me annual fees, provided I hold no funds (shares and ETFs are fine) and don’t trade. I am OK to pay them transaction fees, the aim here is not to churn. They have no monthly investing facility, and you can’t borrow from the ISA – it isn’t a Flexible ISA.

Flexibility is valuable to people with no income

The financially independent are despised by the banking system, who won’t lend them money because without a salary income they can’t qualify the risk. So it’s handy to be able to borrow from your ISA, though you should never aim to use it. I hung onto my Charles Stanley account for its flexibility, but what with one thing and another it tended to grow, and CS jacked up their fees a while back. This begins to irk me. According to the Great God Monevator, CS rocks in at 0.35% where Vanguard are 0.15%. The difference in that makes it slightly worth while to shift as the account gets larger. As an old git I don’t need to flay costs as if they were the tattooed agents of darkness is the same way as TA, because I am a decumulator, and there aren’t as many decades to accumulate as for a 20-something. On the other hand I carry a lot of gold in the iWeb ISA and have shifted my risk balance lower, so maybe I do need to up the ante on the equity part. I was pointed toward the behemoth Vanguard as a lower-cost supplier with a flexible facility via a comment on Monevator. Although flexible access tends not to be a bargain basement offering, Vanguard do indeed offer it. To wit

The Vanguard ISA is a “flexible” ISA, meaning that money you withdraw may generally be paid back in during the same tax year without counting towards your annual allowance

Don’t transfer your old ISA as your first act. Because: AML theatre/freezes

Vanguard then demands my driving licence and bank statements before it will give me any of my money back, because they can’t verify my identity with credit reference agencies. Well yes, of course you bloody well can’t, That’s because I don’t borrow money you twits. I have no mobile phone account, my credit cards were opened years ago and I pay them off, I don’t have car loans and I loath subscriptions like they were the tattooed agents of darkness. Until then I can’t draw money out. Now you have to put £500 into Vanguard as a minimum, and there’s a strong argument to be made that you shouldn’t be anywhere near Vanguard if losing £500 for a year would raise your heart rate, but nevertheless, shouldn’t there be a teeny wealth warning

due to the odious and ineffective money laundering regulations in the UK, bear in mind that you are going to lose this deposit until we can verify your name, rank and serial number.

Anyway, let battle commence. I’d say the recommendation here is open your Vanguard account with £500, and go through the name rank and serial number rigmarole rather than transfer your entire ISA that provides your total income and represents all your earthly wealth, because you might be dischuffed to have it held to ransom if something goes titsup. You have absolutely zero recourse with a money-laundering freeze – they are judge, jury and executioner, and they won’t tell you the charge. I know the rule of law begins to fray under populist governments like our current crew, but this specific rollback of the principles of habeas corpus started in the 1990s so it can’t be blamed on them. Which is why I battle-tested this in this way Winking smile

It’s quite a bizarre process. Some years ago some Yanks demanded some government ID for some service or other which I didn’t deem worthy of the demand. The asker was a private firm, a web host ISTR. So I found someone’s driving licence on the Web and set to with Photoshop, making sure the DOB was different, so when some ne’rdowell hacks their company they have duff gen2. You want government ID – stick that in your pipe and smoke it.

Similarly in my short foray into the selling of my time for far too little money that is otherwise known as matched betting I had to create some documentation that matched a variant of my name that I had a bank account in, back in those innocent days of the 1990s when I would wander over to the bank near The Firm’s campus, show my company pass card and wander out with a new bank account. So my trusty original version of Photoshop 5 was used to amend it appropriately. Hell, if it’s good enough for Martin Bashir it’s good enough for me, except that I DIY rather than hire a graphic designer because I am a cheapskate. Exactly what the point of this exercise is beats me. FWIW I don’t do this for things that matter, like this ISA application, but it’s not hard, guys. And for people who don’t need to know in my view I always feed false personal data into their sticky beaks. The point being that uploaded photos of documents aren’t worth a jot. Because: Photoshop

But Vanguard has now decided that while the photo does look a little bit unusual

2005_teeth_square

it may accept mustelids3 after all.

So I thought I’d throw that one out as a warning. Don’t transfer your whole ISA to a new provider before establish that your new provider will clear you through the AML4 process. And the best way to do that is to open the account with the minimum cash deposit. Which also locks you in to using that provider for your ISA contributions in this tax year, because you aren’t permitted to have two ISAs of the same type active at the same time.

Some nice options with Vanguard

I have a poke around in what I can do. I was already caught on the hop by their minimum deposit requirement of £500 – I expected know your customer aggravation so I initially wanted to sport £50, and computer said no.  They seem to run funds and ETFs. I am generally an ETF sort of guy, mainly because iWeb charge to hold funds but not shares. They don’t any more. See comments. And I like to have market pricing. And interesting wrinkle with Vanguard is you can avoid the £7.50 transaction cost on ETFs if you run it as a batch buy rather than quote and deal. For ETFs that’s pretty neat

Place your buy order now and it will go through at the next trade point. This is usually twice a day for ETFs or can take 2 to 3 business days for mutual funds. The fund’s unit or share price may change between now and then.

Twice a day is good enough for me if it saves me £7.50. Beats me why anyone would use mutual funds given the extra latency, I already have an anti OEIC prejudice from iWeb’s fee structure. But perhaps there are some that are only available as funds.

Switching out of Charles Stanley

You can only hold Vanguard funds and ETFs in Vanguard’s ISA. In Charles Stanley I had specifically avoided Vanguard, because I hold a large slug of Vanguard’s VWRL in iWeb. Vanguard has to be a major prize for state sponsored hackers. Let’s hope they run their nightly backups onto WORM media and then send a couple of guys in sneakers, each watching over the other, to take two copies and stick the media into a fire safe. Or whatever the modern equivalent of that is, but if it’s connected to the Internet without an airgap all bets are off. Even airgapped systems aren’t safe. I am pretty sure that somewhere there is someone trying to work out how to hack Vanguard, purely because of it’s sheer size. Which makes me uncomfortable about having too much in their funds. But not as uncomfortable as paying the Charles Stanley extra fee tax. I won’t sell my VWRL in iWeb, but I will look for alternatives to add. Monevator tells me that HSBC FTSE All-World Index Fund C (GB00BMJJJF91) is a worthy non-Vanguard replacement.

All my stuff in CS is in funds, because their fee structure favours that. It’s also in things like Dev World ex UK, because: Brexit at the time. So I told them to sell the lot. In theory I could lob this years ISA allowance into Vanguard and give them the buy order at the same time as CS the sell, and the fund selling time latency would cancel out, sort of. But I’m not that stressed in being out of a sky-high market for a few weeks, and CS has a lot more than 20k in it anyway. So this will be a straight cash ISA transfer, and then I will drop the anti-UK bias, because the UK is less overvalued than the US. VWRL will probably do. I will use VMID for the FTSE250 I was doing in CS.

A chance to invest more intentionally

It’s an opportunity to think about whether my aims should be different. I have moved significantly towards a safer spread of asset classes – gold and Premium Bonds as non equity asset classes. I still don’t do bonds.

How about Bitcoin? All the rage these days, I hear. Nah. It’s fundamentally the greater fool theory, not a productive asset. OK so I violate the what would Warren Buffett say doctrine with the gold, but at least that has some track record. HODLing BTC isn’t my bag, I don’t care if it could make me filthy rich in some meta-universe. It’s fast fashion IMO. Having said that, I do hold RICA and they seem to have benefited from BTC – and actually crystallised their benefit. I’m no passive believer and I’m all for market timing but BTC is strong food indeed, I just don’t have the balls. As Warren said, you don’t have to swing for every pitch.

Wiser heads than me are already scratching their noggin and going WTAF is with the markets? Fortune has this breathless take on how the kids are doing all right, with their Robinhood accounts, and crypto, and smartphones. And leverage.

Robinhood and crypto and phones are new, but the fuel is leverage, and Warren Buffett sits in his empty lecture hall looking scared, and Fortune tells us your father’s stock market is never coming back. What’s a mustelid to go? Throw caution to the winds and go get me some BTC to HODL with a side order of NFTs and dogecoin all washed down with ethereum, as approved by Elon Musk?

Leverage and a Gilded Age

If you’re Joe Soap and you need leverage to make your fortune then you’re in a Ponzi scheme, some make it big and many get hosed. Fortune’s breathless article is a fun read, but there is a stench of decadence and decay reeking across the land. We don’t know what we stand for in the West any more. The threads of the rule of law are fraying. Sociopaths like Elon Musk and Jeff Bezos are worshipped, because we know the price of everything and the value of nothing.

Welcome, dear fellow travellers, to the Belle Époque 2.0. I hope it will see me out, though I will be too old to be called up for the ensuing war5, as the checks and balances fail one after the other for a lack of maintenance, or perhaps because we have forgotten what they are for. I differ slightly from ZXSpectrum48k’s call in that I see the Gilded Age as starting, but perhaps that’s wishful thinking because I’d rather not live through the war.

The froth that shows now are the morbid forms that Gramsci described appearing between the fall of the West and the rise of whatever is yet to come. I see the tiredness and senescence that Oswald Spengler called out long ago – see if you recognise any of these portents from Die Niedergang des Abendlandes

“The press today is an army with carefully organized weapons, the journalists its officers, the readers its soldiers. The reader neither knows nor is supposed to know the purposes for which he is used and the role he is to play.”

“Through money, democracy becomes its own destroyer, after money has destroyed intellect.”

“Long ago the country bore the country-town and nourished it with her best blood. Now the giant city [ed: London?] sucks the country dry, insatiably and incessantly demanding and devouring fresh streams of men, till it wearies and dies in the midst of an almost uninhabited waste of country.”

“At the beginning a man was wealthy because he was powerful — now he is powerful because he has money. Intellect reaches the throne only when money puts it there. Democracy is the completed equating of money with political power.”

In movies the decline and fall is portrayed as catastrophic, because the narrative needs a thrust-plate for the hero’s journey. Where the fall is caused by external forces that may be the case, but when the mainspring of culture unwinds, the interregnum can be be a long decline.

Leaving that aside, when da yoof convince old gits at Fortune to write breathless articles that it’s all different now, we know that it’s the beginning of the end. We’ve seen this particular movie before. I was (sort of) da yoof in 1998. I set up an internal company share discussion board on an old machine under a desk 6, and opened batting with this first transmission.

“The aim: to make us rich. Very very rich”

That’s the whole point of being a young cock – to be so damn dead certain sure that this time it’s different

Bliss was it in that dawn to be alive,
But to be young was very Heaven!

How did that work out? The Ermine got away lightly, spaffing a few grand in tuition fees at the University of Stock Market Investing, while one fellow got to remortgage his house

I’m not clever enough to know whether ZXSpectrum48k’s withering riposte on redditors’ smarts makes sense analytically. But I concur with the likely outcome

A small few of you (both retail investors and hedge funds) will make huge sums and strut around the media. A few will also lose huge sums and achieve a different type of attention. The bulk of you will lose small sums and will be never heard of again. Overall though, the net P&L will be a loss.

Not because I know what the hell he’s talking about. But because leverage at the top of a frothy market always ends that way. Small guys borrowing money to invest in a bull market is the the bugler sounding the Last Post for that market.

This is why I hold a shitload of gold, and my ill-gotten gains from shorting last year are partly in gold in the ISA and partly with NS&I in the form of premium bonds. It’s why I’m not troubled sitting in cash for that ISA transfer. My ISA estate is still mostly equities, but I feel the crash is survivable now. When will it come? God knows, but I hope it comes soon, because the higher and higher it climbs, the worse the fall, and I am not so sure that the tired economies of the West can take that sort of Great Depression fall, it’s not like there aren’t signs of social tension now.

Sure, your father’s stock market isn’t coming back. You grandfather couldn’t buy the index – or AMZN. But a lot of the sci-fi market is wind and piss, born of decadence and too much borrowing. Meme stocks, BTC, NFT, it’s all froth, dot-com boom 2.0, and we have seen this movie before. The giveaway is that little word leverage. If you thought you were buying productive assets that deliver a steady income stream then you wouldn’t need leverage. If you need leverage to make a buck because the share price is king and income is dust since everything is overvalued you’re in big danger territory. And if you’re a little guy that needs leverage at the top then you are upcoming roadkill.

The great win the young Ermine achieved in the dotcom bust was not using leverage. That’s why I didn’t get to remortgage my house. You can pay a lot more than I lost there for training into how to be a shit-hot trader using leverage, but you never hear from the guys that crash and burn. Funny old thing that.

Success has many fathers but failure is a bastard.

Otherwise known as sample bias. Coming to a Redditor near you, or pretty much any of Fortune magazine’s cast of characters. Avoid leverage. It never ends well. Don’t. Use. Leverage. If you’re a little guy that is. If you’re a hedgie then knock yourself out, because what’s the worst that could happen? You blow your account up and get to look for another job, rather than remortgage your house.


  1. it has been a while but I think main was launched by a breakaway cable from the aircraft, so it didn’t need presence of mind 
  2. It staggers me how many folk tell Facebook their birthday, all for the rush of having 300 ‘friends’ wish them happy returns. Don’t. Do. That. 
  3. That’s a pine marten, beautiful creatures. I’ve only ever seen them in Scotland, though perhaps one day I can see one in Wales. And just for the record, no, I didn’t replace the photo on my DL with this handsome fellow, it was sent to Vanguard SOC 
  4. Anti money laundering 
  5. The war will be fought with screens, not men, until the fragility of the networks that were built over decades and never black-started as a whole shatter into islands or go dark for decades. The Internet of today is not your grandfather’s ARPAnet and has concentrated pinch points and single points of failure 
  6. using Matt’s Perl Scripts WWWboard, lethally hackable code that I was amazed to still find on t’internet – for the love of all that is holy don’t ever even think about putting this on a real site. At least my site was on the intranet. 

55 thoughts on “The Coming Gilded Age and Vanguard’s mustelid indigestion”

  1. I think we may have had this conversation before, but I should point out that IWeb don’t charge platform fees for holding OEICs. I have a large fund only ISA with them, for which I pay about £10 per year in dealing fees.
    Youinvest and Hargreaves Lansdown both have the fee structure you describe – % based for OEICs, but a capped lower platform fee for ETFs/shares only. I’m not sure where you have got the idea that iWeb do this.

    Liked by 2 people

    1. Ta – my bad. It stuck in my head because that’s what they did when I signed up. Looks like this change is what we got to the increase in signup fee from the £25 I paid to £100.
      Now if I were a Lifestrategy fellow that would make me happy, as that is fund only ISTR.

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      1. Oh dear. It could be worse than I thought. The problem could be incipient ermine brain rot instead 😉

        I like iWeb – there’s nothing fancy about it and it’s a pretty basic ride. But I am grateful to them for delivering me from the pestilence of paying anything at all on those periods I leave it all alone

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  2. I hope your ISA transfer to Vanguard was quicker than some small pension transfers to my Vanguard SIPP are taking. I’ve been waiting nearly 2 months now on what should be an electronic cash transfer from one of the other providers. I thought I would do the small pensions before consolidating a big one with them, the idea being to dump it all in a LS fund and go bird watching selling down lumps as required. So it spooked me off transferring a decent sized L&G ISA to Vanguard before it gets thrown into Fidelity by L&G. So I went on to my Hargreaves ISA and kicked off an “in spec” transfer of my L&G funds to them and in less than a week there they are parked in my HL account. I have to hand it to HL – when they get a sniff of that 0.45% platform fee on funds they really go for it on the transfer like a badger after peanuts. Of course I have now switched those funds to ETFs but in my tardiness I ended up paying a month’s worth of the 0.45% fees on the funds crossing into the current month before I did so – I guess they deserve it for the efficiency. I’m not sure what is up with the Vanguard SIPP transfers being so slow though and that flexible ISA would have been nice to have. I’m sure SIPP transfers are more complicated than ISAs with all the regs, but I wasn’t expecting to have to babysit the pension transfers between Vanguard and the other providers so much…got a feeling I’m in for a long game here..

    Liked by 1 person

      1. Well, I thought I had missed something so in case it has changed so went to check. The blurb small print in the HL stocks ISA key features PDF has this statement “ The HL Stocks and Shares ISA and Cash ISA aren’t flexible ISAs and withdrawals cannot be replaced in the same tax year”. Disappointing but for £45 a year platform charge holding ETFs, ITs and shares I still find it good value and my recent Friday afternoon help desk support call to them was helpful and they resolved my transfer problem in a few minutes on the phone.

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      2. Bill,
        My bad – I misread / misunderstood the google response to “is hl isa flexible” from the HL news archive that reads:
        ——————————————
        “The tax-efficient ISA wrapper is flexible, you can withdraw money whenever you like and invest to suit your needs – for income, growth or a combination of the two.

        A 60 second guide to Stocks & Shares ISAs”
        ———————————–

        If you dig into the article (rather than rely on the summary like I did) what is really meant becomes a bit clearer. Furthermore, this HL article dates from 2014 and flexible ISAs (where ‘flexible’ now has a special meaning) have only existed since 2016 IIRC.

        My apologies.

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  3. For info, a few years back I opened a VG ISA with a not dissimilar amount to you and some time later initiated a very similar sort of cash ISA transfer. From memory, this took about 2 – 3 weeks start to finish and there was some oddity along the way too. At around the same time I was taking the PCLS from a DC scheme – which did take somewhat longer. I had cause to contact both platforms customer service teams and found VG to be the more helpful and responsive.

    Generally, I have always found it a good ploy to open a/c’s ahead of needing them with smallish amounts as this has allowed me to ‘find my way around’ before needing to use them in anger – for want of a better phrase.

    Liked by 1 person

  4. My obsessive proof-reading brain noticed you can’t decide on the spelling of [Pp]remium [Bb]onds.

    I have some bond-related stuff but no gold.

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  5. I have long ago given up any active investing and simply hold my stash with a veteran financial advisor firm that keeps me balanced and diversified both in assets and internationally. It’s worth it.
    In Canada, we have no flexibility in our TFSA (your ISA) no matter who manages it. If you take money out this year you cannot recontribute it until next year.

    Liked by 1 person

  6. > If you take money out this year you cannot recontribute it until next year.
    That’s how it used to be here. When I moved house and wanted to use that facility to bridge the space carrying both it was only a a year after that change, I wrote to CS and asked did you actually really mean that because it seemed too good to be true. But it worked!

    > active investing.

    I know. One shouldn’t, but it’s starting to feel like 1999 all over again. Weird and wonderful stuff that no beggar can work out the true value of. Share price is king, income is trash. Little guys winning on leverage…

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    1. Yes, it seems pretty strange to me as well. That said, whenever I feel tempted to take the reins, I ask myself: am I any smarter than two guys who are 30 years younger and still have 20 years’ experience in the markets? Um…no.

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    1. Wow. I think that’s the dictionary definition of overthinking 😉 Make me feel for William Goldwater’s “nobody knows anything” though applied ot the movie biz 😉

      Mind you, this is a treat

      it is very hard to understand the visceral feeling of retirement risk until one has, in fact, retired. Human capital depletes faster than you think and the lack of a safety net other than one’s own portfolio gets your attention completely and utterly; margins for error compress more than one would like.

      Indeed. Once you pass the point of no return, there is no return…

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  7. I found the Vanguard platform to be at best OK, but the £375 maximum platform charge that I was lucky enough to qualify for was too much for my liking. Much cheaper £45 max ISA charge at HL if you are an ETF investor.

    I understand that this gives you flexibility, but that is an extra £330 you are paying for that option each year.

    For me I decided to keep my costs low. I can always transfer into a flexible ISA if I do decide I need to access the money like you did to buy a house. It is hardly a spur of the moment decision, so there should be time to organise it. Are you planning another house move soon?

    Any other huge expenses, e.g. if I needed cutting edge cancer treatment to save my life that wasn’t available on the NHS, would just be a straight expense coming out of my ISA and being spent.

    Liked by 1 person

    1. I’m not in that league, though that’s because this isn’t my main account. Vanguard are standby – I use Iweb for my primary platform because of its zero fees on ETFs. And funds, apparently. I can’t actually think of a specific reason I might want to borrow at the moment, but I want some protection against platform failure and AML freezes, so I figured I may as well take the extra flexibility facility in the secondary account. If Al Cam hadn’t established HL was a non-flexible ISA I confess I would have ballsed this up, as I expect to pay a decent amount over £45 at Vanguard. But not £375 😉

      I am an old git with fewer years to compound. Sometimes comfort matters more than performance, though I have absolutely no complaints about HL, I use them for my vestigial SIPP.

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      1. Happy to have provided some food for thought. 🙂

        What used to irritate me about Vanguard Investor was the fact that they chopped off (not even rounded) their statements to 2 decimal places. I held a fund with them, it had 4 decimal places of a holding but only ever showed two of them on their statements.

        I used to complain, not just because it was wrong, but I thought it was in a small way a public good if it gets them to improve. Lots of other people must just tut at it and do nothing, it is just a rounding error after all.

        This one was an error that could have been so easily fixed, but I got nowhere, just worn down complaining. So I took my business elsewhere. I never felt I got good value, given the high fee for my size of holding. If they had been a very cheap no-frills outfit, I might have had a little more sympathy. No other platforms I used ever had this problem. I regarded fixing it as important, since along with the contract notes, it was proof of my holdings.

        Maybe it won’t happen to you, since you cannot buy fractional ETF shares, but since you don’t need the optionality of a flexible ISA I would just cancel your transfer for the fee saving.

        You will also have the entire market of ETF’s to choose from, not just Vanguard ones with someone like HL, or III, or others.

        One more thought, if you look at VWRP, that is the accumulation version of VWRL, so you won’t even have to pay transaction fees to re-invest dividends.

        Anyway, that’s my six pence worth, good luck in whatever you decide to do.

        Liked by 1 person

    2. Good points well made.

      > I can always transfer into a flexible ISA if I do decide I need to access the money like you did to buy a house.
      I suspect that you may have to do the transfer before you paid in that years ISA money to qualify – do you know if this is, or indeed is not, the case?

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      1. From the questions I was asked by Vanguard, if you have paid anything into that ISA this TY you have to transfer it in its entirety. And I guess you can’t test pay into the destination either.

        This isn’t so much of a headache if you have more than one ISA for redundancy, however, since by definition only one will be active.

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      2. I would be tempted to interpret that as meaning that you can convert any [non-flexible] ISA contributions from this tax year to flexible by transfer. If that is correct then that may add more grist to Jam’s points – providing flexible ISA’s remain open to new customers and they are prepared to accept transfers too.

        Liked by 1 person

      3. > If that is correct then that may add more grist to Jam’s points

        Yup. I cocked this up. I should have written this post before opening w Vanguard 😉 I already have a HL account for my SIPP, and I could have transferred in specie (probably) although since the fee structure of CS favoured funds and HL appears to favour ETFs maybe cash was fine as I’d need to convert anyway. And I could have reduced my overall exposure to the Vanguard behemoth/Borg. And it would have saved me a little more money.

        Maybe something to think about next year. Although I have a SIPP with HL it’s pretty residual, mainly to collect my free £180 from the taxman each year (the saving on the quarter of my £720 tax bung that is protected by the 25% PCLS, all the rest what the taxman gives with one hand, he takes with t’other). So I wouldn’t be flattened if HL goes titsup, whereas if Vanguard goes titsup I am in more trouble because that would reach into my holding of VWRL in iWeb.

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      4. To be fair – as I understood it your initial objective was to reduce the cost of holding a flexible S&S ISA below that charged by CS. This you will clearly achieve. However, through discussion and chatter your objective has probably morphed a bit. We all live and learn and as is usual the devil really is in the details – which may well be different again in a years time!

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      5. Indeed. It’s definitely one to file under First World problems… Jam has served me well in getting to think about what the win of flexible access really is, given the requirement is quite an edge case. In my case it’s probably closer to their example than a house move, in which case flexible access is a moot point. So the exercise has been useful in clarifying what my requirements are. I’ve also become soft because iWeb don’t charge platform fees and I’ve always regarded this ISA as standby. However, it will receive some of the ill-gotten gains from shorting my main ISA last year so percentage fees will start to add up. HL will probably get more business next year.

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  8. Bill,

    Having consolidated 7 bits of DB/DC pensions a few years back, my overwhelming opinion is that the tardiness lies with the remitting pension, although I agree with other comments here that the receiving entity can do a lot on your behalf to speed things along.

    BTW it took me 6 months!

    Good luck!

    Liked by 2 people

    1. >>Good luck!

      Thanks. Due to my previous long-time employer regularly switching providers I also had 7 plans to consolidate, 3 are going to the Vanguard SIPP. Vanguard tell me that they have a high volume of transfer requests and it seems like they are queuing the requests in turn for customers. A victim of their own success I think. When my request hits an issue and I do something to resolve it I think it gets put on the back end of their ticketing system again. So they tried the transfer on this Origo electronic transfer system but they use the wrong identifier for the other side and it isn’t recognised and fails. So I call the other side and to paraphrase they say “yes, we are called AON but they need to use blah blah some other name on Origo because that is the wrapper product name”. So back I go to Vanguard and tell them that and my ticket resets on the queue. Then Vanguard get back and say “Oh, there is also another company AEGON involved and that caused some confusion”, so there are now 3 providers involved in my transfer. Why Vanguard don’t get on the phone to them and figure it out instead of leaving it to me I have no idea, they ought to have some playbook for the various other providers / DC products to make things faster. The DC scheme that needed me to fill in paper forms from the other side and send photos of my drivers license (Utmost/ex-Equitable life) was actually quicker than the one that can be an electronic transfer -a win for old fashioned form filling! I should have got onto this before a pandemic came along, but who knew…

      Liked by 1 person

      1. Bill,
        Did your employer not offer to transfer/roll/consolidate your ‘old’ holdings into the new scheme each time they changed scheme provider or was something else going on?

        Liked by 1 person

      2. Al – it was my choice not to transfer. With the early ones I lost track as just small amounts. I ended up with an HL SIPP which was the best one they took us into apart from the 0.45% fees and it took me a while to figure out my ETF plan with that. Then with more acquisitions and mergers they transferred us to Standard Life then this AON thing – I didn’t want to transfer my HL SIPP through those with the new provider arranged transfer offers. So I left them with this plan to sort it out now with half going into the HL SIPP and half to Vanguard for some platform diversity. I didn’t want to start the transfers last year due to all the market excitement! I think some would happily put it all into HL and be done with it, maybe I should have done that.

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      3. Transferring pensions does seem to be in a different league of hurt to ISA transfers. I had to pay some fellow for financial advice to transfer my own AVC contributions into a SIPP – it’s reasonably straightforward – DC contributions to a DC pension so I could defer my pain DB pension to NRA avoidance the actuarial reduction. It wasn’t that hard. But no, rules is rules. I suppose pensions area more complex beast all round, and there can be wrinkles like guaranteed annuity rates etc, but they do seem to meke this hard for the sake of it.

        Liked by 1 person

      4. @Ermine:
        I can understand [some] complexity around DB schemes, but DC to DC should be fairly straight-forward; after all, DC schemes were set up to be portable! Perhaps Bill will enlighten us.

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      5. Yes these DC-DC transfers should be easy. Part of it was my suspicion of the new employer DC provider each time they switched us and once I got it figured out it in my HL SIPP it was frustrating when they again switched us several times. Some of it was procrastination while work and life happens – like not transferring a big plan I had into HL. Most of my old colleagues probably don’t read these blogs and Monevator etc and likely did the transfers. So it is something I have left to sort out later and I probably know more now about what to do and what I want with it! I thought consolidating DC plans into a Vanguard SIPP would be easier and quicker to be honest – I was hanging around until they had more details on what their drawdown arrangements are. With the HL SIPP I have to be careful not to end up with 2 accounts when I drawdown as they apply the £200 platform fee on both whereas Vanguard does not have that problem AFAIK. I wanted to try the taste of the Vanguard SIPP to start with and leave the HL account alone for a while. I’m pretty sure the answer to the HL 2 account fee issue is to do UPFLS withdrawals so you don’t end up with a drawdown account. Luckily for me I don’t need to draw down SIPPs for a while.

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      6. @ermine = As you wrote at the time, your AVC had the valuable benefit of enabling you to take your PCLS for the combined AVC/DB pension all from the AVC without commuting any of the DB pension. You were aware that you were giving up this benefit in order to access the AVC before the DB pension. However, many would have been completely oblivious to this so, in my opinion, it is not unreasonable that the regulators required you to take financial advice.

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      7. > You were aware that you were giving up this benefit in order to access the AVC before the DB pension. However, many would have been completely oblivious to this

        There’s some case to be made there, but this calculation was closed-form once you’d extracted the effect of drawing the pension early from the DB pension (about 5% p.a. though worse in earlier years). This was an issue of arithmetic, not complex risk computations. Although the combination with the main pension notional value for the PCLS was one positive, the ability to use salary sacrifice was an extra win, once I’d pushed my net salary below the HRT threshold. Saving 32% BRT * NI rather than 20 % BRT pushed me away from the SIPP route

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      8. > thus early access to your AVCs without any impact on your DB pension was largely down to the Osborne rule changes?

        Yep, it was a classic ‘no plan survives contact with the enemy’ sort of thing. I had no desire to buy an annuity at typical open market rates. However, as soon as there was a chance to buy my DB pension (as opposed to drawing early and eating the actuarial adjustment) that was better value. I switched things round and hooked out that AVC precisely to forestall that. I was more skint in the runup to drawing it than after, Die With Zero probably wouldn’t approve. It’s also why I rabidly defend my ISA, normal people use SIPPs here, but I don’t want to pay more tax and managed to preserve/pump up my ISA across the interregnum. Osborne’s changes were transformational for me

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    2. Yup, no early running down of DC pots prior to Osborne’s changes unless you had guaranteed income of initially £20k PA (latterly 14k PA) before tax. Such guaranteed income would usually come from an Annuity or a DB scheme.
      Hard to believe that those were the rules only six years ago!
      I believe that I also benefitted from these changes.

      Liked by 1 person

      1. > should have said laterally 12k PA!

        Don’t rub it in. There’s an argument I should have gone capped drawdown which would not have canned my MPAA down to 4k. But it was all jam tomorrow and I needed the money to forestall drawing the DB pension early. So in the round I probably got the right answer, even if I end up having to pay more tax now – like on 100% of earnings!

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      2. Subtle point re the MPAA. Is it not the case that had you gone capped drawdown you may not have been able to draw the full personal allowance tax free in the interregnum? Planning tax strategies with the benefit of hindsight (or retrospectively) is a bit of a folly IMO! For example, who would have predicted you going back to some paid work?
        Surely, the bigger win was the separability of your AVC’s from your DB?

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      3. > you gone capped drawdown you may not have been able to draw the full personal allowance tax free in the interregnum?

        There was a more fundamental catch-22 in that I didn’t want to draw the DB pension early, so I couldn’t get the guaranteed income anyway. But yes, I wouldn’t have been able to take out the tax-free amount.

        I hardly do enough to make it a major issue, but there’s something peculiarly grating about paying tax on all of the income I earn. It’s certainly a major disincentive to do any more, apart from the obvious nobody’s manufacturing any more time. Oddly enough this region seems to be very short of electronics engineers – I get recruiters trying it on on Linked In all the time, and some of the positions seem to be readvertised. I thought I was going to get some peace moving the profile to the SW!

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      4. IIRC, you did not need guaranteed income (GI) to use capped drawdown; but did need GI if you wanted flexible (ie uncapped) drawdown prior to Osborne’s changes.
        Also, as I understand it, in your situation the possible win on cycling earnings through a SIPP is at best a deferral of 5% of income tax – ie defer 20% tax on the way in to pay 15% (at best) on the way out.
        Thus, I think you would have to earn and then cycle quite a lot of earnings to make up for the gap to tax free up to the personal allowance vs what could have been withdrawn using capped drawdown in the interregnum.
        That is, you did – in all likelihood – go the right way and the MPAA may really be a bit of a red herring.
        I agree the tax system can seem a bit perverse – but I do not see it changing for the better any time soon unless HMG decides they really do need to get all ‘economically inactive’ folks back to work for the benefit of the country!

        Liked by 1 person

      5. I can’t actually remember the details but the percentage drawdown you could make w/o GI was pretty low, of the order of magnitude of the safe withdrawal rate. Which was not enough to burn it up prior to normal retirement age.

        > defer 20% tax on the way in to pay 15% (at best) on the way out.

        Yep. I still cycle my £2880 through the HL SIPP to collect my free £180 p.a., remembering wistfully the days when it was £720.

        However, before someone comes on here and rightfully slaps me about the chops with a wet fish, I am being a greedy git, because this is a nice first world problem to have. Plus I am earning a higher hourly rate than I was at The Firm, though the hours are of course fewer, and specifically hit them up for a raise to cover my tax, and split the difference. So I really ought to STFU and stop moaning 😉

        Besides, it’s a good reason to do less work and more lobster consumption. After all, these bad guys aren’t going to eat themselves.

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      6. And whilst you are working the £180 (5% of 3.6k gross) is not really ‘free’ – but rather a return of some of the tax paid on your earnings. Increasing the amount cycled to the MPAA (4k gross) would net you a whole £20 more!

        >However, before someone ….
        FWIW, IMO setting your hourly rate appropriately seems by far the most sensible approach. For example, if you measure any extra gain from working via the SIPP/tax system (£20) in lobster – it is perhaps one more portion!

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  9. Good article. On heady valuations and comparing to the dot com bust, one important consideration that I consistently do not think people give enough weight too is interest rates.

    The most expensive words are this time it’s different but surely the chart does show that this time something is different https://www.ft.com/content/09ff448a-b767-11e9-8a88-aa6628ac896c

    That’s not to say I have any inside view on where markets or interest rates will go from here. But if I look at my net worth, which is largely global equities, an un-leveraged house and enough $TIPS / Gold / Sterling to hunker down for >5 years if necessary suggests that on balance I think this bull run has further to go, inflation is a risk so be in real assets but everyone needs a plan b in case it all goes t*ts up.

    continued de-valuation of currency, which is rearing its head in asset price inflation and may eventually turn up in sustained CPI inflation seems the order of the day across the G7 – relevant as they are all talking again about stimulus spending and there is zero electoral appetite for budget control – and quite understandably. When money dies by Adam Fergusson and all that.

    Also the S&P 500 yield is circa 1.4%, who cares if you are an investor now if it’s 1%, 1.2%, 0.5% etc etc, what’s the difference – it’s all so paltry anyway. Which suggests investors could bid stocks a lot higher as you have to asset allocate somewhere. Equally all assets are very sensitive to a step change upward in rates – for sure UK is vulnerable to sustained US inflation forcing yields higher that would feed its way across here. I don’t really see it happening but I have no clue. At some point the whole rotten edifice of fiat currency may collapse but that might be decades away if ever.

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    1. > who cares if you are an investor now if it’s 1%, 1.2%, 0.5% etc etc, what’s the difference – it’s all so paltry anyway

      This is what reminds me of the dotcom boom. Valuations was what mattered, buy and sell the SP and to hell with the income. Or even the need to make a profit. BTC is an example, what are you buying. The greater fool theory does eventually run out of fools.

      Yes, interest rates are on the floor etc, and there’s no Volcker anywhere to be seen. Real inflation is high in some areas – like house prices in the UK, perhaps shares, but nobody needs shares.

      When something is that different it usually means something is rotten…

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  10. DER Niedergang?
    I’m totally with you on Vanguard surely being a huge cyber target.
    Also on the value of feeding websites duff information when they really don’t need to know the right answer.
    Unless your name is about as common as “John Smith”, ALWAYS lie about your mother’s maiden name. Speaking for myself (only baptism record in the UK with my combination of names), any idiot could look up my mother’s correct maiden name on familysearch.org in no time at all…. (And from that order up a birth certificate from GRO for under £10 should they be inclined to a bit of identity theft).

    Liked by 1 person

    1. Ah, grammar was always my weakness 😉 Though it’s worse than that, the title is Der Untergang des Abendlandes.

      > familysearch.org in no time at all…. (And from that order up a birth certificate from GRO for under £10 should they be inclined to a bit of identity theft).

      Flippin’ heck, I thought I was just being paranoid, but if it’s that easy they really are out to get you!

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  11. > Diversification is a decent principle …..
    … 1+1 redundancy is a good principle in many things

    In your view does this extend to DB pensions too?
    For example, if you had your time over again and say you were able to do a partial transfer what would you see as the main criteria?

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    1. Tough one, that. I worked over 20 years at The Firm, it was therefore most of my working life (cut short at 30 years rather than the usual 40, assuming a white-collar retirement age of 60) . I also didn’t get out of the gate that early with DC savings, which for various historical reasons are almost exclusively ISA in my case. So I was never going to be able to save enough DC to match 20x the nominal net annual pension, which would be a classic 1+1 allocation. There are specific favourable historical clauses of The Firm’s DB pension that make me less concerned about it going bust or entering the PPF.

      More than half of my ISA nominal value now comes from investment gain rather than saving hard, and I fear that unlike the passivista mantra it was chancing it into bear markets that did most of that lift. That’s not to decry the classic passive mantra, I was an old git that started too late, in the endgame. I just didn’t have decades taking the market’s average return of 4-5%. A colleague who left six months before me and a similar age had twice the capital I had in the ISA and a similar DB entitlement, but he drew it from the get-go. I have more DB pension and more ISA but that could have been me in a different timeline. I was fortunate and lucky. He did live higher o nthe hog in the first five years though – you pays your money and you takes your choice.

      I didn’t commute anywhere near the full 1/4 nominal value PCLS because I have seen enough of DC investing to know that even as a relatively fortunate DC investor (starting in a bear market, and making progress from mini-bears 2011 and 2020) I don’t have the balls and I’m not bright enough to know how you make a reliable floor pension income from capital. If I’d had to that with just a DC pension I would probably slowly surrender to the annuity ladder from 70 onwards.

      Now if I’d worked for The Firm man and boy perhaps there’d be a case to commute more of the DB pension, and I do need to do the DWZ thing and learn how to use my ISA savings rather than hoard the buggers, but a pandemic limits the scope and reduces the urgency in some ways. So no way have I got the balance right. My first aim was Do Not Screw Up.

      I’d say once your DB pension is about 1.5 times your basic running costs at NRA perhaps it’s time to exchange some of the rest for the flexibility and optionality of a DC pension, particularly if you can swing it to be an ISA. For people with feckless kids that never becomes self-supporting, there are many drivers in the direction of more DC. For people without children in need of feather-bedding, maybe favour more DB pension – after all, it’s harder to con you out of your DB pension and cognitive decline should impair that less.

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      1. Thanks.
        Personally, I think a full transfer is out of the question.
        A partial transfer – if it is available at all – is a tricky call with a lot of criteria / factors to consider.
        IMO, this article provides a pretty good summary of these:
        https://www.ftadviser.com/pensions/2017/05/31/top-10-tips-on-db-transfers/
        although at point 9 it completely ignores the derisory indexation provided by the PPF – which incidentally is below the legal minimum specified for all other DB schemes.

        > There are specific favourable historical clauses of The Firm’s DB pension that make me less concerned about it going bust or entering the PPF.
        Nice place to be and pretty much eliminates the need to worry about being ‘over-exposed’ to your re DB

        Currently, PCLS by commutation is rather poor value for money cf CETV rates – but so be it.

        > flexibility and optionality of a DC pension
        Only other potential benefit I can see is possibility of improved survivor benefits in DC vs DB.

        Thanks again for your thoughts.

        Like

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