Can I manage my own pension?

tyllwyd

I'm self-employed, not earning very much, and at the moment I don't have any plans to go back to an employed position.

I've got a small amount (just over £20K) from former pensions when I was employed, and these have been transferred to a personal pension with Skandia, which is managed by my IFA. I don't contribute to the pension, but instead I put a small monthly amount into a stocks and shares ISA, also arranged through my IFA. I can log in and check the investments myself and (although I never have) I can switch the investments myself online.

I'm getting frustrated with my IFA - my pension has only risen by £2K in the seven years he's been managing it, and the six-monthly reviews he promised are currently once a year if I'm lucky. I appreciate that there isn't much money in it for him, but I'm starting to think that if I looked after the pension myself and went for a less flexible but cheaper option, at least I'd save on the management fees.

Would it be possible for me to contact Skandia and tell them I want to move to a cheaper product and handle it myself, or is it more complicated than that?

dunstonh

I'm getting frustrated with my IFA - my pension has only risen by £2K in the seven years he's been managing it,

Your IFA is not responsible for the economic situation that occurred in those 7 years. You may recall that we had the most volatile period on the markets for generations. The FTSE100 is still lower than what it was 7 years ago.

it, and the six-monthly reviews he promised are currently once a year if I'm lucky.

To be honest, you are lucky to get one a year with that small fund value. The IFA is probably close to loss making on you. You dont need 6 monthly reviews on £20k.

I appreciate that there isn't much money in it for him, but I'm starting to think that if I looked after the pension myself and went for a less flexible but cheaper option, at least I'd save on the management fees.

You wont save on management fees. Indeed, they could actually end up being higher. However, you would save on advice fees.

Would it be possible for me to contact Skandia and tell them I want to move to a cheaper product and handle it myself, or is it more complicated than that?

You would need to select the product and provider and request discharge forms from Skandia. So, you can do it. However, you do need to note that Skandia is not an expensive product. On charging level 1 (which you would be on from 7 years ago), you could have some of the cheapest investment options available.

However, you state your frustration is the investment returns. That suggests your understanding of investing is possibly not that strong and you do need to be wary of going DIY on investments if you dont know what you are doing. When the stockmarkets fell over 40%, do you think you would have avoided that?

tyllwyd

dunstonh wrote: »

... To be honest, you are lucky to get one a year with that small fund value. The IFA is probably close to loss making on you. You dont need 6 monthly reviews on £20k. ...

Yes, I take your point, but if he doesn't want to do six-monthly reviews, why did he tell me he was going to? It was his suggestion, not mine!

You would need to select the product and provider and request discharge forms from Skandia. So, you can do it. However, you do need to note that Skandia is not an expensive product. On charging level 1 (which you would be on from 7 years ago), you could have some of the cheapest investment options available.

OK, I take your point, that's a good reason for sticking with what I have.

However, you state your frustration is the investment returns. That suggests your understanding of investing is possibly not that strong and you do need to be wary of going DIY on investments if you dont know what you are doing. When the stockmarkets fell over 40%, do you think you would have avoided that?

Yes, I don't claim to have a high level of investment knowledge. I'm frustrated because the last time we met he told me that his strategy was going to be to move investments in and out of the markets to try to catch any small peaks rather than leaving investments where they are for the long term - and then I haven't heard any more for over 12 months, so I don't feel he is doing what he promised me he would do. (And he couldn't have avoided the stockmarkets falling, but equally he advised me to move all my money from equities to cash at the bottom of the market, which I decided not to do, so if I'd have followed his advice at that point I wouldn't even have the small profit I have got.)

I guess even an email or letter on an annual basis would reassure me that he was keeping an eye on things. (And, again, this is what he promised me I would receive.)

Edited to say: having read this back, I can see my real issue is that I've lost quite a lot of faith in my IFA. I'm not sure whether it's better to muddle on as I am, or make a break with him.

dunstonh

Yes, I take your point, but if he doesn't want to do six-monthly reviews, why did he tell me he was going to? It was his suggestion, not mine!

He shoudlnt do. It would be better to be realistic and up front.

I'm frustrated because the last time we met he told me that his strategy was going to be to move investments in and out of the markets to try to catch any small peaks rather than leaving investments where they are for the long term - and then I haven't heard any more for over 12 months, so I don't feel he is doing what he promised me he would do.

Timing the markets is futile. No-one knows when they will drop or grow. You just know you will get periods of growth and loss and you need to accept you dont know when they will occur. Trying to time markets frequently ends up with lower returns. However, you can rebalance the portfolio and this can take money out of the areas that have gone up the most (or down the least!) and place it into the areas that have gone down the most (or up the least). This can help returns and reduce volatility over the long term. That is common sense to do.

It is possible that is happening without you being aware it is. Check your statement to see if there are periodic buys/sells in funds.

And he couldn't have avoided the stockmarkets falling, but equally he advised me to move all my money from equities to cash at the bottom of the market, which I decided not to do, so if I'd have followed his advice at that point I wouldn't even have the small profit I have got.)

That is not good. It all sounds like someone trying to time markets and you seem to be aware enough to know that is not a good idea.

I can see my real issue is that I've lost quite a lot of faith in my IFA. I'm not sure whether it's better to muddle on as I am, or make a break with him.

I can see that and would agree with you.

Being blunt, at 20k, you dont really need an ongoing service and you are probably better off keeping it simple with a decent multi-asset fund. Bespoke portfolios can offer better returns (or worse as nothing is guaranteed) but it works best and more cost effectively with larger values.

atush

While investing in ISAs is in general a great idea, i'd be pying into your pension as well- at least you'll get tax relief.

As you are SE, are you trading as an LLC or a sole trader?

tyllwyd

dunstonh wrote: »

It is possible that is happening without you being aware it is. Check your statement to see if there are periodic buys/sells in funds.

Nope, the last time there were any changes was Spring 2012. That's what's worrying me - if he had told me he had set things up for the long term, and if I had the impression he was checking on things periodically, I would be more confident in him. I'll have to think about it more.

tyllwyd

atush wrote: »

While investing in ISAs is in general a great idea, i'd be pying into your pension as well- at least you'll get tax relief.

As you are SE, are you trading as an LLC or a sole trader?

I'm happy enough using the ISA rather than the pension, because it gives me more flexibility about when to take the money, and I'm not paying that much in, so the tax relief isn't a big factor. (I'm a sole trader but I only work part time from home, so there isn't a huge amount of scope for tax saving.)

atush

'm not paying that much in, so the tax relief isn't a big factor.

I hope you have a partner to help share/save on costs when you are retired. With only 20K into a pot, not contributing further, and only saving small amts into your ISAs I can't see you being comfortable in retirement on that and one State Pension.

tyllwyd

atush wrote: »

I hope you have a partner to help share/save on costs when you are retired. With only 20K into a pot, not contributing further, and only saving small amts into your ISAs I can't see you being comfortable in retirement on that and one State Pension.

Yes, that's a whole other can of worms. But my OH has a decent company pension so as a family we've concentrated on his pension rather than mine.

zagfles

dunstonh wrote: »

Your IFA is not responsible for the economic situation that occurred in those 7 years. You may recall that we had the most volatile period on the markets for generations. The FTSE100 is still lower than what it was 7 years ago.

I hope most IFAs check their facts a bit better

7 years ago the FTSE100 was 5888. Now it's 6483.

atush

nitpicker