SIPP, Hargreaves Lansdown and Funds 2006 (dunstonh)

optimist_2

So, if I made the transfer onto the Skandia platform using clubfinace, I could then switch from clubfinance to the adviser. Would there be any charge from clubfinance for doing this? Then we are back to no initial charges with all fundbased trail commission refunded and a member charge of £52.32. The £40 per month ongoing advice fee could then be taken from the fund. What exactly is the difference between ongoing servicing and investment advice, or are they the same? He will still charge me £250 for the initial risk assessment and investment profile, but this again can be taken from the fund. Do you think his compliance regulations will allow him to do that?

optimist_2

Using a chartered financial planner for a transaction that doesnt require their skills and knowledge can be expensive overkill. Would you use a brain surgeon to apply a plaster.

So if discount brokers are less likely to complete an execution only Skandia transfer because it has to be done online, that leaves IFAs. It would seem that I am talking to the wrong one at the moment! What criteria should I use for seeking out IFAs who are willing to do this? From your comments, small local ones that are unlikely to be compromised by compliance, is that right?

(CII J06 exam for example is at the level below chartered but above the standard level).

So CII J06 is the highest level investment qualification, and anyone with this should know what they are talking about?

You just need to ask questions and look at the quality of the response and information given. Is there a structure and process or is it all a bit haphazard and random.

What sort of questions should I be asking?

Thats expensive as it is on top of the 0.5% trail commission that HL get already. Most IFAs will accept the 0.5% to cover ongoing servicing.

How would the IFA collect that from HL?

If I am paying an IFA to manage the portfolio, how much am I likely to learn from the IFA? Alternatively, how difficult and risky would it be to do it myself? I have been warned off this in the past - not by IFAs! I am at the most 10 years from retirement (hopefully), so after identifying funds, based on risk and sector, am I right in thinking there would not be as much switching necessary, compared to someone who was further out from retirement?

Thanks!

optimist_2

Sorry, hadn't worked out how to put the quotes in - hopefully this time!

dunstonh wrote: »

Using a chartered financial planner for a transaction that doesnt require their skills and knowledge can be expensive overkill. Would you use a brain surgeon to apply a plaster.

So if discount brokers are less likely to complete an execution only Skandia transfer because it has to be done online, that leaves IFAs. It would seem that I am talking to the wrong one at the moment! What criteria should I use for seeking out IFAs who are willing to do this? From your comments, small local ones that are unlikely to be compromised by compliance, is that right?

dunstonh wrote: »

Plus, when it comes to higher level qualifications for investment strategies, they tend to be at the level below chartered (CII J06 exam for example is at the level below chartered but above the standard level).

So CII J06 is the highest level investment qualification, and anyone with this should know what they are talking about?

dunstonh wrote: »

You just need to ask questions and look at the quality of the response and information given. Is there a structure and process or is it all a bit haphazard and random.

What sort of questions should I be asking?

dunstonh wrote: »

Thats expensive as it is on top of the 0.5% trail commission that HL get already. Most IFAs will accept the 0.5% to cover ongoing servicing.

How would the IFA collect that from HL?

If I am paying an IFA to manage the portfolio, how much am I likely to learn from the IFA? Alternatively, how difficult and risky would it be to do it myself? I have been warned off this in the past - not by IFAs! I am at the most 10 years from retirement (hopefully), so after identifying funds, based on risk and sector, am I right in thinking there would not be as much switching necessary, compared to someone who was further out from retirement?

Thanks!

dunstonh

So, if I made the transfer onto the Skandia platform using clubfinace, I could then switch from clubfinance to the adviser. Would there be any charge from clubfinance for doing this?

No. Agency transfers are done by the product provider (skandia). No work from the old adviser is required.

So if discount brokers are less likely to complete an execution only Skandia transfer because it has to be done online, that leaves IFAs. It would seem that I am talking to the wrong one at the moment! What criteria should I use for seeking out IFAs who are willing to do this? From your comments, small local ones that are unlikely to be compromised by compliance, is that right?

Its more business model than actual adviser. You tend to find servicing advisers are more likely to use investment strategies and defined portfolios. Transactional advisers less likely to as best advice typically means they pick funds that are geared to no servicing.

If you ask an IFA that does 90% mortgages then chances are their investment knowledge is weaker or vice versa. They could hold identical qualifications.

So CII J06 is the highest level investment qualification, and anyone with this should know what they are talking about?

There are many qualification types available from different exam boards. The CII themselves have J06 and R02 which are both at the same level. R02 is compliant with the retail distribution review. J06 is pre RDR. Like school exams, the qualification names change periodically. Someone who has either of those qualifications is likely to know more than someone that doesnt. However, like any qualification, application of knowledge and experience can be more important.

What sort of questions should I be asking?

What is the investment strategy, what type of investments, what sort of servicing is required (e.g. rebalancing). How often is the strategy reviewed (e.g. sector allocated portfolios tend to be updated quarterly).

How would the IFA collect that from HL?

They can't. HL keep the 0.5% for themselves. They wont pay it to an IFA. An IFA would not use the HL contract anyway as they can get cheaper on a like for like basis.

If I am paying an IFA to manage the portfolio, how much am I likely to learn from the IFA?

As much as you want to learn and perhaps how good the IFA is communicating it to you.

Alternatively, how difficult and risky would it be to do it myself?

Its like any DIY. You can end up making a right pigs ear of it. Or a passable job or a first rate job.

You have to decide what investment strategy you wish to use, what investments and then you have to review and rebalance it periodically.

am I right in thinking there would not be as much switching necessary, compared to someone who was further out from retirement?

Probably more if anything as you phase your risk down as you get closer to commencement. Those further away tend to be more consistent on risk profile so they can just focus on rebalancing and new developments. You have to focus on those and risk reduction (potentially depending on what retirement income options you are going to use).

optimist_2

Thanks Dunstonh.

So transactional IFAs are based on sales, and servicing IFAs provide aftercare, if you like. So which do I need? A transactional IFA (or broker) to get me on the platform and then change agency to a servicing IFA? So far, I can't seem to find one who does both! Would I be able to find out from unbiased.co.uk if the IFA is transactional or servicing, and whether they hold R02 or J06 etc?

If you change agency, are you able to change the original contract conditions? I read on the Cavendish website that you couldn't. So, if I got onto the platform with Clubfinance and then switched agency to a servicing IFA, I would still be limited to only 75% of the renewal commission rebated, as per the original Clubfinance contract.

If I got onto the Skandia platform with Clubfinance (or a transactional IFA), do you think that a servicing IFA would be prepared to go along with an agency transfer after that? Or would there still be too much risk, as they had not completed the transfer themselves? Would or could a servicing IFA operate if they weren't the agent on the contract?

Is the nominal £500 to set me up on the platform, or does it include the transfer as well? If the former, once I am on the platform, could I then transfer in myself, or does this have to be done through the agent?

In the article on the main MSE site, it says that re-pensioning is only done by a few companies, notably Cavendish online, yet isn't this exactly the same as transferring, which is very common?

Thanks for your patience!

dunstonh

So transactional IFAs are based on sales, and servicing IFAs provide aftercare, if you like.

Basically. Although there are people that dont want servicing or its not cost effective to do so. So transactional can be better for them. However, advice can vary if you ask an IFA to do transactional instead of servicing. An IFA has to recommend what is suitable now and forseeable future. So, if you go transactional, an IFA has to consider that they will not be providing ongoing advice so using investments that need reviews and rebalancing shouldnt be recommended unless its clear that the consumer is going to do it.

If you change agency, are you able to change the original contract conditions? I read on the Cavendish website that you couldn't. So, if I got onto the platform with Clubfinance and then switched agency to a servicing IFA, I would still be limited to only 75% of the renewal commission rebated, as per the original Clubfinance contract.

Some providers allow you to sign a new charges agreement. Others do not. It tends to be platforms that are more flexible on this front. Insurance contracts tend to be cast in stone.

If I got onto the Skandia platform with Clubfinance (or a transactional IFA), do you think that a servicing IFA would be prepared to go along with an agency transfer after that? Or would there still be too much risk, as they had not completed the transfer themselves? Would or could a servicing IFA operate if they weren't the agent on the contract?

Clubfinance carry all the liability for the transfer (even on non-advice). An IFA could not be faulted for taking it on afterwards unless they were involved in it initially. Whether an IFA would be interested in servicing after that would depend on the remuneration level. £100k plus and the answer is yes. Less than that you are either going to get a significantly increased number saying no or an increased level of charge.

Is the nominal £500 to set me up on the platform, or does it include the transfer as well? If the former, once I am on the platform, could I then transfer in myself, or does this have to be done through the agent?

You would expect it to be to cover the admin to get the transfer sorted.

In the article on the main MSE site, it says that re-pensioning is only done by a few companies, notably Cavendish online, yet isn't this exactly the same as transferring, which is very common?

re-pensioning is not actually an industry word. Its made up by Martin. As you correctly state, it is a pension transfer. Whether you use the same company for a different contract or a new company it is a transfer. All companies do transfers but some may refuse to do internal transfers.

optimist_2

Dunstonh, thanks!

So, as a temporary measure, and while I found the IFA of my choice, I could move my funds to clubfinance. I don't think there is a cash fund, but is there a unitised cash fund I could use for the time being, on the skandia platform?

Can you set up a new charges agreement on the Skandia platform? If so, once I have found my IFA, I could then switch agency and sign a new charges agreement, if the IFA was willing to do this. If not, could I transfer execution only into a new Skandia contract, or is this what you meant by internal transfers? So it all depends whether you can do this on the Skandia platform.

dunstonh

I don't think there is a cash fund, but is there a unitised cash fund I could use for the time being, on the skandia platform?

There is no actual cash account yet (its coming). However, there are several cash funds (blackrock cash and aberdeen cash for example).

Can you set up a new charges agreement on the Skandia platform?

yes

If not, could I transfer execution only into a new Skandia contract, or is this what you meant by internal transfers?

Not needed as it doesnt apply.

optimist_2

dunstonh wrote: »

Not needed as it doesnt apply.

But if the adviser doesn't consider it worth his while just to perform ongoing servicing, might he not want to acquire an initial fee by performing an internal execution only transfer? If so, is this possible?

If I changed the agency and set up a new servicing contract on the Skandia platform, could the fund allocation be covered along with the risk profile in the initial meeting with the IFA, or would this be an additional chargeable item?

I think that normally a suggested fund allocation is included as part of the report recommending transfer in an advised sale, but as it would merely be a change of agency, the full report obviously wouldn't be necessary.

dunstonh

But if the adviser doesn't consider it worth his while just to perform ongoing servicing, might he not want to acquire an initial fee by performing an internal execution only transfer? If so, is this possible?

Just in case we are mixing up what we are talking about, I am working on the basis you use clubfinance to do the transfer and later do an agency transfer to a servicing IFA. This does not require any internal transfer. Skandia will appoint the IFA as the agent instead of clubfinance on the existing plan. You then sign a revised charge agreement which is sent to Skandia and they adjust the existing plan. (Skandia being a platform and more flexible like most platforms).