Standard Life Pension

thriftybabe

Hope someone can help. My FA started us off with a Clerical Medical Pension a year and a half ago then just after Standard Life floated he changed us to that. He is saying that it is performing well however that the costs have gone up. Surely if it is performing well it does not matter about the costs. Anyway he is saying that we have to keep our funds in Standard Life however our new monthly payments are now going to go back to Clerical Medical. This seems a bit off to me as we have switched back and forth three times in a year and a half. Can anyone tell me if Standard Life are better than Clerical Medical or any advice please.

dunstonh

There is no "financial" reason for the IFA to recommend the move back and forth like this as 1) Standard Life do not pay any initial commissions so he wasnt paid anything to move it to them. 2) there is a clawback if you move pensions around in the first 3 years.

So, there has to be a logical reason and I cannot see one to be honest.

The CM personal pension offers a very good fund range. The CM stakeholder isnt great but CM are well known for having low volatile low risk funds. The Standard Life Personal Pension offers a very good fund range and many of the funds are identical to those offered by CM. The Standard Life stakeholder pension is not as good but little different to the CM stakeholder.

It makes no sense to be switching around like this and I would question him as to how you are going to benefit. What is it about the switch that is a benefit to you?

If he is saying one performs better than the other then walk away and find a new adviser. Both offerings are virtually identical and have a number of fund overlaps so how can one be better than the other. If he was that concerned over performance potential he would be looking at a SIPP or fund supermarket pension instead.

I suggest you ask for more information as to why its better and what funds he will be recommending with CM. Post that information here and let us respond to that. In the meantime, be sceptical (by any chance, has the adviser changed employer in that period?)

thriftybabe

He says that the charges for Standard Life have increased therefore keep everything that we already have with them. However, our monthly payments have to go to CM. He is the owner of the Company so not sure if that has anything to do with it.

thriftybabe

Sorry i have not mentioned but it is a self invested property pension that we have.

EdInvestor

thriftybabe wrote:

Sorry i have not mentioned but it is a self invested property pension that we have.

What is this beast?

Do you mean it is invested in property funds within the Standard Life SIPP?

What funds was is iinvested in before, and what funds is it proposed to move to now ( still property funds) ?

dunstonh

Being a SIPP could make a world of difference to my comments earlier. So disregard them for the moment.

Is it invested in commercial property funds or is it an actual commercial property you have in it?

thriftybabe

It is invested in commercial property funds but he says that we can buy property with our pension pot. Hope this makes sense! When we first went to CM he got a commission of £9000 between my pension and hubbies. In addition when everything was transferred over to SL in August of last year he got £7200 between my pension and hubbies. We have only been with them since August which has obviously raised the alarm as to why he is now changing again. I personally think it is for commission and if so then I will not be changing. I know that we have a 30 day get out policy for changing over so I am awaiting details from CM which will tell me how much commission he will get. I was up last night worrying myself sick as we have known this guy for a number of years and cannot believe he would do this purely for his own gain. I will be challenging him as soon as I get all the facts. Unfortunately we do not know anything about pensions and have just let him do what he thinks is best!

thriftybabe

I believe he is transferring it to CM Property Funds but not 100% sure. I will check this out.

dunstonh

Please sack this adviser now. You are getting awful advice.

100% investing into the UK property sector was [almost] acceptable upto a couple of years ago but now its going in at a time when most UK property managers are expecting a bad year with anything from negative performance to 2%.

If it is a SIPP (self invested personal pension) with SL and hes talking about going into the personal or stakeholder pension with CM, then the charges will be a little lower. However, the advice to put you in the SIPP in the first place appears a little suspect.

I fear that he is doing it for his own gain and this is investment advice. It is the sort of thing that an adviser that does hardly any investment business would do. He is doing exactly the sort of thing that the financial press has been raising concerns over about churning pensions unnecessarily.

So, in summary here are my concerns and dont be afraid to raise them with him.
1 - SL's SIPP pays initial commission. SL's personal pension (PPP) and stakeholder pension (SHP) doesnt. SLs property fund with the PPP and SHP is cheaper than it is on the SIPP. Why wasnt the PPP or SHP used?
2 - The FSA have issued guidence on what is good advice about SIPPs and has said that you should only recommend a SIPP if the SIPP features are used. This is due to the higher charges. Recommending a SIPP to someone that doesnt need it could be classed as a mis-sale if they would have been better off in a SHP or PPP.
3 - Investing solely in one sector, such as UK commercial property, indicates low skill and low experience in investing and will lead to lower returns over the long term.
4 - The providers and products chosen do not have a clawback on commission (most do). Convenient or co-incidence?
5 - If property funds were the key desire then why not pick a provider like Scottish Widows that has the excellent UK Property fund and the European Property fund AND a couple of global property fund in it's PPP contract? Or, better still, why not the SIPP or a fund supermarket pension investing in a range of the many property funds out there?

We don't know all the facts but what you have said points to the worst kind of adviser there is. He does damage to us all by these sorts of actions. The advice is disgraceful, its costing you money and its only being done to earn a commission.

thriftybabe

Oh my goodness my gut feeling may be right! But I just want to get as many facts right so I can approach him with this. Okay he has put 50% into a New Star Property Fund, 25% in Morley Property Fund and 25% in Standard Life Investements Select Property Fund. (do not know if these are good funds or not - hope someone can help) He is going to keep all the funds that we have at the moment in this circa £60k. The new monthly payments have now to go to CM which is roughly about £600 each a month. Dunston thank you so much for your help. I am still thinking of a way to approach him with this. In addition when the CM details come through I shall see what it says on that about commission etc. We are pretty gutted as we work so hard for our money!

dunstonh

Okay he has put 50% into a New Star Property Fund, 25% in Morley Property Fund and 25% in Standard Life Investements Select Property Fund. (do not know if these are good funds or not - hope someone can help)

As property funds go, they are fine. I have utilised all three and have some of my own money in one of them.

However, utilising three property funds isnt diversification. Its hedging your bets which will be the better one. But if property goes bad, they all go bad. Where's the stockmarket side? Wheres all the other sectors? Its not good enough. Property and stockmarket dont perform in line with each other. They dont often crash at the same time and there are other sectors apart from stockmarket and property which you could be using as well.

Also, if he was going to put you in property, he could have picked the Scottish Widows PPP which gave a similar range but cheaper (no initial charge, unlike Std Life) or the Norwich Union PPP (four property funds on that one, all cheaper) or Std Life PPP (three I think they have now with the Select version and the traditional version and a global), again cheaper.

Given the fund choice, the use of a SIPP is a unnecessary expense. £600pm would earn him a much better commission with CM than it would in the SL SIPP.

You do need to do something as the fund choice is poor but I have no confidence in the adviser you are currently using to be able to that. He would have done it already. Also, the £600pm doesnt need to be moved and possibly the SL SIPP doesnt need to be moved as most of the cost is in the intial move into SL and not ongoing. You could get another IFA to take on your case and they can do an agency transfer (gives servicing rights and ongoing commission rights to the new adviser rather than the old one without having to change products) and they can adjust your investment portfolio to suit your risk profile and give you a much better spread.

If you want help on how to present your case to him then post here and all the regs will help. However, the questions you could be asking are those raised in my last post.