Legal & General Personal Pension help Please!

Queenriderbrekke

Hi

Both my hubby and I have a Legal & General Personal Pension.

Regular contributions of £3600 per annum.

I am 48 and hubby is 49.

Funds are divided between:

L&G Property fund
L&G Distribution fund

Now in the present climate it is losing money:o

Our financial advisor says Ahh yes! But you are buying the shares dirt cheap at the moment and when the market recovers the price will go up accordingly!

I understand this but at the moment like everyone else I am getting scared by the economic down turn and wonder what to do!

Also are there any pensions that don't gamble money and give a fixed return?

Anyone got any helpful suggestions?

dunstonh

Our financial advisor says Ahh yes! But you are buying the shares dirt cheap at the moment and when the market recovers the price will go up accordingly!

Technically he is correct in that you are buying units cheaper but you are not buying shares and the equity content is nil on the property fund and only forms part of it on the distribution fund.

understand this but at the moment like everyone else I am getting scared by the economic down turn and wonder what to do!

You dont do anything. You have 17 & 18 years until state retirement age. By then we would have gone through another 1 or 2 of these type events (probably not as severe but recessions). You are old enough to remember the last few we had. It may have been a longer gap but these things happen.

Also are there any pensions that don't gamble money and give a fixed return?

You can put cash in a pension but its pointless to do so for a large amount and the time you have.

Anyone got any helpful suggestions?

Speak with an IFA. Not an L&G sales rep. Your fund choice is pretty naff but that still wouldnt have avoided losses. It just limits your potential. Where is your asia, european, fixed interest etc in your pension?

Queenriderbrekke

Thanks, the person I spoke to is our IFA and he recommended L&G at the time!

I must have have lived through recessions before as you say, but they proably didn't affect me then as I either had no money to save or was too young or stupid to notice them!

I realise that the market has time to recover before our pension retirement age but like everyone else, I'm just scared I think!

I'm sorry but I don't understand the bit:

Where is your asia, european, fixed interest etc in your pension?

dunstonh

I'm sorry but I don't understand the bit:

Where is your asia, european, fixed interest etc in your pension?

Your pension is in various investment funds. However, its not diversified at all well. You have no asia pacific investments, no european, american etc. Its in property and a distribution fund (that is designed more to provide an income than real growth). Basically, the selection is basic and poor quality. It could be that a basic option is best for you, in which case a balanced managed, cautious managed or tracker fund may be the best option. However, once you go picking funds its needs to be done correctly. A case of picking two funds at random isnt ideal.

Queenriderbrekke

Our IFA recommended this to us, showing us various tables and percentage growth over so many years, against various growths of other funds and we thought he knew what he was doing so took his advice, now when he suggested diversfying we don't know whether to stay with the present fund and wait for the units to get back to something like what they were before this happened, or move to different funds and when the recovery happens lose out again?

We had a meeting with our IFA just before christmas and we decided to stay with the L&G fund and wait it out, but is that feasable that it will recover?

Lokolo

Queenriderbrekke wrote: »

we thought he knew what he was doing so took his advice,

Its not about "he looks as though he knows what hes doing", if you don't understand, ask. At the moment all you're doing is listening to someone who you think knows what they're doing and trusting them.

Its a bit like going upto a football supporter and making him tell you all the latest transfers but not understanding any of it and trusting everything he says.

And diversifying bit: Say you've got £50,000. Instead of what you have, 2 funds £25,000 in each you could go £10,000 in Property, £10,000 in Distribtuion, £10,000 in Europe, £10,000 in US, £5,000 in Emerging X, £5,000 in Asia.

There are many more markets available to you and you want to use them. Depending on timeframe and risk profile (taking words out of dunstonh's mouth here...) will determine where you want to put the money, so say that to the IFA. Say you want more diversity and you don't like your money going down so you want low risk for example.

Queenriderbrekke

So going to an IFA like we did and taking his advice is not a good idea then?

I thought that was the whole point of going to an IFA, to get advice?

Lokolo

Yes but not all of them are brilliant. Wait to see what Dunston says first though.

Queenriderbrekke

He explained everything to us for over an hour and in the end we went for what he suggested as it's just so complicated, with all the percentage profits and charts over so many years.

Alol our investments are meant to have a risk factor of 1 or 2 as we wanted "safe" investments!

Queenriderbrekke

Soooooooo!

Do we continue with this fund, waiting for the market to recover and our unit price and pension pot with it and then diversify.

Or do we move out of this fund immediately and diversify straight away?

I realise that it might not be as clear cut as that and that it is our decision, just that another opinion (especailly one that knows what they are talking about) might help us!

dunstonh

Alol our investments are meant to have a risk factor of 1 or 2 as we wanted "safe" investments!

Neither of those funds are risk profile 2 on any scale (apart from a scale of 3!). On a 1 to 10 scale, i would place them both in 4. (1 = cash)

There is nothing wrong with the recommendation as far as can be seen. There is nothing wrong with the provider. Its just that the choice of funds is neither a simple option or a portfolio. It is more like a sales rep recommendation than an IFA recommendation with both funds in the same risk category. Along the lines of you saying you are a certain risk profile and the adviser only putting you in funds from that risk profile.

If the adviser doesnt believe you are able to understand portfolio planning then they should use a simple option which will be your balanced managed, tracker funds/lifestyle option or probably cautious managed fund in your case. If he feels you are able to understand it or you are with a servicing IFA who will provide ongoing advice and you are willing to rely on them, then you build a portfolio but that would typically be 5-10 funds. Your 2 funds dont fall into either of those camps.

We dont know the conversations you have had that have led to the decision and can only view it based on what you have said here. its certainly not mis-sale so dont get worried about that. Its just fine tuning and the fund choice doesnt sit well for me.