Aviva Personal Pension

andmas

My IFA has recommended Aviva Life & Pensions Av Balanced Managed Fund and after discussing my attitude to risk has recommended the following fund choice with equal percentages in each:

• Schroder UK Mid 250 Pn S6 - May 06
• Cautious Managed Pn S6 - Oct 07
• Fidelity South East Asia Pn S6 - Sep 08
• Investec Cautious Managed Pn S6- May 06
• JPM Natural Resources Pn S6 - Apr 08
• New Star Eoropean Growth Pn S6 - Oct 07

I understand that Aviva only charge an Annual Fund Charge of 1% with no Fund Manager Expense Charge.

My initial review of Aviva and the above choice of funds is favourable but I would welcome comments from the 'experts' on the forum.

Thank you

EdInvestor

And how exactly does he evaluate your attitude to risk: what category has he put you in?

It's not apparent from the fund choice.

dunstonh

I understand that Aviva only charge an Annual Fund Charge of 1% with no Fund Manager Expense Charge.

Only on internal funds. On external funds they charge more.

My initial review of Aviva and the above choice of funds is favourable but I would welcome comments from the 'experts' on the forum.

What investment strategy is he following and how does the recommendation fit that?

Looks a bit random to me at the moment. Nothing wrong with the funds but cant spot any obvious reason for an equal spread in those.

How do they fit with your risk profile? That spread is certainly higher up the risk scale compared to the Balanced managed fund

petejones76

The risk profile seems quite high, did you suggest you would tolerate fairly high risk? What age are you? Those investments would certianly suit someone younger as they will go up and down quite a bit.

Compare the charges with other providers who offer the same funds, or even better ask your IFA to to this.

andmas

Thank you for all replies.

I discussed my attitude to risk with my IFA and we concluded that I required a balanced portfolio with some exposure to more volatile stocks so that there was an opportunity of increased returns. He advised that as a consequence some of my investments would be in more specialised stock market linked investments. He warned me that fluctuations in these funds would be more pronounced than those in less volatile funds.

I am aware that the spread of risk is quite high but I am prepared to accept that (at least for a few years) to get the opportunity of higher return and then change to lower volatile funds as I near retirement. I intend to retire in 14 years time when I’m 65.

I am seeking a greater return than my existing Zurich (ex Allied Dunbar) Adaptable Pension Plan provided (this plan is to be transferred into the Aviva plan).

I’m not sure what ‘category’ he has put me in – ‘categories’ weren’t discussed.

Concerning Aviva’s charges, I assume that the selected funds are internal as I have been advised that the total yearly charge is 1%.
Not sure what is meant by ‘investment strategy’ or why he has proposed an equal spread of funds (unless this is to get the ‘balanced portfolio’).

jem16

andmas wrote: »

Concerning Aviva’s charges, I assume that the selected funds are internal as I have been advised that the total yearly charge is 1%.

If I'm correct the only internal fund you have is the Cautious managed fund. The rest are all external - i.e Schroder, Fidelity, Investec, JPM and New Star.

EdInvestor

andmas wrote: »

My IFA has recommended Aviva Life & Pensions Av Balanced Managed Fund

Not quite sure what you mean here.Is this an ordinary fund? Or is it perhaps an umbrella type Multi Manager or Fund of Funds type product, through which you invest in the other six funds you list (of which only one, the Cautious managed PnS6 is an internal Aviva fund, there rest are all external.)

whiteflag_3

I know exactly what the IFA has done but im unable to make it clear as I wouldnt want to damage the reputation of the IFA sector.

andmas

On re-reading the document I have found that the illustration is based on 100% investment in the Aviva Balanced Managed fund, which is 1 of 240 available (not as i first thought the name of the pension itself!). With this fund there is no 'Additional Yearly Charge' and hence on my illustration the AYC is shown as 0.00%. On checking the funds selected the AYC is 0.05% for the Cautious Managed and between 0.63% and 1.00% for the others. There is also a note stating that the FMEC has been rounded to the nearest 0.05% and so where the FMEC is less than 0.025% the charges will be rounded down to 0, which has happened in my case. Therefore I could be charged up to 0.025% for the FMEC. The true charges are therefore between 1.05% and 2.00% (plus any FMEC). It shows I should the 'small print' more carefully!

Originally Posted by whiteflag
I know exactly what the IFA has done but im unable to make it clear as I wouldnt want to damage the reputation of the IFA sector

This statement concerns me - whiteflag would you please elaborate - are you saying that what the IFA has done is 'wrong'?

dunstonh

I have a couple of concerns.

1 - the initial illustration doesnt reflect the use of the correct funds - that is an FSA breach.
2 - Most allied dunbar pensions have no annual management charges when paid up. There is also usually a transfer penalty. So, you would be paying to leave and then going into a pension that costs you a lot more. So, its a good chance that you would need 9% growth (just picking a figure in there as we dont have the facts) just to match the figure if it had been left in the Zurich plan which got say 7%. I have yet to see an ex AD pension that I have recommended to transfer. The low charges and fairly decent internal fund range mean its rarely a good idea to move them.

Has the adviser given you a cost comparison using the same growth rates? e.g. if left where is, how much will it be at 7% p.a. compared to the alternatives using the recommended funds?

peterg1965

As a comparison, I have an Aviva Personal Pension managed by an IFA. I have a medium to slightly high attitude to risk and this is my fund split:

European equity S6 - 10%
Corporate Bond S6 - 25%
UK equity S6 - 10%
Shroeder UK Mid 250 - 15%
Investec American - 15%
Property S2 - 25%

Broken down into sectors:
Global Equity28.33%Fixed Interest26.37%UK Equities23.82%Property17.94%Cash3.54%


I have been very pleased how it has performed through the last 2 years - I started it in Dec 07 and fund it to the tune of £1150/month gross. It is in slight 'profit' in relation to the money paid in. The effects of 'pound cost averaging' are clearly apparent. The performance of the Corporate Bonds over the last few months has been incredible.