Confused & Disappointed - Pension Transfer

[Deleted User]

Good comments in the above posting from pal. If I didn`t have the charting facilities, expertise and knowledge, then I would do as pal suggests in the last few paragraphs re buying into funds

whiteflag_3

Pal wrote:

You may not have said it was the cheapest pension, but you seem to go out of your way to imply that it is the best deal for anyone looking to invest in funds, when that is clearly not the case. This is a moneysaving site, not a SIPP promotion site. Can't you bring yourself to state that people looking to invest in funds should look into doing so through an IFA so that they can get the lowest charges? You constantly mention the 30% impact of charges on final returns, and state that they should be minimised, and yet you continue to post as if a SIPP, specifically the HL product, is the best deal for fund investors, which clearly is not the case.

If people want to buy their own stocks, Kitty for example, then SIPPs are the way to go, but for fund options it is the case of finding the cheapest way of doing it.

Also if people want to mix funds with individual investments, then they can get two pensions - the cheapest personal pension for their fund choices (possibly through an IFA), and a SIPP for their direct investment.



The same way that you find out which is the cheapest supermarket, car showroom, furniture shop etc. You visit websites or phone up and ask. One of the advantages of an IFA is that they have databases of these things so you don't have to do it.

It seems to me that the way to go for JohnG and any others looking to invest in funds, is:

- Do his research, choose what funds he wants to invest in;
- Look for a provider that offers those fund choices. Note down the charges quoted for direct access. This could include SIPP providers.
- Discuss this with an IFA. They will help clarify the fund choices, and then advise whether they can get any of them cheaper, and the best vehicle to use. If the IFA is paid commission then that is fine, as long as the charges are the cheapest available. If the IFA cannot get the funds cheaper, go direct.

This is a long process. The research task is frankly enormous to do properly. It does however guarantee the lowest annual fees without reliance on an IFA to provide the advice on the fund choices, as everyone appears to be a cynic when it comes to advice from IFAs.

Anyone have any comments on the above?

Makes perfect sense!

What I cant understand are two things-

What is the big problem with telephoning IFAs to ask what deals are available?
WHy isnt it worth using an IFA on fee basis to get the best deal ? Surely if as Ed has pointed out so many times ££££££s goes in charges , why not spend a few pounds initially to save yourself heaps in the long run?

[Deleted User]

whiteflag, fee based makes sense in the above scenario. I am sure there are IFAs who wouldn`t be asking £250 per hour as asked by our (ex) IFA

Trouble is this has gone around in a bit of a circle for the OP. The impression I am getting is that he should do the groundwork re funds and then phone around with a specific list

EdInvestor

This is a long process. The research task is frankly enormous to do properly.

Actually I would have thought this was easier bit, as there are plenty of sources that rate funds around, such as Morningstar, Trustnet etc.The better performing funds with a good reputation are pretty well known ( because there are so few of them). I'd have thought John could assemble a small selection of worthwhile funds according to his asset allocation profile just by reading a few threads/asking a few questions on this site ( though not necessarily in this forum ).

It's finding the low-cost pension tax wrapper that's the problem.I can't see how he could easily find out which providers offered the funds he wanted and at what pension prices without using an IFA database.

The system isn't set up like that - it operates on the basis that first you choose a pension provider, and then you pick the funds from the list it provides. It's not investment-performance driven, if you see what I mean. It's my impression (correct me if I'm wrong) that in the past, any clients who wanted investment performance ended up at Skandia in their PP, which operated in a way closely akin to, you've guessed it.....a SIPP :D

Other insurers have moved towards this now, buit only partially, whereas today's low cost SIPPs will a) tend to have all the funds he wants, not just one or two of them and b)have transparent info on charges, so can at least be compared with each other.

They are also set up to to deal with the public, not through IFAs, so the customer service experience is much better.

It's a structural problem really.

You may not have said it (the HL SIPP) was the cheapest pension, but you seem to go out of your way to imply that it is the best deal for anyone looking to invest in funds, when that is clearly not the case

Two things are wanted here:

1.Best funds
2.Lowest charges

PPs may provide the lowest charges but they won't normally provide more than a couple of the best funds, and investing in them will normally incur an additional charge.

The low cost SIPPs will provide the vast majority of the best funds, and low charges if not the absolute lowest.

That's the choice really.

whiteflag_3

kittie wrote:

whiteflag, fee based makes sense in the above scenario. I am sure there are IFAs who wouldn`t be asking £250 per hour as asked by our (ex) IFA

Youve kind of summed up my confusion- What is the problem with paying an IFA £250 per hour if it gets the job done?

whiteflag_3

EdInvestor wrote:

It's finding the low-cost pension tax wrapper that's the problem.I can't see how he could easily find out which providers offered the funds he wanted and at what pension prices without using an IFA database.

Whos the he in this post. Ive been back and read the original post (agina) and I cant see anywhere where he said hes looking for "the fund he wanted"

The initial complaint was about the level of commission and not the product/solution

It's finding the low-cost pension tax wrapper that's the problem

Its not, phone/visit an IFA and charge him with the task of finding the lowest cost wrapper for your pension. Offer to pay a fee and that is what you will get.

EdInvestor

whiteflag wrote:

Youve kind of summed up my confusion- What is the problem with paying an IFA £250 per hour if it gets the job done?

I think we've now come full circle back to the OP's first post in which he said:

My Equitable fund amounts to a fairly meagre £29,311 after their 8% transfer fee so to discover the IFA guy stands to recieve a further 6% of it straight away plus a further £400+ over another two years is frankly, very disturbing.

So the IFA proposes to charge a total of 1758.66 now,plus a further 800quid to transfer John's fund.That suggests he's done 7 hours work on John's case and will do a couple more later.

Does 7 hours seem feasible?

Even more important, does it seem like value for money?

Compared with, say, what you pay a solicitor to do the conveyancing on your house purchase?

whiteflag_3

EdInvestor wrote:

I think we've now come full circle back to the OP's first post in which he said:

So the IFA proposes to charge a total of 1758.66 now,plus a further 800quid to transfer John's fund.That suggests he's done 7 hours work on John's case and will do a couple more later.

He hasnt proposed a charge , the IFA is taking commission instead of charging a fee.
Also the £1758 doesnt come out of Johns money up front ( remember its a stakeholder no initial charges). It comes out of the Amc over a number of years. In the first 7 years Scot Eq are carrying all the risk.

Does 7 hours seem feasible?

Very, after all as well as the face to face stuff there is the research, which as Kittie points out is huge

Even more important, does it seem like value for money?

Certainly, if you take into account the IFA will always be liable for the advice, not the case if you go direct/diy.
-

Compared with, say, what you pay a solicitor to do the conveyancing on your house purchase?[/QUOTE

]

Certainly , conveyancing is just a production line
]

One final point, given that it is impossible always to be in the best fund ( whatever that is ) isnt making sure chrages are as low as possible must be paramount.

Ed - Can you do some research into the Scot Eq UBC fund and let us know what you think.
This is a genuine request which i think will ultimatley help johng.

EdInvestor

IN the meantime here's a handy link to the Citywire fund finder which ranks all the funds in all the sectors by performance, both unit trusts and life and pension funds, over up to 10 years from the top to the bottom.

Just what the doctor ordered

Of course we do all realise that past performance is no guide to the future, but sometimes a little history can be quite helpful.

EdInvestor

I've had a look at this UBC fund.It appears to be a bog standard balanced managed fund with a tracker aspect (unspecified). This fund has virtually no history, which is probably because the original balanced managed fund that it emerged from had a ghastly record over the crash period, so it's been canned and replaced with this ostensibly new fund with an upmarket sounding name. That's why it's so big (2bn quid in it).

It's far too risky, quite out of line with the appropriate asset allocation for John's risk profile.81% of his money would be invested in shares, of which 30% is in the more risky foreign ones.Less than 20 per cent of the fund is in safer assets like bonds and cash.Not a penny is in commercial property.

This is a unit-linked version of a With-profits fund.The Citywire Fund Finder above rates it in position no 120 out of a total of 187 funds in its sector.

I find it quite startling that anyone would be expected to pay 2000 quid for access to this fund, but I guess that's pensions for you: despite all this A-day fuss, not a lot has changed.

AVOID.