SIPP investment ideas for a 25 year old

jamesd

EdInvestor, and they do it for a higher price than you can get the same investments for from an insurance company. Or a lower price, depending on the company and package you get.

What HL do well is marketing and easy online access. Good direct sales of an insurance company based personal pension with similar easy online dealing could be a good competitor to them. I don't know of one that sells direct that does that and is competitive on price at the moment, though.

dunstonh

But surely all your doing is castigating a wrapper becuase of the poor choices people make. By its very nature a SIPP is what it says.

I have nothing against the wrapper and I myself have made the same point as you on other wrappers.

However, the issue with the HL SIPP is that it is marketed as low cost and targets people who typically dont know any better. The investment choices that have been made by people on many of these have been really poor. You often either see fashion investing, far too high risk investing or the use of MM funds which are far more expensive than the insurance company version that they left and hasnt performed anything like as well. We saw a case on here last year where someone left their Scot Eq personal pension and transferred it to the HL SIPP. They picked HL's MM funds. The performance of those funds had been consistently lower than the fund they were in with Scot Eq and the charges on the Scot Eq could be as low as 0.3% p.a. compared to 1.5% with HL. Yet they though HL was a better option because they fell for the marketing.

If someone knows that they can get good funds at a quarter of the price of that offered by HL and still goes into the SIPP then fair enough. They have made their choice. However, if they havent realised that and have fallen for the marketing in the belief its cheaper then its only fair they are made aware of it.

cloud_dog

jamesd wrote: »

What HL do well is marketing and easy online access. Good direct sales of an insurance company based personal pension with similar easy online dealing could be a good competitor to them. I don't know of one that sells direct that does that and is competitive on price at the moment, though.

This was one of the key reasons for us moving the OH pension in to the H-L SIPP. Also I am a fairly competent investor and like the flexibility to move (reasonably quickly) to cash if I feel the need.

JMatt

I'm struggling to see where I am paying 3-4 times as much through HL. I have checked my old pension provider and looked at their annual charges for a random selection of (the limited) funds they offer and compared them to the same funds through HL. In all cases HL charges were lower. In one case, the pension provider's own fund had an annual charge of 1% and this was 0.95% through HL.

Am I missing something fundamental here?

dunstonh

. I have checked my old pension provider and looked at their annual charges for a random selection of (the limited) funds they offer and compared them to the same funds through HL. In all cases HL charges were lower.

I'm not talking about comparing legacy pensions with HL. Historically pensions used to be more expensive than they are now.

If you look at a modern personal pension or stakeholder pension bought on a like for like distribution channel (i.e. DIY in this case) then you can get them with charges around 0.3-0.5% p.a.

Most unit trust funds through HL are going to be 1.5%. Some as low as 1.00% but some as high as 1.75%

JMatt

But I am not talking about legacy either. I looked at the pension provider's website this morning and HL's website this morning. Examples, as follows:

Invesco Perpetual High Income PP = 1.72%, HL = 1.5%
Jupiter Undervalued Assets PP = 1.8%, HL = 1.5%
Fidelity European PP = 1.75%, HL = 1.5%
Standard Life Corporate Bond PP = 1%, HL = 0.95%

There is no dispute that there are lower cost funds available with charges of 0.3% but are you comparing like for like, i.e. the exact same fund available through both channels (as above)?

I am still struggling to see where the same fund being offered by HL at, say, 1.5% would be available through another provider at 0.4-0.5% as you indicate (i.e. 3-4 times lower).

dunstonh

The pension provider's website will show the full cost annual management charge (i.e. maximum commission basis). It wont show them commission free. Knock off 0.5%-0.7% on those providers figures and thats comparing like for like (e..g DIY vs DIY).

Std Life isnt the best priced provider either. I havent placed a plan with them for over 5 years as they neither offer best quality or best price.

JMatt

In this case the Std Life figures were from their 'Hands on pick your own' section, which I understand is their DIY option.

dunstonh

JMatt wrote: »

In this case the Std Life figures were from their 'Hands on pick your own' section, which I understand is their DIY option.

That is not DIY.

They are pricing it on maximum commission basis which typically means when you buy direct from them or an IFA taking maximum commission. If you buy it that way and then later pick your own funds then that is the pricing you get.

If you buy it on execution only from the start on nil commission basis then you will get around 0.4% cheaper with Standard Life. The better pensions and providers can improve that to around 0.7% p.a. cheaper.

jamesd

cloud_dog wrote: »

This was one of the key reasons for us moving the OH pension in to the H-L SIPP. Also I am a fairly competent investor and like the flexibility to move (reasonably quickly) to cash if I feel the need.

Ease was a key reason for me as well. Still, at present my split is around 13k HL and 40k work. That's because the work has a few very cheap institutional trackers that I'm happy to hold at the moment. Neither HL nor, most likely, any retail product, can touch that pricing.

Once I find out about some pension changes that will happen at work at some point in the next six months I'll decide where to move next.