Repensioning. Increase your pensions return without any risk discussion area

Spoon77

Ok, but aren't HL a firm of IFAs? I'm not sure I understand how discount brokers are distinct from IFAs. Does you already have to have a pension to transfer before you can engage a discount broker. I can see some further research is required on my part.

jem16

HL and Cavendish are both IFAs who offer discounts so no different to any other IFA who also offer discounts.

If you go direct to Scottish Widows you will pay exactly the same and get no advice than you would if you go to an IFA and get advice. In some cases the IFA will even be less with advice.

Why do you want to change the Scottish Widows Personal Pension? It's one of the best around.

Spoon77

jem16 wrote: »

Why do you want to change the Scottish Widows Personal Pension? It's one of the best around.

I don't necessarily want to change the product, just the way I am buying it. I feel slightly hoodwinked by the fact that the IFA's commission is coming directly out of my payments, and if there is a way to reduce this, then that's a lot of money over the lift of my pension. Also, having looked at the FSAs comparative tables, I can see that the SW has some of the highest charges too.

jem16

Spoon77 wrote: »

I don't necessarily want to change the product, just the way I am buying it. I feel slightly hoodwinked by the fact that the IFA's commission is coming directly out of my payments, and if there is a way to reduce this, then that's a lot of money over the lift of my pension.

The commission payments come from the charges. You would be paying those charges anyway, even if you went direct to SW with no advice.

Also, having looked at the FSAs comparative tables, I can see that the SW has some of the highest charges too.

Most of the cheaper ones are stakeholder pensions which are meant to be cheaper.

What exactly have you paid to the IFA?

dunstonh

I was impressed that the IFA took commission from Scottish Widows, not fees from me, without putting two and two together and realising the commission ultimately came from me!

Albeit that it takes about 10-15 years for you to make up the commission amount paid in the charges.

Given that the pension is very new, I don't have any loyalty at risk as mentioned earlier in the thread. Therefore, is repensioning a viable course of action for me?

You will reset the counter on your bonus when Scot Widows start adding loyalty bonuses.

Incidentally, I do think that IFAs should be a lot clearer about the fact that you would pay significantly less charges on a pension if you go direct rather than through an IFA.

You dont pay less charges going direct. Scottish Widows keep the commission for themselves if you go direct.

Also, how many IFAs have you seen? Many of us work on a fixed charge basis that is clean and simple to understand.

I just feel it wasn't apparent to me when I signed up. I know better for next time!

You would have been supplied a personal illustration detailing the charges before you signed the application. They send one in the post to you as well with the cancellation rights.

Also, having looked at the FSAs comparative tables, I can see that the SW has some of the highest charges too.

No it doesnt. It may not have fund based discounts but it's fund availability and investment choice make it a good product.

I feel slightly hoodwinked by the fact that the IFA's commission is coming directly out of my payments,

How did you think they were going to get paid then?

EdInvestor

Spoon77 wrote: »

Ok, but aren't HL a firm of IFAs?

There are several arms to H-L's business, including both an 'execution only' discount broker service, and an IFA service.

I'm not sure I understand how discount brokers are distinct from IFAs.

They don't give advice.Instead, they rebate most of the chunk of charges which the company would spend on paying the commission to the IFA back to you.If you go direct to the company, they will pocket this money for themseleves, so you get the worst of both worlds - paying for advice you haven't received.

While it is true that some IFAs will do business on an 'execution only' basis (ie they process the deal but give no advice and take no responsibility).But this would not be a mainstream part of their business - obviously their main business is to give advice and get paid for it.

Does you already have to have a pension to transfer before you can engage a discount broker.

No.Obviously if you are attempting to "repension" via a discount broker, as Martin suggests you would need to have a pension to start with.But you can arrange any investment from scratch through a discount broker.

dunstonh

There are several arms to H-L's business, including both an 'execution only' discount broker service, and an IFA service.

As do most IFAs. You get approached at times to do execution only business and most IFAs discount to varying degrees. So HL are do nothing new there. Where they differ more than most (noting it is not unique) is that they also have their own product.

HL also earn commission and the charges on their product are higher than the Scottish Widows pension.

While it is true that some IFAs will do business on an 'execution only' basis (ie they process the deal but give no advice and take no responsibility).But this would not be a mainstream part of their business - obviously their main business is to give advice and get paid for it.

True. Many of these larger IFAs have low paid staff operating on a factory line basis able to deal with execution only pricing. Smaller IFAs are not mostly interested as it doenst make good business sense. That said, I can undercut HL's pension on execution only basis with £100k or more. I could do it less than that but I dont want to. It is a choice I make. Another IFA may make that cut off at 50k or 500k.

Spoon77

Ok, so if I'm understanding this correctly, there are potentially 3 ways to 'buy' the same product:
1. via an IFA
2. direct with the company i.e. Scottish Widows
3. via a discount broker

Options 1 & 2 result in my paying the same charges, and option 1 also means I recieve advice. Option 3 means the broker returns most of the charges to me.

So, in theory if I were confident in how to invest the money within the pension 'wrapper' i.e. mix of funds etc., then option 3 might be the best way to maximise my pension investment, with the caveat that it requires more personal attention.

jem16

Option 1 can also be cheaper than Option 2 depending on the charging structure of the IFA involved.

Option 3, as you say, requires you to know what you are doing. You could lose far more than the charges if you don't.

EdInvestor

Spoon77 wrote: »

So, in theory if I were confident in how to invest the money within the pension 'wrapper' i.e. mix of funds etc., then option 3 might be the best way to maximise my pension investment, with the caveat that it requires more personal attention.

Correct.The bottom line is whether or not it's cost effective for you to do the investment research compared with paying an IFA to do it.

That's a factor of

1)The level of the IFAs fees/commission
2) The value you put on your own time
3)How hard you think it is to acquire investment skills vs paying for the IFA to provide them
4)How high you rate the IFAs' skills

plus, sadly, there is an additional factor

5)Whether or not you could be the victim of "commission bias" or other misselling incidents if you go through an IFA, compared with doing it yourself.