wife's pension fund review - advice needed

Craig_W_2

My 41-year-old wife has four funds with Friends Provident and wants me to review her pensions (a task for which I'm not exactly overqualified).

She has three stakeholder funds and one personal fund. All are invested in FP's "Stewardship Fund" - an ethical fund classed as "medium +" risk. She is very keen to have an ethical pension.

Questions:
- how does this fund compare to other ethical funds? I've tried to check on the Internet but there are a confusing plethora of similarly named funds and I'm unsure which is hers.
- how does she go about switching funds? Is it simply a question of choosing a better performing one, applying to it and stopping the old one?
- she currently goes through a financial adviser for everything to do with her pensions. Is this necessary and/or desirable? Is it more expensive to do this in terms of charges etc? Or is it just as easy for us to make any changes necessary directly?

Sorry for all the numpty questions. Disdainful replies are expected!

Any help much appreciated.

dunstonh

- how does this fund compare to other ethical funds? I've tried to check on the Internet but there are a confusing plethora of similarly named funds and I'm unsure which is hers.

Depends on her ethics. Ethical funds cover different areas to cater for different peoples views on what is ethical. It certainly isnt the best ethical fund in the category but she is not exactly got a lot of choice on a stakeholder pension and is probably as about as good as you can get there. (subject to her ethics matching the fund ethical stance)

- how does she go about switching funds? Is it simply a question of choosing a better performing one, applying to it and stopping the old one?

What is your definition of a better performing fund? A fund that has just lost say 20% could be the best fund to be in. Even if another has gained say 2% over the same period.

- she currently goes through a financial adviser for everything to do with her pensions. Is this necessary and/or desirable?

It is not necessary. You should avoid using an FA. However, the choice should then be either an IFA or DIY. If you DIY then you need to know what you are doing and why. if you dont you could make a right pigs ear of it. If you dont feel you can do it then use an IFA.

Craig_W_2

Thanks for the reply, dunstonh.

dunstonh wrote: »

Depends on her ethics. Ethical funds cover different areas to cater for different peoples views on what is ethical. It certainly isnt the best ethical fund in the category but she is not exactly got a lot of choice on a stakeholder pension and is probably as about as good as you can get there. (subject to her ethics matching the fund ethical stance)

Actually she has four pots: the larger portion is a "personal pension", the smaller a "stakeholder". Does this make a difference? What sort of fund or product should we be looking for and where?

dunstonh wrote: »

What is your definition of a better performing fund? A fund that has just lost say 20% could be the best fund to be in. Even if another has gained say 2% over the same period.

I know past performance is no guarantee of future performance but if that is not a good measure of a fund, what is? I mean, clearly, all of us are seeking a fund that achieves above average growth. If we don't use past performance as an indication of future prospects, what do we use?

dunstonh wrote: »

It is not necessary. You should avoid using an FA. However, the choice should then be either an IFA or DIY. If you DIY then you need to know what you are doing and why. if you dont you could make a right pigs ear of it. If you dont feel you can do it then use an IFA.

My mistake, she has been using an IFA but she doesn't know what or how she's paying him or what for.

dunstonh

What sort of fund or product should we be looking for and where?

I cant say as rules prevent but typically, if you want ethical investing, you would look to a platform personal pension or SIPP as that is where the bulk of the ethical funds are. Insurance company pensions tend to offer a token ethical fund.

I know past performance is no guarantee of future performance but if that is not a good measure of a fund, what is?

It has a small element in filtering but where you invest is more important. Over the long term, over 90% of future return will be down to asset/sector allocation.

Depending on how much you want to manage the investments yourself or leave it to someone else will depend on how you invest going forward. If you take an economic cycle and just look at UK equity, there will be times the Recovery funds are best or equity income or small cap or large cap. So, if you take a "guess" on what is happening next in the cycle, you can tweak to match your views. You may be wrong but if you are going to use those sort of funds, you need to be monitoring and moving more frequently.

jamesd

Check the range of investments that interest her in the personal pension and stakeholder pension. Check the charges for those investments. Move the money to whichever one offers the best combination of desired investments and costs.

The Friends Providen Stewardhip Fund has an investment policy that I regard as unethical so I wouldn't want to be using it.

Craig_W_2

Thanks, james. Interesting. Is it their anti-nuclear power stance you oppose?

Can I just ask, how do I know how the "FL Stewardhsip Fund" (which is how it is written on my wife's docuemnts) is doing? There are a plethora of similarly named funds listed under FL on the financial sites and the only one with that exact name has a unit price totally different to that quoted on my wife's pension.

jamesd

That's one of them, there are others. Lack of a stated policy on onshore wind power generation with its adverse environmental effects is also a concern, since the renewable power policy implies that it might be looked on favourably rather than unfavourably. There are also things like an absolute ban on producers of recreational products like alcohol, betting or erotica as their main business. That aspect seems to have been written for certain religions more than ethics.

sorcerer

Why don't they have any unethical funds? :-) , I would totally invest in that!

gadgetmind

sorcerer wrote: »

Why don't they have any unethical funds? :-) , I would totally invest in that!

Many equity income funds are rather heavy on tobacco, booze, gambling, guns, oil and (even worse!) utility companies, so you can't go far wrong with one of those!

margaretclare

sorcerer wrote: »

Why don't they have any unethical funds? :-) , I would totally invest in that!

Because, as the name 'Friends Provident' implies, they were Quaker in origin. Quaker = Society of Friends. Think Rowntree, who built a workers' village without a pub. Think Fry, Cadbury - Elizabeth Fry was a prison reformer. Chocolate rather than alcohol.

Hargreaves Lansdown have a list which they call 'Wealth 150'. If you look at them individually they clearly state what they invest in. Take your pick.

Why doesn't your wife know what she's paying the IFA for? I thought that it was mandatory now for clear detailed explanations of what you pay for.

Unethical? I wonder where the Syrian government is getting all its armaments from, to shell their own people, unarmed civilians, power supplies to babies in incubators? That's about as unethical as you can get - maybe you should invest there.

jamesd

sorcerer wrote: »

Why don't they have any unethical funds? :-) , I would totally invest in that!

Try Morgan Sinshares, subsquently renamed to Morgan Funshares. That particular one went out of business in 2003 though.

You might consider:

• the Vice Fund (VICEX) which invests in tobacco, gambling, alcohol, and defense stocks
• ISE SINdex (SIN)

For a more readily available UK choice you might consider Invesco Perpetual Income, which has a high percentage of tobacco companies.