Transferring personal pension to SIPP

dunstonh

They have an advisory section, but we are talking about their execution only/discount broking service.

All IFAs can do execution only/discount brokering.

Can the client self invest online directly with a Selestia SIPP?

That comes in July.

If there is a self invest e/o SIPP service at Selestia, what are the charges?

It isnt a SIPP but a unit trust/oeic/sicav based contract. If you need the SIPP features, you take out a SIPP. If you are only using funds, you have the option of SIPP, personal pension or fund supermarket pension. If you want unit trusts and not insured funds, then you have SIPP or fund supermarket pension. If you want protected rights, you have personal pension or fund supermarket pension.

The amc's with Selestia are the same as you get on all funds with HL (and most platforms as they match the standard unit trust amc). However, the IFA (with execution only/discount broker hat on) can rebate some or all of the trail commission which makes the equivalent amc lower than HL. Quite useful for larger funds.

scrooge38

dunstonh wrote: »

Most SIPPS do not invest in anything other than funds. So, having pensions that offer only that side of it isnt going to be an issue for most people. Obviously for those that want the other things, then a SIPP is best but they are in the minority.

Got any figures to back up this assertion, dunstonh? It may be the case that what you as an IFA see is all fund-based, but then surely that's because you sell that type of product, and as I'm sure you would be only too quick to point out, are not authorised to advise on direct equity holdings - so you won't be selling those then. But there are many many people who like the DIY/equity route with the likes of ATS, SIPPDeal, etc. preferring the control and lack of costs these bring.

Scrooge

dunstonh

It may be the case that what you as an IFA see is all fund-based, but then surely that's because you sell that type of product, and as I'm sure you would be only too quick to point out, are not authorised to advise on direct equity holdings - so you won't be selling those then.

The advising of SIPPs to hold direct equities and other assets is authorised and I have arranged a very small number on that basis.

But there are many many people who like the DIY/equity route with the likes of ATS, SIPPDeal, etc. preferring the control and lack of costs these bring.

And the majority of DIY investors use funds. Control and costs have nothing to do with it as costs with SIPPs is usually higher. So that is a smokescreen and control is available with a number of conventional pension products. The DIY market has embraced SIPPs and they buying of funds within the SIPP is very easy and that has probably been a key reason why funds are popular. Plus the SIPP providers for the low cost DIY market need consumers to buy funds as that is where they make their money. Just take a look at HL's site and you will see that it is very focused on funds.

Got any figures to back up this assertion, dunstonh?

I dont have a copy of the slide that gave the figures but it was based on new business into SIPPs post A day which highlighted that before A day it was heavily weighted against funds but post A day funds have become the more popular option.

scrooge38

dunstonh wrote: »

And the majority of DIY investors use funds. Control and costs have nothing to do with it as costs with SIPPs is usually higher. So that is a smokescreen and control is available with a number of conventional pension products. The DIY market has embraced SIPPs and they buying of funds within the SIPP is very easy and that has probably been a key reason why funds are popular. Plus the SIPP providers for the low cost DIY market need consumers to buy funds as that is where they make their money. Just take a look at HL's site and you will see that it is very focused on funds.

To say that control & costs have nothing to do with it is absurd, for these are the main characteristics sought by value-seeking investors. Also you are quite wrong when you say that low-cost providers need customers to buy funds for the commission they offer; what about the low-cost providers such as Alliance Truist Savings and SIPPDeal, who offer transaction based charging and ZERO ANNUAL FEE, and a full repertoire of equities?

Scrooge

dunstonh

To say that control & costs have nothing to do with it is absurd, for these are the main characteristics sought by value-seeking investors.

If they wanted cheap, they would go with stakeholder. SIPPs are not the cheap option for funds.

Whilst an experienced investor wouldnt want a stakeholder, we have seen it on these forums where someone fell for the SIPP hype and transferred their Scot Eq pension to HL and went into HL's balanced managed fund. That fund had worst past performance than the Scot Eq fund they were in each and every year and they were paying 0.5% a year more with HL than they were with Scot Eq.

If you are going to use SIPP features then fine. That is what they are there for. However, for funds they are often not the best option. Particularly for lower risk investors.

Also you are quite wrong when you say that low-cost providers need customers to buy funds for the commission they offer; what about the low-cost providers such as Alliance Truist Savings and SIPPDeal, who offer transaction based charging and ZERO ANNUAL FEE, and a full repertoire of equities?

And how long are they going to survive with those terms now that SIPPs are regulated? Sipps are no longer the cheap unregulated product for providers. HL are laughing as the income from those holding funds is a nice steady increasing income stream. They established it before regulation and can afford to offer the terms they have.

Will a SIPP that charges transaction based charging survive if they dont get many people doing transactions?

This is why a number of SIPP providers chose to close their doors and not enter the regulated side. The smaller providers are at the most risk and those that dont get enough business will have no option to sell up (if they can find a buyer) or increase their charges.

Mojo71

Hi,

Since my thread is still going strong, I have another question related to the current discussion.

It is mentioned that HL are not the cheapest SIPP provider, and that a fund supermarket would be cheaper. I then said that I wanted to go with a bigger, more well-established firm, hence my liking for HL. (or Fidelity fundsnetwork, also they've been poo-poohed above for being lower quality).

How then, does this take into account the cheaper, smaller providers who have/may close their doors to new business because they can't afford to pay to be more regulated?

Basically, how is one covered in the event of a financial institution "going under"? With HL (or any other SIPP), my money is invested in other companies funds, with HL only managing the account and administration. Is my money protected, because it's not actually "with" HL because they're just an intermediary?

scrooge38

dunstonh wrote: »

And how long are they going to survive with those terms now that SIPPs are regulated? Sipps are no longer the cheap unregulated product for providers. HL are laughing as the income from those holding funds is a nice steady increasing income stream. They established it before regulation and can afford to offer the terms they have.

Will a SIPP that charges transaction based charging survive if they dont get many people doing transactions?

Well I think the answer is that there will be the volume for a few players. And the established players like SIPPDeal and ATS will probably be the ones to corner that market. It would be tragic if this facility didn't survive; really it needs to be more mainstream than it is at present. Achievement of critical mass for a few players is therefore crucial.

For the independent value-seeking investor, the way ahead has to be transaction based charging rather than an annual fee. For those who want advice, funds are probably a viable solution, but it should not be forgotten that annual fees, used to at least in part pay trail commission, eat up an absolutely enormous slice of the income on the underlying investments. eg a 1% annual fee will consume around a third of the income on the FTSE-100.

Fees of this size (and I'm sure many are higher) effectively negate over time any tax relief allowed on the initial investment, which means that one is having to put up with all the onerous restrictions of these nauseous products for nothing in return. Why would anyone do that? And bearing in mind that if you compare the SIPP with eg an ISA, the fact that pension income suffers an additional layer of taxation over the ISA means that (25% tax free lump sum apart) there is little tax advantage anyway.

So with onerous fees, huge restrictions, and additional taxation, why would anyone bother with a pension? The only case I can see is free money from an employer.

Avoid pensions.

Scrooge

EdInvestor

Mojo71 wrote: »

It is mentioned that HL are not the cheapest SIPP provider, and that a fund supermarket would be cheaper.

For someone who wants to make regular contrinutions into a SIPP into funds I have yet to hear of a cheaper provider than H-L. Others will be cheaper for shares and investment trusts.

How then, does this take into account the cheaper, smaller providers who have/may close their doors to new business because they can't afford to pay to be more regulated?

It's the larger providers which are cheaper and they will not be closing, indeed some are reducing charges now.

Basically, how is one covered in the event of a financial institution "going under"? With HL (or any other SIPP), my money is invested in other companies funds, with HL only managing the account and administration. Is my money protected, because it's not actually "with" HL because they're just an intermediary?

The fund providers are regulated and protected as are the banks holding the money in the SIPP cash account.Now that SIPPs themselves are regulated, any possible "falling down the cracks" issue - eg when money is between a regulated insurer and a SIPP provider or between the cash account and a fund investment, is now covered