Fees

garybarlowsbeard

Just been looking into a pension for the first time. Didn't realise it was so expensive! I am a 50% shareholder in a limited company and am looking to contribute around £200pm with quite a high-risk profile. How should I choose who to invest with and what sort of fees are standard?

Cheers
GBB

Your_Hero

How you invest is up to you, no one can make that decision for you. You need to decide how much risk you can accept ("quite high" risk is quite subjective) and choose funds accordingly.


What fees are you referring to? There are many types - adviser fee, platform/service fee, fund fees are the most common.

dunstonh

Just been looking into a pension for the first time. Didn't realise it was so expensive

Modern pensions are not expensive. Legacy ones can be when compared to modern options.

I am a 50% shareholder in a limited company and am looking to contribute around £200pm with quite a high-risk profile. How should I choose who to invest with and what sort of fees are standard?

Depends on timescale, capacity for loss, experience and knowledge, how you will review and rebalance in future, if you really understand what high risk means etc.

zagfles

Pensions aren't expensive - you can get personal pensions and SIPPs for well under 1% pa total charge, or maybe a little over 1% if you want the more expensive managed funds.

garybarlowsbeard

I was quoted £500 to set it up and 1% fee.

In terms of risk, I mean high risk as I'm viewing it more as an investment than a pension at this stage. Maybe a 6-8 out of 10 as I understand things?

zagfles

garybarlowsbeard wrote: »

I was quoted £500 to set it up and 1% fee.

In terms of risk, I mean high risk as I'm viewing it more as an investment than a pension at this stage. Maybe a 6-8 out of 10 as I understand things?

Have a look at Cavendish for example http://www.cavendishonline.co.uk/pensions/

dunstonh

garybarlowsbeard wrote: »

I was quoted £500 to set it up and 1% fee.

In terms of risk, I mean high risk as I'm viewing it more as an investment than a pension at this stage. Maybe a 6-8 out of 10 as I understand things?

That seems very reasonable.

With a relatively low amount of £200pm, it will take some time for fund based discounts to kick in (£20k plus is common). After that the 1% would quickly fall to half that.

My 1-10 scale is weighted, as many are, so the mid point is not 5. In terms of losses, how much loss could you tolerate in a 12 month period before getting cold feet? That is probably a simpler way of defining it.

garybarlowsbeard

I think for a year if I was to lose everything that would be bad but not a total disaster.

Re the fees, in a way I just wanted to know if £500 was fairly common and reasonable or if it was worth shopping around. Cavendish are far cheaper but I assume you get what you pay for to a degree and maybe these are different services?

dunstonh

I think for a year if I was to lose everything that would be bad but not a total disaster.

So, lets say you spend 10 years building up a fund and then you lose the lot. Would you accept that?

Re the fees, in a way I just wanted to know if £500 was fairly common and reasonable or if it was worth shopping around. Cavendish are far cheaper but I assume you get what you pay for to a degree and maybe these are different services?

Cavendish operate a limited panel and provide no advice. Hence no advice charge. You pick the pension, the funds and do the admin. The adviser is being paid to give advice. The adviser picks the product type, provider and funds and sets it up for you. You get greater consumer protection on advice than you do non advice. (you cant complain you did the wrong thing if you DIY).

zagfles

garybarlowsbeard wrote: »

I think for a year if I was to lose everything that would be bad but not a total disaster.

Re the fees, in a way I just wanted to know if £500 was fairly common and reasonable or if it was worth shopping around. Cavendish are far cheaper but I assume you get what you pay for to a degree and maybe these are different services?

You rarely "get what you pay for" in financial services (or indeed most other stuff!).

But it depends whether you want advice or not. You can choose a personal pension which includes "lifestyling" options (eg see the Cavendish options), or you can choose a SIPP where you choose your own investments, eg see http://www.hl.co.uk/pensions/sipp - they have investment suggestions for different risk profiles, or you can get an IFA to sort everything for you but they will charge for the advice.

garybarlowsbeard

Ok, I think I might be getting somewhere. Is the issue complicated by the fact that we're company directors so the company would be paying direct into the pension (pre-tax) or could we still use any of these options, eg SIPP and could I go for one option and the otjher director/owner go for another as long as the investment amount was the same?