Increasing pension and savings for the future

Aegis

Kez100 wrote: »

I had it with Scot Eq until May 2007. It was then worth about £15k. No, I didn't review funds - is that not the job of an IFA who is presumably getting a regular fee income from this?

Not unless you agreed that this is what he would do under some sort of servicing contract. Did you agree that he would service your funds for you and recommend rebalancing and adjustments to your strategy every now and then? If not then you can't really blame him for leaving you in stocks that fell.

I questioned the IFA in 2007 who looked into it and recommended that it be transferred into Legal and General Stakeholder : funds are L and G Property and L and G Distribution. I did look at it again in 2008 as I found out one third is commercial property and I questioned the IFA (in writing) if that was a sensible choice as the property market looked as if was going to take a pounding and he replied (in writing) that it was as the fund had good rental cover which would support that 'fund'.

Well, IFAs generally have to look at the long term strategy rather than trying to time the markets. Presumably your deposits into the pension are now buying up units at a very cheap price so that you'll be quids in when the market rises again? Unless you have retirement coming up imminently you'll probably do fine, though you might want to consider a full review with a new IFA to see if he agrees with your current level of diversification.

Especially given my written communication to him, I am pretty peeved to be honest. Apart from Scot Eq fund growth being non existant over the years L and G has fallen (despite £660 gross a year going in) from £15k (2007) to £13k (2008) and now £11k.

If that's all you've lost you've done ok. A 25-30% loss compared to a 35-40% FTSE loss isn't too bad at all comparatively. A lot of people have done a lot worse by managing their own investments, and as already mentioned you're now buying more units than you were previously at no additional cost. If you have time to keep investing, you'll benefit in the long run if the market rises again at some point, which it should.

Could he not have just advised me keeping that bit aside in cash if I was concerned about property? (I didn't know holding cash in a pension was even a possibility until I read things on here recently as it's not my job)

You couldn, but I think that holding cash ina pension is a largely pointless exercise unless you're within a couple of years of retirement. The total return between investing in a high and a low at this point will probably be minimal in 20 years time, and if you have the attitude that you withdraw to cash every time you get worried, your pension simply will not grow as fast as it could.

I am also flabergasted at the management charge of £16 a month when I thought stakeholders were cheap. That's all my tax relief!

Stakeholders are cheap, though I would expect a lower fee than £16 a month for £11k invested in one. £9 would correspond to an annual charge of 1%, which would be about right.

Twickenham_Green_FA

Aegis has made some excellent points. Naturally it does depend on your age and years to retirement etc, but you are currently buying very cheap prices in the market right now, so when the market eventually rises you'll be a good position. If you're not happy with you current IFA, then shop around. Find one your comfortable with and develop a long term professional relationship via regular reviews.

Kez100

What annoys me is that I am being told that I should have agreed that he do annual reviews. This does not do your profession any good at all. It's fine that it isnt an automatic thing - if that is the way it works, but I should have been given that as an option at the start, don't you think? So I could have chosen and knew that annual reviews, switching funds or companies was an option. What about being contacted when the cheaper stakeholders came in? Remember some people go to an IFA - especially when they are 18 - because they don't know anything, not because they do. My only experience of pension is my husbands (which is a company one) and he just pays in and that is that. Of course I know the difference now but I didn't when I was 18 and into creative art. That's why I went to an IFA.

I have 15 years to 'retirement' (at 55) but I don't know that any of us will actually be retiring then - probably 60.

I'm only glad I picked this up before potentially ploughing a decent amount in.

My stakeholder charge is 1.5%.

Paul_Herring

What annoys me is that I am being told that I should have agreed that he do annual reviews.

Would you complain if you just dropped your car off at the garage in the morning, returned the following evening and they hadn't performed the service/MOT/oil/tyre change you 'expected' him to do despite the fact you hadn't asked?

Or if you'd asked them to do a service, and 'expected' them to do an MOT that they didn't?

Thought not.

dunstonh

but I should have been given that as an option at the start, don't you think?

You have had the pension 22 years. IFAs didnt exist 22 years ago. Plus, things change. Back in the 80s and right through to really the early 2000s, the most commmon investments were with profits and balanced managed funds. Nowadays there is far more choice.

What about being contacted when the cheaper stakeholders came in?

There is no guarantee that the stakeholder would be better than your original retirement annuity contract.

If you see a transactional IFA then you will get a transactional service. If you see a servicing IFA you will get one based on servicing. Some people prefer servicing, some transactional. Its up to you to decide which you want and there are plenty of advisers that cater for both types.

Kez100

Paul_Herring wrote: »

Would you complain if you just dropped your car off at the garage in the morning, returned the following evening and they hadn't performed the service/MOT/oil/tyre change you 'expected' him to do despite the fact you hadn't asked?

Or if you'd asked them to do a service, and 'expected' them to do an MOT that they didn't?

Thought not.

I disagree and I don't think this attitude helps the profession one little bit. It makes them look like salesmen not professional advisers and I am sure that is not what they feel they are.

Your analogy is flawed.

When I take my car for a service I expect them to service it and advise me if there is anything they have noticed (in their professional opinion)to put it right. In fact that is what garages do - they usually ring as well if the cost is above a certain level. That is similar to me expecting the adviser to tell me that there is an option available whereby they will do an annual review. I am not expecting them to just do it or do it for free - but to tell me it can be done.

You say I am expecting him to have MOT'd it when I get back. That is something completely different. That is like saying, having sold me a pension, I expect him to sign me up for the next great ISA that passes his table. I do not expect that, as you rightly conclude.

I dont have an issue with the L and G drop - I can see I am invested in cautious (2/3) and medium risk (1/3) - sounded out by the drops seen which I fully understand to be during a deep recession - and I take on board others answers on here about ignoring my plea over the commercial property. My issue is over the carp customer service received in terms of advising me what he can do for me. (Yes, I have still been in contact - I have annual buildings and contents with them (two different policies and two different dates and an endowment)

Twickenham_Green_FA

Kez, I doubt we could change your opinion of your IFA, however I would encourage you to look to the future rather than dwell on the past and make the most of the 5-15 years before you retire.

Resolve the issues with your IFA, or move to another adviser.

Aegis

Kez100 wrote: »

I disagree and I don't think this attitude helps your profession one little bit. It makes you look like salesmen not professional advisers and I am sure that is not what you want or feel you are.

I don't think that Paul's an IFA. Neither am I for that matter. However, it seems that you want the world here despite not actually sending much reward the IFAs way. If you think that the management charges are high at £16 per month for your pension, imagine adding the cost of an annual review onto that when IFAs can typically charge £150 an hour. If you assume that a review and a rebalance with an interview with you come to even 3 hours, that's £450 per year down the drain for you out of your £660 contribution to this plan.

Do you really think it would have been appropriate for an IFA to sell you that sort of servicing contract? It's unlikely that servicing would have come much cheaper than that due to the low remuneration value of your pension. An IFA still has to make a living at the end of the day, and the small trail commission that he gets from your funds is unlikely to pay for anything (what would you do for maybe £6 a month?).

Your analogy is flawed.

When I take my car for a service I expect them to service it and advise me if there is anything they have noticed (in their professional opinion)to put it right. In fact that is what garages do - they usually ring as well if the cost is above a certain level. That is similar to me expecting the adviser to tell me that there is an option available whereby they will do an annual review. I am not expecting them to just do it or do it for free - but to tell me it can be done.

That's exactly what an IFA will do. They will look at your financial situation and will solve problems that they encounter. They are not obliged to offer you a servicing contract in the same way that a garage is not required to offer to take responsibility for what happens to the car 8 years down the line.

You say I am expecting him to have MOT'd it when I get back. That is something completely different. That is like saying, having sold me a pension, I expect him to sign me up for the next great ISA that passes his table. I do not expect that, as you rightly conclude.

Now this an IFA should be able to do if the customer wishes. Holistic financial planning is important, so if you go in for a pension he should discuss ISAs with you to ensure that you are making the most of your tax-efficient allowances.

I dont have an issue with the L and G drop - I can see I am invested in cautious (2/3) and medium risk (1/3) - sounded out by the drops seen - and I take on board others answers on here about ignoring my plea over the commercial property. My issue is over the carp customer service received in terms of advising me what he can do for me. (Yes, I have still been in contact - I have annual buildings and contents with them and an endowment)

If you genuinely don't like your IFA, then you should go to another one that offers what you want. The trouble is that a regular full review of your pension is likely to cost you a lot because you just don't have the funds in there to make it worthwhile for an IFA to do on a commission-only basis.

Paul_Herring

Your analogy is flawed.

Most analogies are. Especially when you start digging at them for the bits that don't compare well between the original subject and the comparison. That's why they're called analogies - c.f.:"drawing a comparison in order to show a similarity in some respect".

It's close enough though, despite your denials to the contrary.

To rephrase it somewhat, since you've deliberately misinterpreted it: If you go to a garage expecting to have a service and an MOT, but only ask for a service expecting that it includes an MOT, you are not entitled to complain that an MOT was not done - it doesn't matter that the mechanic didn't ask "did you want an MOT? It'll cost more."

You say I am expecting him to have MOT'd it when I get back. That is something completely different.

Not at all

That is like saying, having sold me a pension, I expect him to sign me up for the next great ISA that passes his table.

No it's not.

I do not expect that, as you rightly conclude.

I conclude nothing of the sort. I conclude that you expected your advisor to perform yearly reviews, something that you neither asked him to do, nor paid him to do - it doesn't matter that your advisor didn't ask "did you want yearly reviews. It'll cost more."

In this my analogy holds - not your deliberate mis-interpretation of it.

Kez100

No worries, I am. In fact, in a glass half full sort of way I am delighted that I hadn't been investing more. It's now I have the funds to start to seriously think of a way forward. I have to say it makes me question what other options I might have other than an investment via the IFA route.