SIPP, Hargreaves Lansdown and Funds

EdInvestor

Hi John

The scepticism tends to be mainly concentrated among the advisor fraternity, who will,naturally, not be too pleased to see people going through discount brokers who don't use their services and rebate the money back to customers.

I think it's wise to take your time.The HL site has a lot of useful information about the funds they think are the best choices, which is worth digesting at your leisure.

This site:

https://www.citywire.co.uk/Funds/Home.aspx

is also worth studying,as it divides all the funds into categories and then rates them according to performance.If you look over 10 years, it soon becomes clear which are the consistently good ones (there are not many!)

It also rates the best fund managers: not surprisingly the best funds and the best fund managers tend to go together, so there aren't many of them either.

You soon realise that of the 5000+ funds out there, only around max 20 are worth bothering with, and some of those you can strike off, because they are in categories that don't intetrest you, or are too risky, whatever, leaving 10 or a dozen.

At this point, the whole thing gets a lot less baffling, one finds.

dunstonh

The scepticism tends to be mainly concentrated among the advisor fraternity, who will,naturally, not be too pleased to see people going through discount brokers who don't use their services and rebate the money back to customers.

The advisers here dont earn a penny from you John. So that sort of comment is just pathetic. Unfortunately, it has been a trend from Ed over the last few months. Ed posts a lot of inaccurate, misleading or provocative information which the advisers here spend a lot of time trying to put right.

The FSA has issued warnings and concerns that too many are entering into SIPPs without realising that they are paying more for things that they can get cheaper. At this moment in time, you are an example that fit's the regulators concern.

This site:

www.citywire.co.uk/Funds/Home.aspx

is also worth studying,as it divides all the funds into categories and then rates them according to performance.If you look over 10 years, it soon becomes clear which are the consistently good ones (there are not many!)

On a thread in the investment section, Ed has said that these same funds are expensive and useless and should be avoided.

EdInvestor

The advisers here dont earn a penny from you John

Not now they don't.

With his HL Sipp, John will be paying no annual fee.Let's say he picks one the two very popular and top performing Invesco Perpetual Income/Higher income funds for his list of funds he wants to invest in.

HL Top funds discount list

He's likely to pay an AMC of 1.25% and no initial charge for that fund. He will usually pay more at a lifeco - typically 1.6-1.7% that I've seen.

It's not SIPPs run by discount brokers trhat are bothering the FSA.It's the expensive ones run by the lifecos.

[**BTW John, the funds on the list above are a good place to start your " fund studies".]

dunstonh

It's not SIPPs run by discount brokers trhat are bothering the FSA.It's the expensive ones run by the lifecos.

Evidence to support that please? (which you cannot provide)

He's likely to pay an AMC of 1.25% and no initial charge for that fund. He will usually pay more at a lifeco - typically 1.6-1.7% that I've seen.

What complete bull. He is in a balanced managed fund. How many times have we posted on this forum that investing in a bog standard balanced managed fund is a bad thing. Virtually every life company has a balanced managed fund on their pension at 1%.

Over 5 years HL's fund has grown at 8.43%. Here are some examples of other balanced managed funds from life companies in the exact same period:
Scot Widows 12.82%
Std Life 10.50%
Zurich 9.91%
NU 9.47%
Lincoln 9.27%
L&G 9.10%
Friends Prov 9.08%
Pru 8.92%
Windsor 8.84%
AXA 8.76%
Scot Eq 8.72%
St James Place 8.69%
Winterthur 8.67%

whiteflag_3

Dh- I think this thread is starting to look very similar to the original "confused and disappointed" JohnG thread.

Not matter how much fact you post I dont think it will make any difference, i think it a case of "you can lead a horse to water..........."!;)

cheerfulcat

JohnG wrote:

I note there is alot of sceptism over HL from various members on here and whilst this does slightly concern me I was happier to go with them as they seem to go out of their to keep their customers informed of all the latest news etc.

As one of the main complainers about HL, I'd like to try to put your mind at rest. HL's professionalism is not in question; I would not worry about holding my SIPP with them ( indeed through inertia I still do...). What is unsatisfactory is the way they deal with problems when they arise, their attitude at all times being aggressively defensive IYSWIM. Nothing is ever their fault.

JohnG

Hi all,

I have obviously been following the various responses to my particular situation relating to my decision to go direct to HL and must acknowledge that, whilst most of it appears negative, the responses are intended to provide valid points which may well benefit people like me.

The trouble is I now find I have to somehow try to justify my choice which I have already made so here goes……

Firstly, like many people in recent years, I have experienced numerous financial setbacks especially relating to mortgages and pensions and as a consequence I have lost a great deal of faith in these areas and especially those persons who represent and sell policies etc on behalf of financial companies.

The point is I (we) have always, ALWAYS gone for what we understood to be safer options, we have never knowingly taken risks yet we have come undone pretty well every time.

So you see I am very sceptical about everyone and everything so simply don’t feel I can trust anybody and, thinking about it further funnily enough, this business of not being allowed to be given “Advice” has kind of exasperated the whole thing (I had an interesting response from a Scottish Widows employee when I changed my mind about switching to them a while ago - He suddenly gave me loads of advice as to why I should or shouldn't do something, advice he wasn't supposed to be giving I think).

So the final straw was seeing what appeared to be a horrendous fee/commission, whatever you want to call it, from an IFA for being pointed in the direction of a Scottish Equitable Stakeholder pension.

From what I can gather it turns out to probably be a standard charge but even so the IFA somehow managed to reduce the fee quite substantially when he realised that I wasn’t taking up the offer. I’m afraid though, whilst that appeared a very generous offer it only served to reinforce my view on the whole issue which was “Was I and my pension pot being taken advantage of?” I might well of been wrong but that's the way I think these days.

Anyway, the upshot was I wanted to have more say and hopefully more control in my pension so a SIPP looked to give me that chance. Of course, Edinvestor, who I have felt all along was more in tune with my concerns, has been quite instrumental in me choosing a SIPP but I honestly didn’t feel I was been pushed towards HL rather than any of the others such as SIPPDEAL etc. I chose HL in the end because they appear to be well established and are very active through the media and via postal communication to myself (since the Equitable debacle). I guess you could say it seemed a “Safe” option but hey, I can’t change a habit of a life time.

It may be I’ve made another terrible mistake but at least I will only have myself to blame and the way things have been going on the pension side, I will be amazed if I get anything back, if and when I get to retire!

Thanks for everyone’s understanding
John

EdInvestor

What complete bull. He is in a balanced managed fund.

Yes, we know that, that's just at the start while he has time to look at the other funds available.You can't expect people to figure everything out in one hit - if they could, they wouldn't have had a problem in the first place. It does take some time to learn the investment basics, but it's well worth it IMHO, as you make so much more money in the end..

My comment referred to what he would pay for a Rolls Royce type fund like Invesco Perpetual Income, not his "holding" fund.

The whole point about SIPPs is that you can put your money into high quality investments at low cost.So now he's got the wrapper side of things sorted, JohnG needs to do a bit more work and assemble his list of quality funds to move the money into.

I would suggest he aims for around 4 funds to start with. He might also like to think about a property fund - this asset class is lower risk than equities, so in line with his thinking.The Equity Income fund type (like the IV one I mentioned) is also a lower risk type of equity fund. So there are two to consider for a start.

John can take his time over this. Say he has 40k in his Sipp in the BM fund for now, but he wants it spread over 4 funds,10k each.He looks at the IV fund, likes it, and switched 10k out of the BM fund (leavuing 30k) and into the IV fund.

Simple. Then he sees a property fund he likes, and repeats the performance, so now he has

20k in the BM fund
10k in the IV fund
10k in the property fund...

And so on until he has the mix he feels comfortable with.

An IFA can do this in a few minutes of course, but the investor then has no idea usually what has been done, why it has been done, or how to do it himself.

So Johng should take his time, watching how his funds perform, getting "the feel" of the market as well....There's no rush, after all he's likely to be doing this for the rest of his life so he may as well adopt the "slowly but surely" approach and get it right.

dunstonh

So the final straw was seeing what appeared to be a horrendous fee/commission, whatever you want to call it, from an IFA for being pointed in the direction of a Scottish Equitable Stakeholder pension.

Does it matter what the IFA was earning out of it? His recommendation would have offered a cheaper solution to what you chose. Also, that figure is gross commission. Not net. Expenses have to come out of that. My business expenses were over £70,000 last year. So, when you see an illustration showing £2000 commission, don't think that the £2,000 is going straight in the pocket.

From what I can gather it turns out to probably be a standard charge but even so the IFA somehow managed to reduce the fee quite substantially when he realised that I wasn’t taking up the offer. I’m afraid though, whilst that appeared a very generous offer it only served to reinforce my view on the whole issue which was “Was I and my pension pot being taken advantage of?” I might well of been wrong but that's the way I think these days.

Welcome to the world of retail. Many shops will discount items if you ask, others wont. Why should financial services be any different. The fact you could have got Scot Eq even cheaper means it makes the HL deal worse value.

Of course, Edinvestor, who I have felt all along was more in tune with my concerns, has been quite instrumental in me choosing a SIPP

That is a big concern because Ed is not authorised, qualified or knowledgeable enough in these areas. You have ended up in a more expensive contract, a worse performing fund, only your ordinary rights transferred and not your protected all because you didnt want an IFA to earn from your transaction. Despite the IFA offering a better all round contract with lower charges.

Ed is helpful on many things and does provide excellent "suggestions" at times. However, that is peppered with misinformation and a disregard of facts and a bias against most things financial services.

The advisers here dont care what you do. However, you ignore them at your peril.

Not matter how much fact you post I dont think it will make any difference, i think it a case of "you can lead a horse to water..........."!;)

I agree.

JohnG, what you do is up to you. However, you have chosen a product which does require more work from you, not just now but every year. It is more expensive than alternatives that were recommended to you and currently your fund choice is woeful for the product you have.

If it was to remain like that, you would end up paying around 30% in charges over the term than the product the IFA recommended with similar performance. You would have the satisfaction that the IFA didnt get paid but you would be financially worse off.

margaretclare

Hi John, what you've decided is what I decided to do, the only difference is that I stick to 'ethical' funds. I haven't been dissatisfied with H-L's customer services at all, quite the reverse, and when I think of the delays and hassle from Friends Provident following my post A-day decision to move my FP stakeholder to a SIPP with H-L, then H-L win hands down.

It's an unfortunate fact of life, that when we make a serious choice/decision, we haven't got what the economists call 'perfect knowledge' of every factor involved and importantly, we haven't got a crystal ball to see what our circumstances may be or what the current legislation may be a few years ahead. Therefore, we do the best we can and we live with the consequences.

Best wishes

Margaret