Moving pension investment fund

sue_c_3

We have recently had a local IFA look at my husbands personal pension. This is currently invested with Clerical Medical. He advises that we should move the money to Skandia to take advantage of a wider range of funds. We are concerned that this will incur more costs on what is already invested. How do we decide whether this is the right move for us or not?

The investment appears to incur a 3% initial commission with 1% nominated trail. They would be reviewing our choices every 6 months - is this a reasonable charge? Or should we be inviting other IFA's to quote? Although I don't know if I can face going through all the details again with someone else!!

Thanks in anticipation of your help

purch

You'd probably be better posting this on the Pensions Forum.

shaunrc

Hi Sue

I have some thoughts for you. Firstly lets start with the Clerical Medical plan.

1. What are its charges?
2. What investment choice do you have?

Next 1% as a trail seems steep are you sure this is for the financial adviser? Or is this the annual management charge?

Once you are clear on the comparison costs between Clerical and Skandia it gives you more of an idea.

Lastly how many funds will your new adviser suggest you go into with Skandia? It is all very well to talk of investment diversification but how many funds is an acid test of how it will be put into practice.

Also what does the 6 monthly review mean in practice?

To give an idea of the steepness of the charges we would need to know the fund size.

dunstonh

This is currently invested with Clerical Medical. He advises that we should move the money to Skandia to take advantage of a wider range of funds. We are concerned that this will incur more costs on what is already invested. How do we decide whether this is the right move for us or not?

My own pension is with Skandia on their investment platform. It is one of the best personal pensions around in terms of what it offers. However, it is not the cheapest. It is rare in that it uses the unit trust funds rather than pension funds. Pension funds are cheaper but many experienced investors would prefer to be in unit trust funds given the choice. However, if you are not an experienced investor and not monitoring and reviewing the investments and not using wider investment areas then using the Skandia pension is a bit of a waste of money. It would be like buying a ferrari but never driving it.

Clerical Medical will depend on the type of contract they have. They do have some very good schemes and some obsolete ones.

Despite my own pension being with Skandia, I actually put fewer clients on it as most dont have enough money or their investment experience to benefit from its features. If you have enough money and you utilise an investment strategy (such as sector allocation) and use funds not typically available on a personal pension then no problem.

The investment appears to incur a 3% initial commission with 1% nominated trail.

That is high. With collectives (which is what Skandia use), the average charge is 1.8% plus 0.5% trail. The typical maximum is 3% plus 0.5%.

The figure may be high if the pension pot is small. However, the larger the pot, the lower the charges would typically be.

sue_c_3

Many thanks for the above response - we are still trying to sort ourselves out.

The fund range suggested is Skandia Unit Trust/OEIC and the portfolio chosen has a risk rating of 5. The information sheet is headed Portfolio U Skan. We are not sophisticated investors .... as you will have guessed from the questions! We understand that the fund mix will be reviewed every 6 months to ensure it is still performing well would this normally be by Skandia themselves or our IFA?
The figures in my initial query are those showing on the information sheet ie 4.50% initial + nominated trail with a commission rebate of 1.50%. Nominated trail being 1%. These being for the transfer and the regular investment. The fund transfer value is around £30,000.
We plan to ask more questions of our financial advisor but at the moment are not even sure what questions we should be asking!!
You mention not putting many clients on the unit fund scheme as they do not have the experience to benefit from the scheme but we thought that is what we are paying our IFA for!!
Our concerns are that we are put on a well performing scheme but that we may be charged over the odds by the IFA.

We would appreciate any comments you can give to assist us.