Is the entire financial services industry only out for themselves?

gadgetmind

Moby wrote: »

the vagaries of the market should be kept out of public services in my opinion

I'm sure that if I worked out what you actually meant by this, then I would disagree with you.

jamesd

Moby wrote: »

the vagaries of the market should be kept out of public services in my opinion:)

Except for the state pensions, pensions and other investments aren't a public service, so if you meant to include pensions in that it'd be worth saying so.

I disagree about competition for many public services, competition between private sector and public sector can be a good thing. Not always.

fugglestick

bigfreddiel wrote: »

every day now we hear about irregularities in the financial services industry beit, libor fixing, money laundering by hsbc, fund managers charging exhorbitant fees and now its the pension industry taking a slice of your money - take a look at the moneybox live page here:

http://news.bbc.co.uk/1/hi/programmes/moneybox/9739627.stm

fj

In response to BIGFREDDIEL post, http://news.bbc.co.uk/1/hi/programme...ox/9739627.stm

I checked up on my own investment.

I have a Self Investment Personal Pension, MPS, whatever that is with Brooks Macdonald, but when I check the fees they are working out at about roughly £250 plus vat every 3 months.!!!!! The fund is only 65K. and has made £1900 between 1/7/11 and 1/6/12. Yet their invoiced fees, including VAT is £1500 for the 12 months....What money they are making is being swallowed up in fees it seems. Is this a realistic charge? Anyone any guidance on this please?

Thanks

:eek:

l

gadgetmind

fugglestick wrote: »

Is this a realistic charge? Anyone any guidance on this please?

1500/65000=0.023=2.3%

2.3% is *huge* amount of fees to pay, and my guess is that there are loads of other fees that you don't know about.

What is your SIPP invested in?

The total fees (and yes, it is total, I'm anal) for my SIPP work out to 0.482% pa. However, you'd have to learn how to manage your own investments to achieve that, or be happy with a passive approach.

Linton

fugglestick wrote: »

In response to BIGFREDDIEL post, http://news.bbc.co.uk/1/hi/programme...ox/9739627.stm

I checked up on my own investment.

I have a Self Investment Personal Pension, MPS, whatever that is with Brooks Macdonald, but when I check the fees they are working out at about roughly £250 plus vat every 3 months.!!!!! The fund is only 65K. and has made £1900 between 1/7/11 and 1/6/12. Yet their invoiced fees, including VAT is £1500 for the 12 months....What money they are making is being swallowed up in fees it seems. Is this a realistic charge? Anyone any guidance on this please?

Thanks

:eek:

l

From the Brooks Macdonald website, MPS (Managed Portfolio Service) means that they actively manage your portfolio rather than just for example hosting it as a SIPP managed by yourself.

I would have thought that using a portfolio management service was rather OTT for what is in the overall scheme of things a fairly small pension fund and would have thought you would have been better off choosing a range of pension funds, possibly with the assistance of an IFA, within a simple Personal Pension.

So my initial conclusion is that their fees for what you are asking them to do are reasonable, but that you are paying for a service you dont really need.

fugglestick

Thats very interesting...I did chuck a load of old investment policies into the pot at their recommendation. Their performance summary report shows -7.72% since 21/1/11, The SIPP is a pretty big spread, UK fixed interest, Int.f.I, UK Equities, N American Equities, Japan & Far East 7 EM, Int. & Themetic, Hedge Funds & Cash.
All it does seem is an awful lot of buying & selling and very little return to me.Not being greatly financially minded, I was told I couldn't handle my pension affairs without an IFA, seems a licence to print money for them as they quote anywhere from £100 to £250 per HOUR for their advice..... Pity I couldn't just draw it all out as cash...

Linton

fugglestick wrote: »

Thats very interesting...I did chuck a load of old investment policies into the pot at their recommendation. Their performance summary report shows -7.72% since 21/1/11, The SIPP is a pretty big spread, UK fixed interest, Int.f.I, UK Equities, N American Equities, Japan & Far East 7 EM, Int. & Themetic, Hedge Funds & Cash.
All it does seem is an awful lot of buying & selling and very little return to me.Not being greatly financially minded, I was told I couldn't handle my pension affairs without an IFA, seems a licence to print money for them as they quote anywhere from £100 to £250 per HOUR for their advice..... Pity I couldn't just draw it all out as cash...

The sort of management you are paying for seems more appropriate to £600K rather than £60K. Even £250/hour as a one-off fee to set up something simple would be much cheaper than what you are paying now. The only ongoing management you need if you cant do it yourself is at the most an annual session with an IFA to review your portfolio.

dunstonh

I have a Self Investment Personal Pension, MPS, whatever that is with Brooks Macdonald, but when I check the fees they are working out at about roughly £250 plus vat every 3 months.!!!!! The fund is only 65K. and has made £1900 between 1/7/11 and 1/6/12. Yet their invoiced fees, including VAT is £1500 for the 12 months....What money they are making is being swallowed up in fees it seems. Is this a realistic charge? Anyone any guidance on this please?

Why are you using an expensive, advanced option? It is geared towards larger funds/investors. Not someone with a smaller fund like yours.

Not being greatly financially minded, I was told I couldn't handle my pension affairs without an IFA, seems a licence to print money for them as they quote anywhere from £100 to £250 per HOUR for their advice..... Pity I couldn't just draw it all out as cash...

The problem is that you are paying the charges for a more elite service. Akin to employing a servant in your house. An IFA would be a lot cheaper than that as would be doing it yourself.

gadgetmind

fugglestick wrote: »

I was told I couldn't handle my pension affairs without an IFA.

Who told you that and why on earth did you believe them?

You can't ride a bicycle until you learn, but learning to manage your own investments doesn't take much longer and (usually) involves less bruising.

Unless those fees are paying for a service that has the combined skills of Warren Buffet and Mystic Meg, then those fees will consume half of your returns in good times, and turn break-even (at best) into big losses at other times.

Aegis

fugglestick wrote: »

In response to BIGFREDDIEL post, http://news.bbc.co.uk/1/hi/programme...ox/9739627.stm

I checked up on my own investment.

I have a Self Investment Personal Pension, MPS, whatever that is with Brooks Macdonald, but when I check the fees they are working out at about roughly £250 plus vat every 3 months.!!!!! The fund is only 65K. and has made £1900 between 1/7/11 and 1/6/12. Yet their invoiced fees, including VAT is £1500 for the 12 months....What money they are making is being swallowed up in fees it seems. Is this a realistic charge? Anyone any guidance on this please?

Thanks

:eek:

l

It's probably worth asking what the IFA is taking out of that fee compared with the investment manager. £1,250 inclusive of VAT for a year is 1.9%, so that represents a fee of around 1.54% before VAT. It might well be 1.5% + VAT if you've provided round figures. In other words, not much different to a standard retail OEIC, and if the IFA is taking a cut of 0.5% and the SIPP is taking a cut as well, then it's not unreasonable charging, it's more an unfortunate consequence of bizarre VAT regulations which make OEIC management fees VAT exempt but discretionary portfolio fees chargeable.

However, as mentioned above, you can definitely find cheaper offerings out there if you don't feel the performance is justifying the charges being levied.