Hargreaves Lansdown (HL) Managed Service

tjd08

Hi,

I am only 2 years into saving for my pension. I am 25 and have opted for a SIPP. I have a small Vantage SIPP with HL at the moment (from previous employer), and a small account with Aviva (under a current company pension). However, I find fund selection rather tricky, and the default fund selections perform poorly too. So I was kind of wondering if anyone uses HL's Portfolio Management Services. This isn't something I can look at myself for a number of years, but what kind of returns do these managed services achieve? Has anyone tested the performance of HL's Managed Service against a Fund of Funds, or other managed services? What about against a particular single fund, e.g. Jupiter Merlin Income?

I find I've read about countless funds through my own research, but I just don't have confidence in what I'm choosing, and would love to be able to leave it to an expert, but with varying fees associated with any advice (and rightly so), I'm struggling to know where to build a foundation for my pension. I just want to get it right, heck, I'm sure we all do.

At the moment, I've got a mix of funds in my portfolio, in HL, I have a bit in BlackRock Gold & General (Acc), Jupiter Merlin Income Portfolio (Acc), M&G Strategic Corporate Bond, and Standard Life UK Equity Unconstrained, and in my Aviva Pension, I've just split it 50/50 between Aviva Mixed Investment (40-85% Shares), and Jupiter Merlin Income Portfolio (Acc). The latter I have done because I'm interested to test how they perform against each other.

On an extra note, I find it hard understanding what is considered a 'good' rate of return on a pension. I mean, would 5% per annum averaged over a 40 year period be considered good? Or 8%, or higher?

At the moment, I'm wondering whether I should just put all my eggs into one basket, perhaps with the Jupiter Merlin Income Portfolio (Acc) fund, with as little as £5k in a pension, does this seem logical or silly?

Thanks in advance.

Hargreaves_Lansdown_representative

Hi

Please note my vested interests, I work for Hargreaves Lansdown. This aims to be informative without being overly advertorial.

The Portfolio Management Service is a financial planning and investment management service. After an indepth consultation with an HL financial practitioner, assuming the service is right for you, your money is invested in the appropriate portfolio and then managed for you. How the service works and the fees for this service are detailed on the HL website.

Alongside the other investment research, another option is to use the range of model portfolios on our website. This saves you the cost of the advice. You don't benefit from the individual, personal consultation and advice, and you make all your own investment decisions, but they are designed for investors who are looking for for a bit of a steer.

In simple terms, the more risk you take with your pension fund, the greater the reward should be over the long term, although this is not guaranteed. Stock market returns have averaged around 9.2% per annum since 1900 (source: Sarisin) although the markets never grow in straight lines, and your returns could be lower than this. I think 6% as a long term average return after charges is a good starting point.

When making your investment choices, bear in mind you are aged 25 and therefore have at least 30 years investing before you can access your pension fund. Therefore you can probably afford to choose investments in areas which are volatile (risky) if you wish.

Multi-manager funds are more expensive than stand alone unit trusts/ OEICs. That said the Jupiter Merlin range has a good record of investment returns despite being one of the more expensive funds. Past performance is not necessarily a guide to future performance. Multi-manager funds tend to suit those who are looking for a "ready made" but not bespoke, portfolio, and often those with relatively modest pension pots.


Danny Cox
Hargreaves Lansdown

jem16

tjd08 wrote: »

So I was kind of wondering if anyone uses HL's Portfolio Management Services.

There have been a few posts on here from people who have used HL's managed service and been disappointed to find that they have been placed in HL's own funds.

However do also remember that with HL's SIPP you are actually paying for the ongoing cost of an IFA without actually receiving any advice, as part of the amc of each fund includes 0.5% to the IFA. It will be interesting to see how this changes in light of RDR and the Platform Review.

If you do need help then use https://www.unbiased.co.uk for an IFA in you area. You could perhaps see more than one and see what they are offering.

jamesd

Danny,

Does the Portfolio Management Service provide independent financial advice and hence normally result in a recommendation to use a platform other than Hargreaves Lansdown, because of the high costs of holding the same funds at Hargreaves Lansdown compared to alternative platforms like Skandia?

There was an interesting piece about pensions in the Investment Times recently, about transparency of costs at Hargreaves Lansdown. The last time I asked Hargreaves Lansdown to tell me the amount of remuneration Hargreaves Lansdown was receiving for each fund I hold there Hargreaves Lansdown refused to provide that information. Has Hargreaves Lansdown changed its policy so it is now willing to provide that information or is this a misleading financial promotion that is falsely claiming price transparency that doesn't exist at Hargreaves Lansdown?

Hargreaves Lansdown does many things right, particularly in the area of customer service. Sadly cost transparency has not been one of its strong areas, being sufficiently bad to be a poster boy example of why the FSA found it necessary to include execution only platforms in the RDR changes.

tjd08

Thanks to all for your replies so far... especially Danny (I've read your articles a number of times!)... however.. can I possibly steer this back to my original train of thought...

Is anyone actually using HL's Managed Service (and if so, what are you views here), and is anyone able to provide a breakdown of the performance of their Managed Service account (after all fee's) over the past several years?

I find it very difficult to see through the sales bias and fee structures with all this (both on an advice level, and annual fee's and whatnot for funds). I really don't have a bad word to say about HL.... But... ultimately, HL, or any other Managed Service provider, should be able to provide an example breakdown of how their MS has performed for clients over the past 5-10 years based on a range of risk scenarios, and make it clear how this MS has performed against a benchmark, whether it be their own Fund of Funds, some form of index, or a (range of) fixed fund selection.

I fully accept MS requirements differ from client to client, from risk attitude to the invested sum, chosen investment plan and a whole host of other bits, but it should be entirely possible to provide an example breakdown of common setups.... making it easier to see whether a MS is a good investment or not.

My gut instinct is that a MS isn't cost-effective, which is why I thought I'd ask here.

Many thanks again.

tjd08

Gotta be done... bump?

quattro2

Hi, I'm in a similar situation & i've decided to use salty dog investor. This company gives you a comprehensive list of fund performance on a weekly basis so you can track & switch funds to suit your attitude to risk, also its on a 2 month free trial after that its £25 per week well worth a look in my opinion.

dunstonh

The difference between HL and salty dog is that one has to perform due diligence and is regulated and brings a certain level of consumer protection. The other has to do none of that.

quattro2

hi Dunstonh, what you said is wrong, salty dog is a tool to help you run a sipp & not give any form of advice or is it a pension. What it does, is chart all the funds, oeic's & etf's available on a week by week basis showing which are performing best so you can manouvere your assets to suit which areas are performing best. It is quite clever in its simplicity, although to be fair it took me a little while to get my head round it at first. Also salty dog does not need to be regulated, as it only charts the investments, the end decision is up to the individual based on facts & performance of the investments. It's free to try then £25 per month inclusive of VAT without being tied in, i'm in my third week with them whilst my best invest is being set up & it looks like a good set up to help novices like me.

dunstonh

what you said is wrong

what bit?

salty dog is a tool to help you run a sipp & not give any form of advice or is it a pension.

Exactly. It does not have to perform any due diligence. It does not offer any consumer protection.

It is a provider of information as you say but the information is not just cold facts on performance which you can get on the likes of Trustnet for free. It leads people towards a style of investing or using certain investments. Of course, you can ignore all that but then why pay £25pm for something you are going to ignore?

The service is not comparable with HL. Salty Dog is a tool to aid DIY. If you used the HL SIPP to follow Salty Dog's processes then you would end up paying more than you would with most IFAs. If it is what you want, then fair enough. I have no issue with people buying any product or service that they want and know the pros and cons of.

quattro2

All of it. what you said was wrong because you put both products as like for like in one sentence, the products are different, as you know one is a wrapper for investments the other is a tool for gauging performance of funds. The OP says he is struggling to understand all the different choices of funds available & is looking at alternatives, i've offered an alternative to look at for free, you just steam in with an off the cuff remark which bears no relevance.