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

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  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    zagfles wrote: »
    SIPP, actively managed funds (UT/OEICs) not trackers, wide choice.

    There are platforms that refund the trail commission but they tend to have annual and/or dealing fees. I guess it depends on how often you trade.
    But if you're happy with the outcome why would you want to :)

    Everyone wants a happy ending. :-)
    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
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    gadgetmind wrote: »
    Over what timescale? It's easy to be mislead by short-term (sub 5-10 year) fluctuations.

    I've only had the SIPP for about 4-5 years - the first investment was Aberdeen Emerging Markets which I'm very pleased with. Got into fixed interest at the right time also thanks to HL.
    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!

    Of course, and they bombard you with marketing drivel, but the thing I like about their fund recommendations are that they're not generally based on fund performance but long-term individual manager performance, which is what I've looked for and has served me well.

    Are there really significantly cheaper ways to get exposure to the underlying assets? Your experience with IFAs clearly demonstrates that going via an IFA is much more expensive, some might do better deals but is any really going to waive the full initial charge (like HL do) for instance?
  • zagfles
    zagfles Posts: 20,363 Forumite
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    gadgetmind wrote: »
    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!

    Yes, my works pension is similar - in fact I think some of the charges are even lower - about 0.2%. But the fund choice is very limited.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    zagfles wrote: »
    I've only had the SIPP for about 4-5 years - the first investment was Aberdeen Emerging Markets which I'm very pleased with. Got into fixed interest at the right time also thanks to HL.

    Yup, EM, fixed interest and commodities have also served me well over recent years. However, my individually chosen tech shares have whooped them all, but I will admit the risk was higher.
    Of course, and they bombard you with marketing drivel

    And how! Save a tree: ditch Hargreaves Lansdown!
    Are there really significantly cheaper ways to get exposure to the underlying assets?

    Yes. Increasingly the investments within asset classes track each other, and active management and stock picking are minor noise on a big signal. A few well chosen trackers and ETFs will deliver much of what you can do with UTs/OEICs with lower ongoing fees.

    So decide upon your asset mix, allocate across territories and sectors, and then find the lowest cost way to achieve this.

    I'm currently using OEICs within our ISAs and ITs and direct share holdings in our (much larger!) unwrapped investments. This is trending towards low cost trackers and even more direct share holdings: I don't need to pay someone 1-2% per annum for a fund that vaguely tracks the FTSE 100 or that buys GSK, AV, AZN, BP, VOD, and all the other high yield blue chips.

    Our pensions are currently more hands off, but this is already changing, and the 2nd differential is positive.
    Dear Middleman: My favourite 17 letter word is "disintermediation" - look it up on wikipedia. Value add is a good thing, but the UK pensions industry has suffered from cost add without value add. Market transparency is the enemy of the middleman: it's already coming to pensions, and RDR will turn the trickle of transparency into a torrent.

    Hurrah!

    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
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    zagfles wrote: »
    Yes, my works pension is similar - in fact I think some of the charges are even lower - about 0.2%. But the fund choice is very limited.

    My company pension has higher fees with Friends Life than I can get with investing via Cavendish Online in ... Friends Life.

    I'm about to ask FL to do a pensions transfer from themselves to themselves; watch this space.
    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.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    gadgetmind wrote: »
    If only I'd had a camera handy when I asked him about counter party risk!
    Next time, try him on bid basis vs offer basis for unit trust pricing and see whether he talks about bid and offer pricing instead of bid and offer basis for the bid price.
  • jamesd
    jamesd Posts: 26,103 Forumite
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    edited 22 July 2011 at 10:43PM
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    zagfles wrote: »
    So not a lot of use for those who don't want advice.
    There's no need to pay for advice if you don't want advice. I'm not planning to, the discussions I've had with an IFA are about an execution only, no ongoing advice, purchase on fee basis. Some IFAs might refuse to sell on that basis but not all of them.
    zagfles wrote: »
    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?
    Don't know about dodgy, I wouldn't describe the one I'm dealing with that way. I've no fundamental objection to other people being paid for what is effectively their time and tools. For an execution only deal I don't see why an IFA would need all the information about your financial affairs.
  • dunstonh
    dunstonh Posts: 116,649 Forumite
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    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?

    one word - Greedy. Two words - greedy sod.

    Thats ridiculous. However, he probably has people more than willing to pay it so can afford to lose the ones that don't pay.

    If you have over £200k of funds under management with the IFA you would expect increments to be done with very little initial cost (or even no initial cost if you are a on servicing contract with them).

    Maybe your IFA isnt playing to be there post RDR and is making hay whilst he still can. I have little tolerance of these old school greedy sods.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
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    dunstonh wrote: »
    Maybe your IFA isnt playing to be there post RDR and is making hay whilst he still can. I have little tolerance of these old school greedy sods.

    Yes, old school sums him up nicely, and you might be right about post RDR. Where I suspect we don't entirely agree is how rare such fee structures are.

    Given what I know now, I am a trifle embarrassed regards moving my pension out of the frying pan and into the fire back in 2005. However, the quality of information and the range of options weren't available back then, and I didn't fully commit (my ISA went a different route) and did (eventually!) keep an eye on things.

    As it happens, the performance of the investments has been acceptable, but nothing like good enough to make up for those swingeing fees. However, I intend to use drawdown and thus be in the market for the next 35+ years, so I've got time to put things right.
    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
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    jamesd wrote: »
    There's no need to pay for advice if you don't want advice. I'm not planning to, the discussions I've had with an IFA are about an execution only, no ongoing advice, purchase on fee basis. Some IFAs might refuse to sell on that basis but not all of them.

    Don't know about dodgy, I wouldn't describe the one I'm dealing with that way. I've no fundamental objection to other people being paid for what is effectively their time and tools. For an execution only deal I don't see why an IFA would need all the information about your financial affairs.

    I tend to add to my SIPP most months (ie when I get paid), a variable amount depending on size of CC bills, holidays etc, and invest in different funds each time. HL is an easy platform on which to do this - could I really do this via an "execution only" IFA easily and at lower cost?
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