SIPP, Hargreaves Lansdown and Funds 2006 (dunstonh)

dunstonh

Could an adviser insist on an internal transfer to an identical plan , if he wasn't happy with just receiving ongoing servicing commission?

Theoretically its possible but there is no reason to and an internal transfer is still a product sale as far as the FSA are concerned. So, it would require full justification.

Will the adviser receive a separate initial commission from the platform provider for setting up the plan, in addition to the initial charge provided by the funds?

Most platforms have no initial commission and nor do the investments. The initial charge is what you agree with the adviser. The adviser can only take what you have agreed.

If the nominated trail is expressed as a flat fee or as a percentage, are they both classed as fee based?

yes.

The percentage will obviously give a bigger fee for bigger pots, while the flat fee will remain the same, regardless of pot size. If the flat fee is written into a contract, will this be reviewed on an annual basis?

What you agree with your adviser is between you and the adviser. A flat fee is likely to be subject to change for inflation purposes. You will find that the flat fee will also be subject to VAT. The nominated trail is less likely to be (depending on the services bought). The VAT issue is a bit up in the air at the moment as it is still being discussed. Typically though, trail remuneration is not charged VAT.

optimist_2

Thanks dunstonh.

So initial adviser commission would have applied much more to original personal pensions?

I understand that in an execution only transfer the broker/adviser is just responsible for the mechanics of the transfer. As well, in an earlier post, you said that a transactional adviser was responsible for advising on the transfer, but not for ensuring it happens properly. That seems a bit strange, if the IFA actually puts the transfer into effect.

The AMC on my FSAVCs is currently 0.3% (after rebate), but there is a 5% Bid Offer Spread. Although there is a very limited choice of company funds (15), they are mostly unit trusts.

So, if I moved to Skandia, the AMC is likely to be higher, but the range and quality of investments will be much greater, there will be no Bid Offer Spread and drawdown will be available.

There is currently no transfer penalty on the plans. Do I need to look at current performance of the present FSAVC funds, or is the transfer away a 'no brainer', as I suspect!

dunstonh

So initial adviser commission would have applied much more to original personal pensions?

Yes. Nowadays, its really only the stakeholder pensions that pay initial commissions. The platform pensions and personal pensions are largely fee based.

Even Aviva (who are notoriously slow at keeping up with the times) reported last week that around 2/3rd of the pensions they do now are fee based rather than commission.

I understand that in an execution only transfer the broker/adviser is just responsible for the mechanics of the transfer. As well, in an earlier post, you said that a transactional adviser was responsible for advising on the transfer, but not for ensuring it happens properly. That seems a bit strange, if the IFA actually puts the transfer into effect.

The transactional adviser is required to make sure it all goes through but they are not responsible for any ongoing servicing after that. e.g. a transactional adviser will not review investments or rebalance. You need a servicing adviser to do that.

The AMC on my FSAVCs is currently 0.3% (after rebate), but there is a 5% Bid Offer Spread. Although there is a very limited choice of company funds (15), they are mostly unit trusts.

Thats expensive. However, they are likely to be unit linked pensions and not unit trusts. Unit Trusts tend to be used on platform pensions and SIPPs only.

So, if I moved to Skandia, the AMC is likely to be higher, but the range and quality of investments will be much greater, there will be no Bid Offer Spread and drawdown will be available.

Skandia offer the Blackrock Class D index trackers at 0.20% to 0.29% TER. They are often a better option that insurance company own brand managed funds which are often passive managed. Skandia will only cost more annually if you pick more expensive funds.

Do I need to look at current performance of the present FSAVC funds, or is the transfer away a 'no brainer', as I suspect!

Its never good to assume anything. So, I would check to be sure.

optimist_2

So unit linked pensions are not as good as unit trusts? It specfically says company unit trusts on the paperwork.

How do I check the performance of current funds, through the company website or Trustnet maybe? Do I need to look at the 1,3, 5 or 10 year trend?

Is there a calculator anywhere where I can benchmark both plans, like an IFA would?

Thanks!

dunstonh

So unit linked pensions are not as good as unit trusts? It specfically says company unit trusts on the paperwork.

Its not impossible they offer unit trusts but its very uncommon on FSAVCs.

Pension funds are not bad but many of the external pension funds are mirror funds of the unit trust fund. You get tracking errors and hidden charges with some which means they tend to under perform the UT/OEIC version.

How do I check the performance of current funds, through the company website or Trustnet maybe?

trustnet is a good free version.

Do I need to look at the 1,3, 5 or 10 year trend?

Depends. I tend to not look too much at past performance but future potential based on economic cycle.

Is there a calculator anywhere where I can benchmark both plans, like an IFA would?

The tool I use costs £5k a year. I doubt you will pay that sort of money. However, trustnet will give you basics along with your own knowledge and understanding of asset allocation and economics.

optimist_2

Thanks dunstonh, I will have a look at Trustnet tomorrow. Is there anything else I should be looking at eg TER. How do I go about calculating this?

If I am intent on maximising my pot over the next 3 1/2 years, would Skandia still be best for that, or would I need something that includes direct share dealing, for example?

dunstonh

eg TER. How do I go about calculating this?

Trustnet tells you.

If I am intent on maximising my pot over the next 3 1/2 years, would Skandia still be best for that, or would I need something that includes direct share dealing, for example?

If you want funds, skandia is fine. If you want direct assets (shares, ITs, ETFs) then you need a different platform. Different people choose to invest in different investment types. That is very much a personal thing.

optimist_2

And as you have already said, ITs and ETFs are coming to Skandia. When do you think this might be?

Are there any PPPs that have these at the moment? AXA Elevate or Standard Life, maybe?

dunstonh

optimist wrote: »

And as you have already said, ITs and ETFs are coming to Skandia. When do you think this might be?

Are there any PPPs that have these at the moment? AXA Elevate or Standard Life, maybe?

Indication from Skandia is closer to 2013 when RDR kicks in.

The unbundled platforms are more likely to offer direct and non commission paying assets rather than the bundled platforms. For example, AXA only offer non commission paying assets on their unbundled platform but not on their bundled one.

HL offer it but you pay extra if you use them (I know theirs is a SIPP not a PPP but the differences are increasingly minimal nowadays).

optimist_2

Thanks.

I know that Transact is an unbundled platform. Can you give me a few others to look at, besides AXA?

If you were on an unbundled platform, you would not have to be concerned about what is going to happen post RDR?

You obviously are more than happy not having these additional features!