SIPP, Hargreaves Lansdown and Funds

EdInvestor

Ed is helpful on many things and does provide excellent "suggestions" at times.

How kind of you to say so. :rolleyes:

However, that is peppered with misinformation and a disregard of facts

I would sgest DH that you are more often remiss in this area than me (as seen on this thread).

... and a bias against most things financial services.

No, it's the ripoffs I'm against, not the industry itself. I'm more than happy to make money out of the financial services industry, I just don't want them making too much money out of me

And I'd venture to suggest that most people on this site share that view.

Getting this sorted does take time, it is a learning process, and it does need care and some research, particularly at the start.But you can save (tens of) thousands of pounds in quite a short period and have a much better chance of a good income in retirement.Then there's the peace of mind that comes from having everything under your own control.

It is well worth making the effort, I have found.

dunstonh

I would sgest DH that you are more often remiss in this area than me (as seen on this thread).

Yes, how silly of me to rely on facts and not biased opinions and misinformation.

No, it's the ripoffs I'm against, not the industry itself. I'm more than happy to make money out of the financial services industry, I just don't want them making too much money out of me

And I'd venture to suggest that most people on this site share that view.

And where has that left JohnG? In a more expensive product and a poor fund selection.

It is well worth making the effort, I have found.

Some people are not capable of that or dont have the time or just dont want to do it. Those people are not suited to a SIPP.

whiteflag_3

EdInvestor wrote:

No, it's the ripoffs I'm against, not the industry itself. I'm more than happy to make money out of the financial services industry, I just don't want them making too much money out of me

.

Yes, and thanks to you ED, JohnG is now in a more expensive fund paying higher charges than he would have done with Scot Eq and had twice or three times the hassle!

I Thought we agreed iin the other thread that JohnGwas following your advice and going for a HYP. Why now are you banging on about the IP high Income Fund ?


I suggest you go back and read your posts in the original thread and then repost:rolleyes:

EdInvestor

Some people are not capable of that or dont have the time or just dont want to do it. Those people are not suited to a SIPP.

Possible so. I do not however think this judgment applies to JohnG.

It is easy for you guys to criticise, but poor old JohnG is having to learn about all this stuff from scratch.

So far, he has

1)Got out of the ELAS WP fund and made back the MVA exit penalty :T
2)Moved the non PR part of his fund to HL and got it invested, albeit in a temporary holding fund
3) (as reported elsewhere) surrendered his duff RSA/Phoenix endowment
4)Set up a new offset mortgage and paid in the proceeds plus the premiums and a bit more, thus reducing his mortgage to a very manageable size which he will be able to deal with in a quite a short period. Problme solved.


JohnG has done very well so far :)He is a fast learner. He is sorting out all this rubbish he has been landed with quite rapidly IMHO and he now understands what he is investing in and how his finances work.

I suggest you guys offer some encouragement for this work in progress.

JohnG's next steps are

a)to develop a plan for the PR money (which may just be to wait)
b) to fine tune the investment of the money now in the SIPP.

I look forward to hearing John's next report.

whiteflag_3

It is easy for you guys to criticise, but poor old JohnG is having to learn about all this stuff from scratch.

Whos criticising JohnG?

I think its your initial "advice" we were critical of Ed.

JohnG

Following the continued discussion on the subject of HL SIPPs vs IFA Recommended Stakeholder pensions I now feel even more determined than ever to make my decision to go into to HL a success.

Even so, I have found myself thinking long and hard about whether or not I have made the right choice as clearly all you IFA’s out there feel I have been led up an expensive path when you compare the apparent costs.

Admittedly I do have trouble comparing the different costs and that I have got some homework to do on the whole subject, however it occurs to me that had I taken the Stakeholder option I would be paying both the relatively large commission (over two or three years) as well as a percentage to the pension provider where as with a SIPP I pay a percentage for a management fee.

Presumably many will still say the IFA recommended Stakeholder is cheaper but as I explained earlier, I’m not keen on handing over such large sums to someone simply just for a recommendation. OK, I might be paying more for SIPPs in the long run but my gut feeling is the SIPP fees are there to cover actual management and investment costs and as such these surely must act as incentives for the fund managers to achieve greater returns on my chosen fund/s right?

Anyway, the real issue for me is whether or not something is value for money and as DunstonH stated in an earlier post (No 35):

“If you want cheap, you get cheap.”

Of course, I appreciate that I will need to do some work myself in choosing which investments to go for but I’m going to look at that as a positive because it should mean I will be taking more control of my pension rather than sitting back and allowing things to potentially stagnate in a underperforming fund.

Cheers for now
John

alex234

thanks you

dunstonh

Admittedly I do have trouble comparing the different costs and that I have got some homework to do on the whole subject, however it occurs to me that had I taken the Stakeholder option I would be paying both the relatively large commission (over two or three years) as well as a percentage to the pension provider where as with a SIPP I pay a percentage for a management fee.

That is incorect.

The commission paid to the adviser does not come out of your pension pot directly. The 1.0% annual management charge is your only cost. The pension provider pays the adviser up front and then spends the next 15 years trying to recoup the cost out of that 1.0%.

This is why we keep saying that what you have done is more expensive. The typical investment fund within an HL SIPP is 1.5%. The stakeholder was 1.0%. HL also have a number of service charges which can apply on certain events which are not chargeable within the stakeholder.

Presumably many will still say the IFA recommended Stakeholder is cheaper but as I explained earlier, I’m not keen on handing over such large sums to someone simply just for a recommendation. OK, I might be paying more for SIPPs in the long run but my gut feeling is the SIPP fees are there to cover actual management and investment costs and as such these surely must act as incentives for the fund managers to achieve greater returns on my chosen fund/s right?

As the assumption on stakeholder charges/commission was incorrect, that makes this assumption invalid as well.

EdInvestor

dunstonh wrote:

This is why we keep saying that what you have done is more expensive. The typical investment fund within an HL SIPP is 1.5%.

Actually it's 1.25% and this is for a top class fund which is likely to have much higher returns than a stakeholder fund. (John still needs to do a bit more study to get togther his group of top performing funds, give him a bit of time).

The stakeholder was 1.0%.

For low quality funds, often trackers - and a tracker should only cost 0.5% anyway, so the stakeholders are overcharging.

HL also have a number of service charges which can apply on certain events which are not chargeable within the stakeholder.

These are very small, and most won't apply till JohnG wants to take benefits at which point he would typically pay much higher fees (and experience much more hassle) in moving from a conventional pension anyway.

dunstonh

Actually it's 1.25% and this is for a top class fund which is likely to have much higher returns than a stakeholder fund. (John still needs to do a bit more study to get togther his group of top performing funds, give him a bit of time).

1.5 is closer to the mark on unit trust funds. Some will be at 1.50 and some at 1.25 or 1.75.

For low quality funds, often trackers - and a tracker should only cost 0.5% anyway, so the stakeholders are overcharging.

John hasnt chosen to invest in a tracker though.

Sticking totally to facts, John will be paying more in charges. He may end up with a fund selection which is better but it will cost him more. However, upto his post this morning, he believed that it would cost him less due to an incorrect assumption.