Scottish Widows Retirement Account compulsory £650 fee

Kua

So I was keen to pursue the above, then I was eventually told about this compulsory fee. I don't want any financial advice. I want to make my own investment decisions, mostly in trackers if possible. Shpuld I be going for a SIPP? Does a similar fee apply for other similar personal pensions? What about SIPPs? I've considered a YouInvest or Hargreaves Lansdown SIPP and if they don't have this crazy FA fee that will be the clincher.

EDIT - Its frustrating that this isn't made clear from the start because it has a significant impact on my choice!

EDIT 2 - Actually it looks like I should be going for one of the cheap firms in the MSE guide. Can someone give me an idea of the best going there?

Also do Cavendish and Moneyworld work out cheaper than all the others (trying to understand why they are listed separately)? Should I be concerned that I haven't heard of either?

dunstonh

I don't want any financial advice.

Then its best not to use a contract that is retailed via advisers.

Shpuld I be going for a SIPP?

A SIPP or a personal pension through DIY distribution. Not intermediary distribution.

and if they don't have this crazy FA fee that will be the clincher.

They have other fees.

EDIT - Its frustrating that this isn't made clear from the start because it has a significant impact on my choice!

Adviser charges should be disclosed by the adviser when you employ them. However, they would not be disclosed at product level as it is nothing to do with the product.

Kua

I'm inclined towards a Hargreaves Lansdown SIPP. I'm keen to invest in trackers. I'm a bit confused about how you do that, are they categorised as shares or funds or neither or both? Can I invest in them within a SIPP?

RickyC_IFSWP

Trackers are funds, and yes you can invest in them through a SIPP.

dunstonh

Kua wrote: »

I'm inclined towards a Hargreaves Lansdown SIPP. I'm keen to invest in trackers. I'm a bit confused about how you do that, are they categorised as shares or funds or neither or both? Can I invest in them within a SIPP?

HL may not be particularly cheap for using trackers. By the time you have the platform charge and the OCF of the index tracker fund(s), you may well find it is more expensive than a personal pension.

Scottish Widows retirement account with index trackers may be cheaper too.

Kua

I'm trying to decide between a Youinvest SIPP (£20/year. 0.2% annual management charge, £4.95/fund deal) and a Hargreaves Lansdown one (0.45% annual management charge, no charge for fund deal).

I'll only be putting in around £200/month, which makes the HL one attractive because I can still spread it around with no charge on fund deals. However 0.2% is a very attractive AMC...

EDIT - Turns out the difference between 0.2% AMC and 0.45% AMC for the amount I will have in is negligible, suggesting HL is the way to go.

Kua

dunstonh wrote: »

platform charge and the OCF of the index tracker fund(s)

Sorry, not familiar with either of these terms...

I like the idea of being able to invest some directly in individual company stock... so SIPP appeals on that score.

Kua

dunstonh wrote: »

HL may not be particularly cheap for using trackers. By the time you have the platform charge and the OCF of the index tracker fund(s), you may well find it is more expensive than a personal pension.

Scottish Widows retirement account with index trackers may be cheaper too.

Presumably Cavendish (etc) would be even cheaper because there is no Financial Adviser fee?

Sorry, can't quite get my head round how charges are greater on investing in trackers (funds) in a SIPP than in a personal pension.

jamesd

Most personal pensions will not charge you a 0.45% platform fee on top of the fund's own charge.

You've called a 0.45% charge from Hargreaves Lansdown an annual management charge. Do you really mean that you are considering a tracker fund with an annual management charge of 0.45% or are you mistakenly calling the 0.45% HL platform fee an annual management charge?

You've called a 0.20% charge at Youinvest SIPP an annual management charge. Is that really the annual management charge of the fund that you are considering or is it their 0.20% platform charge, which they call a custody fee, that you're thinking of?

OCF is a slightly more inclusive form of AMC that includes more of the fund's operating costs.

At a platform you might find this:

0.45% or 0.20% platform charge
0.15% fund annual management charge
0.25% fund OCF, not on top of the AMC but instead of it.

Total cost for holding this fund: 0.45% + 0.25% or 0.20% + 0.25%.

Trackers are simply investments that track some sort of index in some way. They can be funds, they can also be exchange traded funds. Charging or an ETF is normally based on share charges, not fund charges, but an ETF does have an annual management charge, like a fund.

The personal pension way of doing things would normally have a much lower platform charge. You pay for the extra flexibility that a SIPP offers, but a standard personal pension would not normally allow investing in shares an might also not allow investing in ETFs.

SallyG

http://www.moneymarketing.co.uk/news-and-analysis/wrap-and-technology/hargreaves-and-charles-stanley-defend-pre-filled-fund-choices/2012102.article

SIPP Lite?

Always wondered if I could hack the DIY decisions in a SIPP - now we're spoon-fed.

dunstonh

There are three layers of charges:
1 - adviser charge
2 - product/platform charge
3 - fund charge

when using pension funds you look at the AMC - annual management charge. when using unit trusts/OEICs in a SIPP, you look at the OCF - ongoing charges figure. The AMC with pension funds equates to the OCF on unit trust/OEICS/ITs. you should not use the AMC on UT/OEICs/ITs.

You can avoid the adviser charge if you dont use an adviser. However, do not assume that this will result in lower charges. For example, HL's platform charge is higher than that which an adviser can get.

personal pensions are often priced in what is known as mono-charged basis. This is a single annual charge. Designed to be nice an simple. Many run with fund based discounts. So, when your value gets above a certain amount the charge goes down. They may also run with a wider range of funds which are more expensive and have an additional charge.

SIPPs are far more complicated usually. They often have pages of charges for various tasks and admin duties that are not charged on a personal pension. Look at: http://www.hl.co.uk/pensions/sipp/charges-and-interest-rates You dont get those sorts of charges on personal pensions. This is not picking on HL. That is normal for SIPPs. There are worse examples with pages of charges for various things. here is Youinvest: http://www.youinvest.co.uk/Sipp/ChargesandRates/

So, when you use SIPPs, you need to look at all the charges.

SIPPs are an experienced investor product designed for those that know what they are doing or getting advice. I am not saying this to be rude but advisers have to consider the knowledge and understanding someone has when they give advice. You are trying to bypass advice so I am just giving you a heads up. Your posts suggest that you are not ready to invest in SIPPs as you lack the basic understanding about the charges, the different investment universes available and even basic fundamentals about how the investments work. The potential for making expensive mistakes is much greater on SIPPs than personal pensions.

Based on what you have typed so far, if an adviser was to recommend a self invest SIPP to you, it would be classed as a mis-sale. If you DIY you cant be mis-sold on that basis but really think about what you are doing as it doesnt sound as if you are ready for a SIPP yet.