Should I ditch my IFA?

smithy009

I set up a pension about 15 years ago and due to circumstances no contributions have been paid into it in the last few years.

It is "managed" by my IFA (who works for a company of advisors) who I understand takes about 1% per year from the pension as their "management fee". He is 100% reactive and only responds to pension reviews when I ask. I get annual updates direct from the pension companies but that is it.

My questions are:

1) Is this what most people experience from their IFA, or should the IFA be calling me and making suggestions as to moving funds about to weather storms etc?

2) Should I simply be paying for his advice instead of them taking a % commission?

I feel like my pension pot is just being skimmed away constantly in commissions, and could get the same level of returns if I changed it from a Personal Pension to a SIPP, bought some tracker funds (or physical gold) and leave it to it?

My other concern is whether my "traditional" pension will actually be worth anything in 25 years, having just read about how annuity rates have been collapsing over the last 20 years (http://www.thisismoney.co.uk/money/p...ity-shock.html)

Any thoughts appreciated.

Meeper

smithy009 wrote: »

It is "managed" by my IFA (who works for a company of advisors) who I understand takes about 1% per year from the pension as their "management fee".

You understand that he does, or he actually does? 1% per annum is quite high if it only covers ongoing servicing.

He is 100% reactive and only responds to pension reviews when I ask. I get annual updates direct from the pension companies but that is it.

Doesn't sound like you feel that you are getting value for money.

1) Is this what most people experience from their IFA, or should the IFA be calling me and making suggestions as to moving funds about to weather storms etc?

If things need to change, then yes. If the structures set up in the first place were correct, however, and if there is a discretionary management agreement in place, then he may be making some changes without you being aware of them. Probably a good idea to get in touch with the adviser to find out exactly what he does for his money prior to condemnation. He may be worthy of condemnation, but let's be sure of it first.

2) Should I simply be paying for his advice instead of them taking a % commission?

Perhaps, that is an option. Ask him for an idea of what his charges would be on a fee basis and compare. Then compare to other advisers on the same basis.

I feel like my pension pot is just being skimmed away constantly in commissions, and could get the same level of returns if I changed it from a Personal Pension to a SIPP, bought some tracker funds (or physical gold) and leave it to it?

Why would you need to change from a PP to a SIPP to buy tracker funds? And if you have been concerned with a lack of management before, leaving everything to tracker funds won't help you.

My other concern is whether my "traditional" pension will actually be worth anything in 25 years, having just read about how annuity rates have been collapsing over the last 20 years (http://www.thisismoney.co.uk/money/p...ity-shock.html)

Any thoughts appreciated.

Annuities are not the only means of turning pension pots into income at the appropriate time. Please don't let negative and alarmist media stories put you off. They should all be horse-whipped for only providing negative stories that scare people into making no provision at all.

bigfreddiel

and another thing about ifas is that they don't or won't lay out their wares without the usual clap trap which always goes something like:

"everyone is different so i can't tell you anything until i get some information from you......blah blah blah....."

or

"you won't understand what i'm telling you so this is what you should do - but the decision is yours - i can only advise........oh and btw - investments can go down as well as up but these are low risk....blah blah blah...."

now in reality most people are the same - as are their circumstances we only vary by degree for example single, married no kids, kids , between 0 and 90+
home owner, renter, unemployed, working,taxed at 20,40,50%

and we all want he same thing honest simple advice with some

and one thing i would like is for the ifas reward to be performance related

so far thats all quite simple

next the ifa just has to lay out their products and charges up front - how hard can that be because your potential clients aren't thick, if an ifa can't do that then meybe he/she should rethink their job and how to approach it - as my old teacher once said to me there's no such thing as a bad pupil only a bad teacher!

i'll finish with a simple analogy - imagine going into a restaurant and you ask for a menu,

The waiter says, sorry I need some info from you first, what allergies do you suffer from, are you diabetic, suffer hypertension ...... blah blah blah,

or

The waiter says, you have to understand how we prepare the food before we give you a menu so listen to this presentation for 2 hours....blah blah blah.

Well i tell you what - any restaurant that worked like that would be out of business in a week.

I hope that helps

fj

Meeper

bigfreddiel wrote: »

"everyone is different so i can't tell you anything until i get some information from you......blah blah blah....."

Everyone's individual circumstances are different, don't be so foolish.

"you won't understand what i'm telling you so this is what you should do - but the decision is yours - i can only advise........oh and btw - investments can go down as well as up but these are low risk....blah blah blah...."

Don't be such an idiot. If you have a point to make (that would be a first) try to make it with reasonable and sensible discussion instead of this crass nonsense.

now in reality most people are the same - as are their circumstances we only vary by degree for example single, married no kids, kids , between 0 and 90+
home owner, renter, unemployed, working,taxed at 20,40,50%

Do you have any idea how many different variations of person are contained in that?

and we all want he same thing honest simple advice

Perhaps if you went into discussions with less of a chip on your shoulder, you might get better feedback.

and one thing i would like is for the ifas reward to be performance related

YOu have no comprehension of how business works.

next the ifa just has to lay out their products and charges up front - how hard can that be because your potential clients aren't thick, if an ifa can't do that then meybe he/she should rethink their job and how to approach it - as my old teacher once said to me there's no such thing as a bad pupil only a bad teacher!

You are demonstrating quite clearly that there are plenty of bad pupils out there also.

i'll finish with a simple analogy - imagine going into a restaurant and you ask for a menu,

The waiter says, sorry I need some info from you first, what allergies do you suffer from, are you diabetic, suffer hypertension ...... blah blah blah,

or

The waiter says, you have to understand how we prepare the food before we give you a menu so listen to this presentation for 2 hours....blah blah blah.

Well i tell you what - any restaurant that worked like that would be out of business in a week.

This is the most ridiculous piece of garbage I have read in a long time. Do you only post when drunk?

I hope that helps

No, it doesn't help anyone, other than to indicate your ignorance. It's people like you making posts like this that make people distrust advisers and then they fail to make sufficient provision for their retirement, place savings and investments in the wrong places and fail to address potential taxation issues.

You should never post again.

dunstonh

It is "managed" by my IFA (who works for a company of advisors) who I understand takes about 1% per year from the pension as their "management fee". He is 100% reactive and only responds to pension reviews when I ask. I get annual updates direct from the pension companies but that is it.

Are you sure?

Is the 1% and charge of the investment fund or the charge of the IFA on top of the investment fund?

For example, a stakeholder pension may have the benchmark 1% p.a. management charge but the IFA doesnt get that. Indeed, the IFA gets nothing after the initial commission. So, if you are not paying the IFA for ongoing servicing then you cannot expect to get ongoing servicing.

1) Is this what most people experience from their IFA, or should the IFA be calling me and making suggestions as to moving funds about to weather storms etc?

If you have a discretionary investment manager IFA then the 1% would make sense as they are doing all the work and need to be paid from it. However, you would get frequent contact.

If you have a servicing IFA then you expect to pay them for the servicing. That will be reviews, updates, rebalancing etc.

If you have a transactional IFA then you dont see them until you need them again.

How you employ the IFA and what levels of ongoing service and how you pay for it is between you and the IFA. If you employ them on transactional basis then you shouldnt expect any contact.

I feel like my pension pot is just being skimmed away constantly in commissions

Commissions or charges?

and could get the same level of returns if I changed it from a Personal Pension to a SIPP, bought some tracker funds (or physical gold) and leave it to it?

Why do you need to move to a SIPP to do that?
What makes you think Gold is best?

My other concern is whether my "traditional" pension will actually be worth anything in 25 years, having just read about how annuity rates have been collapsing over the last 20 years

That is too simplistic. They were far too high in the 80s as the insurance companies made an incorrect assumption on mortality. They stablised around 2003 onwards and were actually beginning to go up again until the credit crunch/recession. Nowadays interest rates/gilt yields are the key driver.

However, you dont have to buy an annuity if you dont want to. So, if you dont like them, you are not stuck with one.

Have you considered having this conversation with your IFA. It may well be that you are a transactional client in their eyes (and what you are paying for) and it may be that their servicing option is far more suited for you. Or it may be that you dont need or want an IFA or it may even be that the IFA doesnt want you (small value, too expensive to service you etc).

and another thing about ifas is that they don't or won't lay out their wares without the usual clap trap which always goes something like:

"everyone is different so i can't tell you anything until i get some information from you......blah blah blah....."

you call it clap trap. The regulator and consumer groups would call it common sense and good quality research/factfinding that allows better quality research.

smithy009

Thank you for clarifying the different types of IFA's dunstonh. I didn't understand the difference before.

I guess my frustration stems from an expectation that as a customer of an IFA, I don't get any proactive feedback, and as of late it is taking him sometimes two weeks to even acknowledge an email (after a poilte reminder to ask him to respond). In my books that's just bad customer management. But I think you are right - maybe he has bigger fish to deal with?

I can't see where he provides any extra value, and wonder whether I can reduce the ongoing commissions by taking control of my pension investment directly?

As a minimum I would like a financial advisor to make proactive suggestions if he see the markets going off the rails long-term.

I personally believe that money invested in pensions invested in paper (bonds, many stocks, cash etc) will be eroded over time unless they are invested in "real" things (such as precious metals, commodities etc). That's just my opinion. However, my IFA has admitted he knows nothing about these areas, so won't be much help in helping weighing up what to do next?

dunstonh

I can't see where he provides any extra value, and wonder whether I can reduce the ongoing commissions by taking control of my pension investment directly?

He may not be getting a penny in commission. Most pension contracts from the era you took yours out dont pay recurring commission. That may be the very cause of the lack of contact.

As a minimum I would like a financial advisor to make proactive suggestions if he see the markets going off the rails long-term.

That isnt what an IFA does. Most of the short term issues cannot be predicted and trying to chase short term returns can usually end up costing you more than just waiting through them. Two way communication on issues is good but guessing trends is not if you expect to be popping in and out of asset classes like that.

I personally believe that money invested in pensions invested in paper (bonds, many stocks, cash etc) will be eroded over time unless they are invested in "real" things (such as precious metals, commodities etc). That's just my opinion. However, my IFA has admitted he knows nothing about these areas, so won't be much help in helping weighing up what to do next?

Pre RDR, that is largely outside the remit of an IFA. Post RDR, IFAs will be able to consider (and be required to consider) many more investment types. However, precious metals are not really considered by anyone to be a solution for the majority of a holding.