SIPPs - is there anything really wrong with HL?

jamesd

Lower cost but less ongoing rebate than pure fee basis via an IFA. Looks like 0.125% instead of 0.5% of the annual commission is kept. An IFA network might have some discounts in addition that aren't available from Clubfinance, depends on the IFA. Or vice-versa.

A £500 IFA fee would match the commission paid to ClubFinance in at £80,000 invested in five years or two and a half at £160,000. After that using the IFA on fee basis steadily pulls ahead, though only by £100 a year per £80,000 invested. Also depends on other charges that there might be for either.

Some of the Skandia features are apparently optional, don't know which Clubfinance turns on.

CannySaver_2

Hi

Charges seem to be well covered here, but two potential issues I see with HL:

1. They promote funds through their Wealth 150 at the same time as taking kick backs, sorry "rebates", from the fund houses. It would be far more transparent if we could see that there was no link between the size of the rebate and the fund appearing in the Wealth 150

2. If you want to hold cash at any time in your SIPP, and there can be excellent reasons to do so, HL are poor. The rate offered by the cash account is extremelly low and they do not allow other deposit accounts to be opened. Furthermore they cannot tell you at any one time which deposit taker your money is held with which could cause issues with the FSCS if you have significant deposits outside the pension

Still, HL attract huge amounts of business, they are very popular, must be doing something right.

The Canny Saver

gadgetmind

CannySaver wrote: »

Still, HL attract huge amounts of business, they are very popular, must be doing something right.

Their customer service is *very* good and they have handled complex manual transactions for me without any hitches. Their platform is also very good regards functionality and ease-of-use, and their charges are generally acceptable.

If I wanted a SIPP, I'd look elsewhere, but recent changes mean that holding ITs and shares in an ISA is OK with HL as the 0.5% has a £45 cap. Dealing costs are also OK as you can pay £12.50 a quarter and then get all trades at £9.95. I do nearly all of my large investing in April-June, so I just register as an active trader for a single quarter.

westy22

To give an indication, on a £50,000 pension pot, they will be receiving about £250 a year in advice fees, on top of a slightly smaller amount paid to them for administering the funds on their platform. However, the important thing is that they're effectively charging you for advice you don't receive.

And that £250 would buy you about 30 minutes of annual advice from an average IFA (probably only a short chat on the phone)? Of course, if you had also paid an initial advice fee of about £2,000 to the IFA to set up the pension in the first place it would take about 7-8 years to amortise that, at £250 per annum.

I am very happy with HL and with over £150,000 in my SIPP, all invested in a range of HSBC trackers at 0.30 TER average and no platform loading, I pay about £0 to HL per annum!

Aegis

westy22 wrote: »

And that £250 would buy you about 30 minutes of annual advice from an average IFA (probably only a short chat on the phone)? Of course, if you had also paid an initial advice fee of about £2,000 to the IFA to set up the pension in the first place it would take about 7-8 years to amortise that, at £250 per annum.

I am very happy with HL and with over £150,000 in my SIPP, all invested in a range of HSBC trackers at 0.30 TER average and no platform loading, I pay about £0 to HL per annum!

I don't know many IFAs that would charge a 4% initial fee for setting up a pension.

Regardless, the point remains that if you use the SIPP to invest in the vast majority of funds, you will be paying for advice you don't receive. This problem only compounds as pots get bigger, and at the size you'd expect later in life (i.e. 6 figures) this option becomes much more expensive in most cases than going somewhere like Alliance Trust, or even Fidelity FundsNetwork via Cavendish.

The HSBC trackers are an interesting exception, but useful only where you think no added benefit can be gained by active management.

westy22

This problem only compounds as pots get bigger, and at the size you'd expect later in life (i.e. 6 figures) this option becomes much more expensive in most cases than going somewhere like Alliance Trust, or even Fidelity FundsNetwork via Cavendish.

I agree with you that there are some DIY options that rival HL for value when pots become significant. BestInvest also have a good alternative that rebates some trail commission on SIPPS. The point I was making was really more of a cost comparison between DIY SIPP and IFA-only SIPP or PP options.

Many IFAs point to the fact that they can access some funds with 0.1% TER. Great, but that 0.2% difference would only save me about £300 pa, but the best quote I got last year from an IFA to move me to such a platform was £3,000 for a one-off transactional fee. Also, tracking differences could totally wipe-out any potential saving between trackers at 0.1% and 0.3% TER.

gadgetmind

Aegis wrote: »

I don't know many IFAs that would charge a 4% initial fee for setting up a pension.

A lot used to (and even higher) and a whole load still try.

I just asked my IFA what it would cost to pay a lump sum into my existing SIPP and he wanted a few percent of that. I'm going to decline.

This is why HL thrive: people just don't want the hassle and expense of an IFA. And yes, with *some* IFAs you *might* be able to haggle a lower fee, but this is supposed to be professional financial planning not flogging used cars.

gadgetmind

westy22 wrote: »

I am very happy with HL and with over £150,000 in my SIPP, all invested in a range of HSBC trackers at 0.30 TER average and no platform loading, I pay about £0 to HL per annum!

I'm looking at three options regards a new pension lump sum and rescuing an old pension from a high-fee platform/IFA environment.

1) A HL SIPP with HSBC trackers. My only worry is what will happen to costs post-RDR.
2) A Friends Life (nee Provident) Personal Pension via Cavendish.
3) Braving an IFA. The total pot for this will be circa £200k so this option *might* be worth it.

I'm about 7 years off (hopefully) retiring but intend to go into drawdown.

Thoughts?

CannySaver_2

gadgetmind wrote: »

This is why HL thrive: people just don't want the hassle and expense of an IFA. And yes, with *some* IFAs you *might* be able to haggle a lower fee, but this is supposed to be professional financial planning not flogging used cars.

If it's supposed to be professional financial planning then why are you haggling? It needs to be paid for, you can't have it both ways!

In my experience a good quality IFA working with the right client can offer significant value. However many people are experienced investors, like some people on this board, and take the perfectly reasonable view that they can make their own investment decisions.

Whether IFAs are a good or bad thing is not a black and white situation, for some people they are invaluable for others they are an unnecessary expense.

The Canny Saver

gadgetmind

CannySaver wrote: »

If it's supposed to be professional financial planning then why are you haggling?

I am prepared to pay for *very* good financial advice, but it would have to be *very* good and fully-costed to show the advantage of this approach versus the DIY approach.

If there is no financial advantage (to me!) then no deal and it's time to vote with my feet.