Moving my personal pension

dunstonh

Well I seem to be in a minority of 1 on the fairness of the 3.00% charge for what appears to be a very straightforward piece of work for the IFA.

Please provide your costs, risk and liability that you have used to come by that decision.

The managed funds your pension would normally be invested in have annual charges of 1-2% which is on top of your pension providers admin charge of 1.06% (or maybe 0.45%...) and then the IFA wants 1.0% on top of this.

Wrong. Already covered in posts above. Also, who says they are managed? Scot Life have a range of index trackers at 0.45% as well as internal managed funds at that price and external funds which cost more.

In contrast you could have have a SIPP with Hargreaves Lansdown (or similar) that charge 0.5% admin and invest in tracker funds that charge only 0.3% annual fee. Break even is then only 4% growth.

So, more expensive than Scot Life then.

gadgetmind

The 0.5% annual HL fee (capped at £200 pa in a SIPP) is for equities (including ITs and ETFs). The trackers are charged for differently via a £2 pcm per tracker charge. This makes holding multiple trackers quite expensive, hence the popularity of the Lifestrategy trackers.

BestInvest have a £120 pa custody fee that covers holding multiple Vanguard trackers, equities, ETFs, etc. If you're OK with higher fee trackers, BestInvest don't currently impose any annual fee.

(Of course, all of this is subject to change post-RDR.)

However, the OP gives no impression of having any desire to go the DIY route, so we're really comparing two different options where one has more than likely already been ruled out by the customer!

dunstonh

However, the OP gives no impression of having any desire to go the DIY route, so we're really comparing two different options where one has more than likely already been ruled out by the customer!

This is the thing. HL includes not cost of advice but does have a cost of retail on top of the clean position. The adviser has a cost of advice which will include cost of retail on the clean position. It is two different services.

gadgetmind

dunstonh wrote: »

It is two different services.

True, but way down past all those levels, it's the same underlying equities, bonds, property, etc.

I prefer to get as close to "the works" as I can whereas others take comfort from fancy wrappers, star managers, and service that comes with a handshake and a smile.

I accept that for the fees I'm prepared to pay, I'm not going to get anything beyond a slick web site, and even this is utterly irrelevant to my needs.

Perhaps we're starting to see a gap in the market for a *real* low-fee SIPP/ISA provider?

jem16

ZacSpeed wrote: »

The managed funds your pension would normally be invested in have annual charges of 1-2% which is on top of your pension providers admin charge of 1.06% (or maybe 0.45%...) and then the IFA wants 1.0% on top of this.

I think the problem here is that you (and quite possibly the OP) are not understanding the charges for Scottish Life and trying to steer the OP down a so called low cost SIPP DIY path whilst also comparing tracker funds with managed funds. This is not really helping the OP who may get the wrong impression.

Scottish Life have a base annual management fee of 1% which includes a range of 38 internal funds with no extra charge on top. This base charge reduces depending on the amount invested. from above £28,300 this base charge reduces to 0.5%. For some IFA firms they may have negotiated a further discount as mania112 said it was 0.45% after £26k.

Info here;

http://www.scottishlife.co.uk/scotlife/UploadedFiles/65L1_7.pdf

On top of this charge there is an extra charge for 120 external funds. For example Invesco Perpetual High Income would be an extra 0.7% on top of the base charge. Normal amc for this fund is 1.5%. So Scottish Life with no discount is 1.7% but with a discount is 1.2%. Other external funds have a different on top charge.

The OP mentions an annual management charge of 1.06% plus investment charges for each fund on top. With a fund of £31,298.77, this would suggest the 1.06% is using external funds and that the 1.06% includes the extra charge.

In contrast you could have have a SIPP with Hargreaves Lansdown (or similar) that charge 0.5% admin and invest in tracker funds that charge only 0.3% annual fee. Break even is then only 4% growth.

A tracker with SL with a £32k fund would be 0.45% (or at most 0.5%) so that's cheaper than what you are suggesting with HL (not that HL actually charge this way for trackers at the moment - plus it will probably change by the end of this year).

Anyway you imply you haven't agreed to the charges in writing so think you have a strong position to negotiate a reduced fee for completion or fair payment for work completed so far.

If it's already got to the recommendation stage, the IFA will have done a good bit of the work involved. The actual transfer is small in comparison. The charge seems fair for advice to me and the SL pension certainly isn't as expensive as you make it out to be.

For an advised pension the charges seem fine. The OP doesn't seem to suggest he/she wants to DIY and nor is the DIY route as cheap as you imply.

jem16

feesarefare wrote: »

Hello Jem

Hello feesarefare - long time no see. I hope you are well.

I think you will find things have moved on, charges have come down dramatically, especially over the last few months.

I know charges have changed with the introduction of clean share class funds but perhaps you could elaborate how charges have come down dramatically, particularly in the DIY market?

feesarefare wrote: »

So why does the IFA operate in a way that allows him to do all the work (which I would agree is a good bit) without getting commitment to pay first.?

I would agree that this would be foolish. However I'm not sure that we know how the IFA in this case is operating as the OP hasn't come back to update us. He seemed to suggest that it was never agreed but it would be interesting to hear from the OP again.

jem16

feesarefare wrote: »

It was the clean share classes I was referring , TERs have been slashed.

Yes with the clean share classes, the TER has been slashed but only because the fund manager's fee has now been separated from the platform fee and IFA fee.

So for a typical clean share managed fund you would have the fund manager's fee of 0.75%. What would the platform fee be? I know you did use Elevate as your platform - are you still using them?

Then you would have the IFA fee - either percentage or fixed per month.

Would this work out as a dramatic reduction over the previous bundled charges?

jem16

feesarefare wrote: »

In my original post I was referring to your comments with regard to fund charges within a DIY SIPP.

That's why I was a little confused. It's only recently that some of the DIY providers have started introducing clean share classes, with at the moment HL being a notable exception which is the DIY SIPP being mentioned. Up till a couple of weeks ago or so, none of the DIY platforms were offering clean share class funds.

So yes in some SIPPs it was possible to get a discount on the IFA fee which might take your typical managed fund down to 1.2% amc ( if full discount given). However no advice and no consumer protection on DIY. Whereas with SL it's 1.2% with advice and consumer protection. Up until 1st January HL offered no discount on their SIPP funds.

I'm still interested to hear how it's a dramatic reduction on prices. Before you had bundled prices with disounts from part to full being given on the trail commission. Now you have fund provider's charge ( clean share class) plus platform charge. For managed funds it's pretty much the same. For tracker funds it's an increase.

Not a bad way to go in this case as cant see where the IFA could add value for the extra 1% he is charging.

Again not quite sure if it's 1% extra. The normal IFA fee of 0.5% was always part of the bundled fee. So is it an extra 0.5% on top with the other 0.5% being included?

Howwever I'm not sure that the OP is ready for DIY to be honest.

Well remembered about Elevate btw

So are you still using them?

jem16

feesarefare wrote: »

Maybe I'm wrong -just would have thought cheap DIY sipp wrapper and clean funds = much cheaper than before?

My apologies - I thought you knew that charges had reduced dramatically when you made this post.

feesarefare wrote: »

Hello Jem
I think you will find things have moved on, charges have come down dramatically, especially over the last few months.

My understanding is that for most managed funds using DIY (SIPP or otherwise), nothing much has changed except that charges are more apparent and now explicit. For most tracker funds it's become more expensive.

I was hoping that you were going to have some knowledge that DIY charges were actually much cheaper than before and that my understanding was wrong.