Pensions, what to do?

Raggie

Neverland wrote: »

An IFA will maximise his commission most likely and rip you off

If you want to pay for big houses and big cars for the finance industry and have a pretty small pension go right ahead and rely on an IFA

Unfortunately if you want to do the best for yourself you are going to have learn quite a lot about it, monitor your investment allocation and make your own decisions

Since your pension fund should be the largest finance asset you have I would suggest taking the time to learn about it

Your choice

I dont normaly post arround here.. but had to reply.. :rotfl:

While I will conceed that knowledge is a good thing, and certianly the OP should learn a little about his choices.. your comments regarding the IFA are :eek:

Personally I have a a desire to learn myself... but if I find a medical problem... i will google it.. but I will aslo check with a local professional to ensure the diagnsis is correct...

That local doctor has a nice house and a big car.. should i disregard his/hers years of training on the basis they are sucsessful?

Any professional who is good in their chosen role will by defult have nice house and big cars... does that make them "rip off merchants".. no.. and i think to tar a whole profession that way is not on....

Neverland

Raggie wrote: »

I dont normaly post arround here.. but had to reply.. :rotfl:

While I will conceed that knowledge is a good thing, and certianly the OP should learn a little about his choices.. your comments regarding the IFA are :eek:

Personally I have a a desire to learn myself... but if I find a medical problem... i will google it.. but I will aslo check with a local professional to ensure the diagnsis is correct...

That local doctor has a nice house and a big car.. should i disregard his/hers years of training on the basis they are sucsessful?

Any professional who is good in their chosen role will by defult have nice house and big cars... does that make them "rip off merchants".. no.. and i think to tar a whole profession that way is not on....

Doctors are not paid on commission by drug companies..

...IFAs are paid on commisssion by asset managers...

...also there is no equivalent of the Hypocratic Oath for IFAs

You would think people would learn after all the financial scandals - endowments, Equitable Life, split capital investment trusts, structured products, internet stocks, Bulgarian holiday homes...but no

atush

Doctors do actually get things form drug companies.

A lot of the scandals mentionned weren't IFAs, but FAs. which some like Nevermind tend to be confused abt the difference.

I take every bit of adivce I am given by professionals
(incl doctors) with a grain of salt and investigate myself and always get a second opinion (incl IFAs).

Neverland

atush wrote: »

IFAs are not all sharks as Neverland protests.

...

But I myself like to DIY most of my investments.

...

But you want it done by april 5th.

There probably are some good ones...but many many useless and/or greedy ones

The cost reason would be why you DIY your investments?

The budget is on 21 March, there is a small outside chance that higher rate tax relief could disappear straight after that - it costs the treasury £5-7bn a year after all

You can slag me off all you like but self-investing and minimising costs has got us a very chunky pension after less than 20 years of working

dunstonh

(b) the FSA uses a standard return of 6% per annum when doing projections on investment returns for equity funds (as an example),

No it doesn't. It uses 5%, 7% and 9% on tax wrappers and providers are required to adjust the rates to reflect the potential of the fund. Equities are typically 7% on mid rate.

most actively managed unit trusts have total expenses at about 2% per annum (net return 4% per year)

No they dont

An IFA will maximise his commission most likely and rip you off

Ok, now you have accused me of maximising commission and likely ripping people off with your sweeping statement. Would you like to explain how I do that as you seem to know so much about how I work and other IFAs work?

...IFAs are paid on commisssion by asset managers...

can you let me know where this commission is as I am not seeing it?

There probably are some good ones...but many many useless and/or greedy ones

What is your evidence to back that up. IFAs are responsible for millions of transactions a year yet have under 1.5% of complaints at the FOS. That was 3000 complaints. Yes there will be some greedy ones as there is in any profession. Just like the builder who will quote £30,000 for a job when another will quote £10,000. However, the consumer gets the choice on what they pay. The evidence is that the vast majority of advisers and transactions are handled with integrity, honesty and efficiency.

atush

Neverland wrote: »

There probably are some good ones...but many many useless and/or greedy ones

The cost reason would be why you DIY your investments?

The budget is on 21 March, there is a small outside chance that higher rate tax relief could disappear straight after that - it costs the treasury £5-7bn a year after all

You can slag me off all you like but self-investing and minimising costs has got us a very chunky pension after less than 20 years of working

I didn't SLAG you off, I mearly presented another side (a more Balanced side) to your argument. Maybe you are a control freak like me and want to control your investments? I don't this with 100% (the OH has 2 pensions I dont' touch) but I do with the rest. That doesn't make IFAs bad or greedy.

I agree there is a small chance they could whip away things overnight, but they dont' tend to do this with pensions as they have to win elections so they tend to give more time. They tend to do it with duty on petrol/alcohol though. Often I have filled my tank the day before budget day lol.

Lokolo

Where's darkpool nowadays?

Neverland

dunstonh wrote: »

No it doesn't. It uses 5%, 7% and 9% on tax wrappers and providers are required to adjust the rates to reflect the potential of the fund. Equities are typically 7% on mid rate.

Please illustrate using some out put from your whizzy IFA software how much a typical active fund paying management fees, paying trail commission to an IFA, within the costs of a pension wrapper needs to outperform a Vanguard FTSE world tracker ETF with a TER of 0.3% pa to give the same investment return?

Then the OP can see exactly how much he would be paying for all this "expert advice" everyone is trying to shove down his throat

Lokolo

Neverland wrote: »

Please illustrate using some out put from your whizzy IFA software how much a typical active fund paying management fees, paying trail commission to an IFA, within the costs of a pension wrapper needs to outperform a Vanguard FTSE world tracker ETF with a TER of 0.3% pa to give the same investment return?

Then the OP can see exactly how much he would be paying for all this "expert advice" everyone is trying to shove down his throat

Why with trail commission? You can get the trail back to the investor by paying through a fee route.

In which case, I would say about 0.5-1% outperform max (given typical AMC 1.5% charge, any trail could go back to investor which would be around 0.5%, add the difference of the TER of the tracker is around 0.7%. )

Neverland

Lokolo wrote: »

Why with trail commission? You can get the trail back to the investor by paying through a fee route.

In which case, I would say about 0.5-1% outperform max (given typical AMC 1.5% charge, any trail could go back to investor which would be around 0.5%, add the difference of the TER of the tracker is around 0.7%. )

So using your maths on fees (which I don't really agree with) and ignoring the up-front costs for the fee based advice; Taking the (likely) low end of the FSA performance scale so a 5% pa return...

...the active fund chosen for you by the IFA has to outperform the index by 10% per annum EVERY YEAR just to give you the SAME return at the end of the day...

...1 in 100 funds will achieve that on average over the 40 years the OP has until he retires...

...like I say low cost wrapper - self invest wins every time