MSE News: Warning over charges that 'wipe millions off pension pots'

Options
123468

Comments

  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    First Anniversary First Post Combo Breaker
    Options
    I just asked my IFA what the fees would be for me paying a £40k gross lump sum into my SIPP. The answer was 4.5% up front, platform fees for the funds on Skandia, and 0.5% trail.

    1) It's becoming clear that I need a new IFA.
    2) I'll DIY as I don't care what "secret sauce" will be used in the asset allocation/balancing, it's going to have an uphill battle to cover those vicious fees.
    3) Is it any wonder that even relatively high-cost platforms such as Hargreaves Lansdown are doing so well?
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • zagfles
    zagfles Posts: 20,363 Forumite
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Options
    gadgetmind wrote: »
    I just asked my IFA what the fees would be for me paying a £40k gross lump sum into my SIPP. The answer was 4.5% up front, platform fees for the funds on Skandia, and 0.5% trail.

    1) It's becoming clear that I need a new IFA.
    2) I'll DIY as I don't care what "secret sauce" will be used in the asset allocation/balancing, it's going to have an uphill battle to cover those vicious fees.
    3) Is it any wonder that even relatively high-cost platforms such as Hargreaves Lansdown are doing so well?

    That makes HL look extremely low cost!
  • jem16
    jem16 Posts: 19,404 Forumite
    Name Dropper First Post First Anniversary Photogenic
    Options
    gadgetmind wrote: »
    I just asked my IFA what the fees would be for me paying a £40k gross lump sum into my SIPP. The answer was 4.5% up front, platform fees for the funds on Skandia, and 0.5% trail.

    1) It's becoming clear that I need a new IFA.

    I think you do - 4.5% initial fee is more than the normal top end of 3%.

    Do you have a servicing agreement already in place with this IFA or do you just pay as you go, so to speak.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    First Anniversary First Post Combo Breaker
    Options
    zagfles wrote: »
    That makes HL look extremely low cost!

    Yes, but I can kick off a new Friends Life Personal Pension via Cavendish, pay £45 up front, and then 0.45% per annum for their internal funds, which are pretty good. Let's just say that I'm not even going to bother with a mathematical model of DIY versus IFA for this particular case!

    OK, I don't get the bells and whistles of a SIPP, but my IFA isn't using them. As he completely fluffed explaining what an ETF was when proudly telling me that Skandia would soon be supplying them, maybe that's all for the best.

    If only I'd had a camera handy when I asked him about counter party risk!
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    First Anniversary First Post Combo Breaker
    Options
    jem16 wrote: »
    I think you do - 4.5% initial fee is more than the normal top end of 3%.

    It gets better. This 4.5% is a special discount because it's a big lump sum as he usually charges 5%. Remember, this is for a lump sum into an existing pension!
    Do you have a servicing agreement already in place with this IFA or do you just pay as you go, so to speak.

    Servicing from trail commission, which is really just asset allocation rebalancing: not exactly rocket science.

    I didn't want to start learning this stuff as it bores me to tears and completely fails to stretch and stimulate me mentally. I'd love to be able to leave it all to someone else, even if this costs me a few bob. However, between higher up-front fees and higher AMC, doing this would involve far too much of my retirement income turning into someone else's retirement income than I can stomach.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • zagfles
    zagfles Posts: 20,363 Forumite
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Options
    jamesd wrote: »
    Yes, Skandia currently sells only via IFAs. Their choice of business model. It'll be interesting to see if that changes. I think they want some of the money that HL is making.

    So not a lot of use for those who don't want advice.
    Fidelity and Skandia don't need to mention refunding trail commission on their pensions because they do it by reducing the fund annual charge by the commission saved, so you never pay it in the first place.

    Not sure what Fidelity version you were looking at, note that the pricing may differ between IFA and non-IFA products.

    The funds I looked at, bog standard UK/European equity types, quoted AMC at 1.5%. I'm not an IFA so obviously I looked at non IFA products.

    I was after an alternative to the "expensive" HL without having to pay for advice, which I don't want.

    Or do I have to do a deal with a dodgy IFA who'll rebate all his commission for a small kickback, without him having to pry into all my personal financial affairs?
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    First Anniversary First Post Combo Breaker
    Options
    zagfles wrote: »
    I was after an alternative to the "expensive" HL without having to pay for advice, which I don't want.

    What are you after ISA or pension? Funds (UTs and OEICS), ITs, ETFs, trackers, or ETFs? Different platforms are better for different types of underlying investments.
    Or do I have to do a deal with a dodgy IFA who'll rebate all his commission for a small kickback, without him having to pry into all my personal financial affairs?

    I don't regard it as prying. Certain info is needed to correctly advise just as with a doctor. I'd describe my favourite sexual positions to either if it would improve the outcome!
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • zagfles
    zagfles Posts: 20,363 Forumite
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Options
    gadgetmind wrote: »
    It gets better. This 4.5% is a special discount because it's a big lump sum as he usually charges 5%. Remember, this is for a lump sum into an existing pension!

    And people say HL are expensive!!
    Servicing from trail commission, which is really just asset allocation rebalancing: not exactly rocket science.

    My works pension does it by a formula (by default)! Charges are lower than HL but the funds haven't performed as well as the ones I selected in my SIPP. The choice is limited, so I'm happy to go with their formula.
    I didn't want to start learning this stuff as it bores me to tears and completely fails to stretch and stimulate me mentally. I'd love to be able to leave it all to someone else, even if this costs me a few bob. However, between higher up-front fees and higher AMC, doing this would involve far too much of my retirement income turning into someone else's retirement income than I can stomach.

    I actually find it quite interesting, but I'm a bit sad. The HL magazine is good - the recommendations there have proved generally good, I know there's all sorts about them being paid to market funds, but the funds I have bought on their recommendation have done very well.
  • zagfles
    zagfles Posts: 20,363 Forumite
    First Anniversary Name Dropper First Post Chutzpah Haggler
    Options
    gadgetmind wrote: »
    What are you after ISA or pension? Funds (UTs and OEICS), ITs, ETFs, trackers, or ETFs? Different platforms are better for different types of underlying investments.

    SIPP, actively managed funds (UT/OEICs) not trackers, wide choice.
    I don't regard it as prying. Certain info is needed to correctly advise just as with a doctor.

    Of course - if you want advice!
    I'd describe my favourite sexual positions to either if it would improve the outcome!

    But if you're happy with the outcome why would you want to :)
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    First Anniversary First Post Combo Breaker
    Options
    zagfles wrote: »
    but the funds haven't performed as well as the ones I selected in my SIPP.

    Over what timescale? It's easy to be mislead by short-term (sub 5-10 year) fluctuations.
    I actually find it quite interesting, but I'm a bit sad.

    IKWYM, but I do have better things to do with my cognitive bandwidth.
    The HL magazine is good - the recommendations there have proved generally good, I know there's all sorts about them being paid to market funds, but the funds I have bought on their recommendation have done very well.

    There are *much* better sources of info, but nothing HL say is actively wrong. They don't tell you there are much cheaper ways to get exposure to the same underlying assets, but neither do IFAs!
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 343.8K Banking & Borrowing
  • 250.3K Reduce Debt & Boost Income
  • 450K Spending & Discounts
  • 235.9K Work, Benefits & Business
  • 609.1K Mortgages, Homes & Bills
  • 173.4K Life & Family
  • 248.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards