What is my IFA doing for me

Salster278

I have a pension from a previous employment that I left 17 years ago. That pension was frozen and when I started my new job, I joined the company private pension scheme that I am happy with. My current scheme wouldn't allow 'transfers in' so I just kept it going. I got a statement every year from the frozen pension and was happy enough with the forecast.

When I got divorced three years ago I was awarded a small % of my ex husband's pension which again was unable to transfer to my current scheme so I was left with finding somewhere to put it

Around that time, a local IFA came cold calling and I explained my situation. He helped me sort the 2 pensions and explained his fee would be taken from the commission from the company that we placed the frozen pension and pension share with. Fair enough. This time last year he rang to say he needed to update me and called with some fancy charts and then said he would take the 500.00 fee from the pension fund. I was a bit taken aback as naively I thought he'd had his commission but didn't say anything:o.

We're now a year on and he's made an appointment to 'review' my pension. I have also just had my forecast and the amount in the pot has dropped by 10,000 in value since last year.

So what I'd like to know is for a pension that is relatively small (around 4K when I retire in 9 years), and will never get any further payments, could I just carry on as before letting it look after itself or do I really need to knock 500.00 a year off the fund to pay for this advice?
Thank you

Neverland

Your fund is probably worth £80-100k if you will get £4k a year out of it :eek:

You need to:

- ditch the expensive IFA
- read a few personal finance books
- consolidate the pensions into a low cost SIPP wrapper
- put the money in a low cost tracker fund or two

Through these simple steps you can probably boost your private pension by a massive 20%....

...to £5k a year

dunstonh

could I just carry on as before letting it look after itself

You could do but with no one reviewing it or rebalancing it then the investments will go out of sync and typically become higher risk and non-rebalanced portfolios tend to under perform rebalanced ones.

or do I really need to knock 500.00 a year off the fund to pay for this advice?

Your choice is to pay for the advice or not. Effectively you either DIY or IFA. If you are up to DIY then you can save on that £500 but whether you will do a better of job or not will depend on the effort you put into it and making sure you keep it up.

dunstonh

Note that this poster is an IFA who presumably makes their living out of charging people like you £500 for annual reviews...

Note that this Neverland is troll and clearly has an anti-IFA agenda. Probably unemployed and lives of the state and doesnt understand the concept of someone being paid to do a job.

Neverland

dunstonh wrote: »

Note that this Neverland is troll and clearly has an anti-IFA agenda. Probably unemployed and lives of the state and doesnt understand the concept of someone being paid to do a job.

Actually I have a pro-saver agenda having pretty successfully got free of the leeches in the pension advisory system and managed my family's personal pension funds very successfully by self investing and keeping the costs down

I want to encourage every-one else to do the same and not listen to propaganda from IFAs seeking to make excessive fees off the backs of ordinary people

If anyone here is a troll...look in a mirror :rotfl:

dunstonh

I want to encourage every-one else to do the same and not listen to propaganda from IFAs seeking to make excessive fees off the backs of ordinary people

And instead listen to unqualified individuals with no consumer protection who are free to spout their rubbish on the internet to try and get poor souls who do not understand the issues to use investments which are likely to be unsuitable for them.

If anyone here is a troll...look in a mirror

A troll is someone who posts on a forum to create argument. All you have done since you have joined this board today is post unfounded allegations and a load of incorrect information which you have failed to support evidence for when asked to support those allegations.

You stick to reading the Daily Mail. You would be right at home there.

Salster278

Neverland wrote: »

Your fund is probably worth £80-100k if you will get £4k a year out of it :eek:

It's worth 113K (was 123K last year)

I suppose as I don't have a lot of assets that need managing the fee felt like a lot of money. I always imagined people who had an IFA had complicated tax/investments/savings affairs and I don't!

I'll find out about SIPP wrappers and I will ask him outright what he is giving for the fee.

Thank you

Neverland

sazz1006 wrote: »

Neverland wrote: »

Your fund is probably worth £80-100k if you will get £4k a year out of it :eek:

It's worth 113K (was 123K last year)

I suppose as I don't have a lot of assets that need managing the fee felt like a lot of money. I always imagined people who had an IFA had complicated tax/investments/savings affairs and I don't!

I'll find out about SIPP wrappers and I will ask him outright what he is giving for the fee.

Thank you

Have a look at Vanguard and ishares for the funds and Alliance Trust/Sippdeal/AJ Bell for the wrapper

There is some pretty good stuff on the net for portfolio construction

With 9 years to go to retirement your portfolio should be pretty low risk and therefore low return, so its very important you minimise the fees

jamesd

An 8% drop for last year isn't unreasonable. Nor is a £500 fee for the IFA service on a pot of that size, it's about 0.44% and normal trail commission would have been around 0.5%. Since the IFA is being paid by fee this should also mean that the funds are not paying the IFA trail commission any more. Ask. In a year ask how the market after the Retail Distribution Review has changed and whether having the investments in a different platform would reduce costs.

Hard to say much about the IFA service because you haven't said where the money is invested, both the pension company and the funds and percentages in each fund.

With nine years to retirement it is not true that your investments should be pretty low risk and low return. It'll be a few years yet before it's appropriate to start reducing the up and down movements of the investments. But this also depends on your own personal view of how much up and down movement you'll accept and that's something you should discuss with the IFA.

Take care with phrases like "low cost SIPP wrapper" because SIPPS are usually more expensive than normal personal pensions and are intended mainly for those who want to hold shares, not funds. That doesn't mean that a SIPP might not be appropriate, just that some people will write SIPP when it's not an appropriate choice due to higher costs. But not all SIPPS have high costs either, it's more a case of don't just use standard pension or SIPP, first decide what investments you want to use, then use the best place to hold those investments. That won't necessarily be the cheapest place, things like customer service and dealing speed can matter more.

No way to know whether the Vanguard funds would be useful, depends in part on what you're already using, because there are cheaper options than Vanguard available that you may already be using. You might also be in funds with a decent chance of outperforming the Vanguard trackers but with higher charges as the price to pay for that. It's not simply a case of cheaper is better.

If you do want to switch to tracker funds it'll be useful to know where your money is currently so we can consider the options available there. No point at all in moving away if you already have better tracker options available.

Best to discuss with the IFA. You may already be using inexpensive tracker funds. If not, the IFA should be able to identify the lowest cost place to hold whatever interests you.

Salster278

Thanks for your helpful advice. I guess to goes to show that I'm a complete novice when it comes to any financial matters outside of mortgages and savings. I just needed some reassurance (or otherwise) as to the fee - it hadn't been mentioned until the point when he asked 'how would you like to pay the 500.00'.

I have been a bit naive not asking upfront what the fees would be -serves me right for responding to cold callers!

Neverland

sazz1006 wrote: »

Thanks for your helpful advice. I guess to goes to show that I'm a complete novice when it comes to any financial matters outside of mortgages and savings. I just needed some reassurance (or otherwise) as to the fee - it hadn't been mentioned until the point when he asked 'how would you like to pay the 500.00'.

I have been a bit naive not asking upfront what the fees would be -serves me right for responding to cold callers!

I think investing a pension fund is as easy as arranging a holiday over the internet versus going to a travel agent

Like you read a holiday guide for the place you are going you read a few financial books (anything by John Bogle or Phillip Coggan is good)

There are a lot of vested interests like IFAs who will tell you otherwise how its all terribbly difficult and you need to pay them

You will need to go to an IFA to pick out the right annuity though, when you do retire and do sums on tax free lump sums though

Mind you, I manage the money for all of my family...