IFA costs to arrange pension

dunstonh

You insist on assuming that people always use funds.Actually in Sipps, especially the execution-only ones IFAs aren't involved in (so how would you know?) they don't.

Kittie has said she is going to be initially looking at funds with other options maybe in the future. So, if Kittie goes with SIPPdeal, she pays no annual charges, at this time, on the wrapper. However, if she chooses funds, she will pay annual management charges which do pay 0.5% p.a. to SIPPdeal for doing nothing. If she chooses to place it herself on execution only through an IFA, a SIPP wrapper with no charges can be selected but that IFA can take the same 0.5% but use it to provide reports or ongoing help to Kittie until such time she may or may not choose external investments.

As for what people invest in, funds are in the majority by a long shot. However, in this case, I wasnt assuming. I was reading what Kittie had said.

And DIY will also avoid the danger of being sold an investment bond for the tax-free cash lump sum, always an occupational hazard of taking your pension, unfortunately.

Just as I thought your posts were improving recently, you go spoil it with another incredibly stupid statement.

EdInvestor

Here are Sippdeal's costs.


From https://www.sippdeal.co.uk

You can invest in UK (and certain US and euro) quoted shares, exchange traded funds (iShares), warrants, covered warrants and a selection of government and fixed interest stock.You also have access to approximately 1,700 unit trusts and Open Ended Investment Companies (OEICs), more than any other fund supermarket.

We rebate all initial commission on unit trusts and OEICs. In addition to this we have negotiated additional discounts with most of the leading fund managers, this increasing the number of units purchased. In excess of 400 funds have no initial charge, more than 1,300 funds have an initial charge of 0.50% or less. See Funds List for further details.


The Sippdeal e-sipp is tax efficient, flexible, transparent and extremely cost effective.
There is a low establishment fee (see Special Offer), and there is no annual management fee. Dealing commission starts from £9.95 and there are certain modest transaction charges to cover administration costs. We do not pay commission and our charges are set at a level to reflect the amount of administration work involved, not the size of your fund.

As I have said before IMHO HL's Sipp is cheaper for people who want to make regular contributions into funds, because they don't have to pay dealing charges on each transaction.Similarly the Alliance Trust Sipp may be cheaper for those who want to make regular conts into investment trusts as it has a special low dealing charge (a bit like the very cheap Halifax Sharebuilder arrangment.)

But this does not apply to drawdown.

[Deleted User]

Dunstonh I respect what you say but I also respect what Ed is saying. I am finding Eds postings incredibly useful. My/our feeling this morning is that we are going to stay with our stakeholder just a few months longer whilst we contemplate setting up a sipp via sippdeal. I have printed out a sippdeal funds list and note the discounted initial charge on most of the funds. I assume the fund manager`s % AMC is the same whether or not the sipp is arranged by ourselves or by an IFA

Our IFA mentioned VCTs last year (I would not actually consider them as the risk is too high) and he did not mention that some AIM stocks are taken out of the IHT basket after two years. IMO he is in the job to make money(obviously) and we are at the stage of wanting to conserve money. He is coming to our house in 10 days and we will listen and I will make notes but we will not be signing anything

My own sipp is entirely in a good spread of stocks. My husband`s sipp will be fund based over a few funds. I am entirely aware of drawdown and possible erosion of fund value

Dunstonh you mentioned the IFA overseeing our portfolio for the 0.5% a year. Can you explain exactly what he would do that I could not do myself? I have access to charts etc

Ed can you spare the time to please explain how to arrange drawdown from sippdeal

Thanks both for your help. I do appreciate it

By the way PIBs are out, gilts are out as the yield is so low at the moment, bonds as a whole are out at the moment, dividends are in, property is in (possibly via REITS) and this is only the start of my investigations

EdInvestor

Kittie

kittie wrote:

My own sipp is entirely in a good spread of stocks. My husband`s sipp will be fund based over a few funds. I am entirely aware of drawdown and possible erosion of fund value

May I suggest for your husband's Sipp that you investigate investment trusts as an alternative for the funds? ITs are listed like shares, so you buy and sell them in the same way and their charges are usually lower than unit trusts.:)
There is an additional wrinkle to them - discounts to NAV - which I am not an expert on, but those who have studied them ( who tend to be DIY type investors) are all fans, I note.

http://www.aitc.co.uk

The ITs/ OEICs and UTs thing seems a bit like ETFs (I-shares) in parallel with index fund trackers, which are also cheaper, instantly tradeable etc.

We already have offshore property trusts as a precursor of REITS, for those of us in the share universes, which are listed (try putting in Epics UBR, SLI and FCPT to find three of the bigger ones.) These are run by the same insurers which run the property funds available in conventional pensions/drawdowns. Another parallel way of investing in effectively the same thing.

Trustnet has a list here on which the property trusts feature, have sorted it by yiled.

I'm quite interested in finding a small cap fund or trust with a decent yield - there is plenty of it down there among the tiddlers, but they are way too risky for my taste to hold as individual shares.

Ed can you spare the time to please explain how to arrange drawdown from sippdeal

It's very simple, just email Sippdeal and tell them you want to open an account, fill in and return forms etc. Then instruct insurance company that you want to take benefits and to transfer the fund to Sippdeal.You probably will have to fill in form for them too. The main decision is over whether you want to have the insurer pay you the tax free cash and transfer the remaining fund, or transfer the whole fund to Sippdeal and have them pay out the TFC. They will charge a fee and the insurer might do this for nothing. On the other hand getting the insurer involved in the TFC might generate delay. Some of them take months to sort out transfers as it is - the better ones take 2 or 3 weeks

By the way PIBs are out, gilts are out as the yield is so low at the moment, bonds as a whole are out at the moment, dividends are in, property is in (possibly via REITS) and this is only the start of my investigations

Entirely agree.

[Deleted User]

Ed you are an absolute star. Thank you

[Deleted User]

Yet another thought. There is a tax of 35% to be paid on a sippdeal fund if my husband dies before me. It therefore makes a lot of sense to withdaw the 25% tax free cash before any funds are set up.

Our IFA, last time he came, said `I`ll have to have a think about what to do with the tax free cash element` We never asked him to have a think!! I would be quite happy managing the cash on behalf of both of us ie drip feeding into our ISAs year on year, or feeding my own sipp with the £2808 year on year. I won`t be saying anything much in 10 days but I think it will be very revealing when (I think) he will offer to set up an investment bond for us

dunstonh

My/our feeling this morning is that we are going to stay with our stakeholder just a few months longer whilst we contemplate setting up a sipp via sippdeal.

Good idea. I would also keep an open mind on provider. There are a number of new SIPPs coming to market after A day and there may be one better suited for you. There is one provider who has charges based on the size of your holdings. Not just yours but all family members. If you and your husband have sizable funds, then you may find them cheaper than SIPPdeal. Particulary if you intend to do a lot of switching as that is one area where SIPPs can really start costing you if you pick the wrong one.

Dunstonh you mentioned the IFA overseeing our portfolio for the 0.5% a year. Can you explain exactly what he would do that I could not do myself? I have access to charts etc

That very much depends on the IFA. Many IFAs pay for software that deals wtih funds which goes into more detail than what is available over the net. They also get information supplied to them which can be far more detailed than what you can get. Some will take it in others will not.

However, my main point on this was that if you do the SIPP yourself, SIPPdeal will get 0.5% p.a. paid to them for doing nothing. If you use an IFA and place it on the same terms as SIPPdeal, even if the IFA just gives you a periodic report and is someone you can sound your ideas off, it has cost you no more than doing it yourself through SIPPdeal.

Ed is again looking at the SIPP wrapper and not the funds. SIPPdeal only rebate the initial commission on funds. They do not rebate any trail commission. Their initial charges are no different that the other fund supermarkets. Indeed, looking at the hybrid SIPPs coming in, if funds were going to be your only choice, these would be the far better option.

I assume the fund manager`s % AMC is the same whether or not the sipp is arranged by ourselves or by an IFA

Yes.

May I suggest for your husband's Sipp that you investigate investment trusts as an alternative for the funds?

Certainly worth investigating but be wary of the higher risk nature when compared with the same sectors on unit trust/oeics. Investment trusts can borrow money. Unit trusts/oeics cannot. If the IT gets it right, it will do very well, if it gets it wrong, it will suffer more (as is the usual as you move up the risk scale, the higher potential for gain, higher potential for loss).

EdInvestor

If you are only talking about the trail commission DH, since when did any IFA do anything for trail commission? As you have said many times yourself. Do IFAs always rebate the initial charge?

dunstonh

If you are only talking about the trail commission DH, since when did any IFA do anything for trail commission?

Quite a lot actually. Indeed, the reference for the companies that act on the trail commission is called "new model". Now obviously, someone with a £3k investment earning the IFA £15 a year is not going to get much if any ongoing service. However, the £300k fund is going to get a lot of service. Any IFA with high net worth clients will tell you that those with more money expect more than those with less.

The new model companies are growing fast. So, whilst still being a minority, its a significant minority. You now even have publications dedicated to new model advisors.

As you have said many times yourself. Do IFAs always rebate the initial charge?

Of course they don't. However, many will do. This is backed up by evidence from the FSA who publish figures on these.

If you went to an IFA with a £300k fund and said I dont want to pay any intial commission but set this transaction up on execution only basis, most will do that with no charges. If you went with a 3k fund, you would almost certainly be told no thank you.