DIY Pension or use Advisor

gadgetmind

Jonah01 wrote: »

He wants to charge 1k to set it up and then a 1% annual charge. On top of this there is a annual charge of 0.9% from the pension provider.

So about half of your expected annual return is going to the pension company and IFA rather than remaining in your pension.

A competent DIY investor can get their annual fees below 0.5% pretty easily (even with automatic rebalancing) and IFAs claim to have access to even lower fee funds. Ignore the £1k as that's just noise at this stage and ask the IFA how to get your annual fees *much* lower.

Jonah01

I believe the 0.9% for Scottish life is stuck at that rate with the amount I am investing being so small.

If I scrap the servicing of 1% would it be reasonable to kick this off paying 0.9% annually. I'm not sure how to get that lower other than choose another product.



Thanks

gadgetmind

Well, even just using Cavendish to access Friends Life is 0.7% pa and they have some very good internal funds.

However, IFAs are supposed to be experts at getting better returns, so make it their problem. For small sums, a good multi-asset fund coupled with low fees is what I'd be looking for.

dunstonh

I believe the 0.9% for Scottish life is stuck at that rate with the amount I am investing being so small.

Its not stuck. As you go into the next tier, the charges will drop. The first 30k gets 0.10% discount. 30k-60,100 gets 0.5% discount and there are tiers above.

Scottish Life is not the cheapest on the market for your level but cost is not everything. Their governance and investment options are one of the best around for transactional advice cases.

If I scrap the servicing of 1% would it be reasonable to kick this off paying 0.9% annually. I'm not sure how to get that lower other than choose another product.

most of the providers kick their discounts in around 25k. So, whilst you can get one that is cheaper, over the term, there will not be much in it.

You can ask to see the cost comparison research if cost is your primary focus. However, Scot Life is a good option if he is talking about their governed portfolio/investment strategies investments.

Jonah01

I am happy to pay the 0.9%. Yes its the governed porfolio. Not indexed linked but managed.

Is it worth me trying to find someone with cheaper fees than 1k?

Thanks

Sobryma

I think you might succeed, but for the amount involved I would go direct either passive or active porfolio - a few examples/info:

https://select.bestinvest.co.uk/products-services/multi-asset-portfolio-funds

http://www.hl.co.uk/funds/master-portfolios

http://www.hl.co.uk/news/articles/three-simple-portfolios-of-famous-investors

http://monevator.com/9-lazy-portfolios-for-uk-passive-investors-2010/

spakkaman

I tried going with an IFA.
Found him slow pompous and complacent.
Put a bit of effort into understanding SIPPs and suitable platforms and it was pretty easy from there.
Went with Fidelity as already had ISAs with them and its easy to invest and spread risk. The value of an IFA on straight forward transactions is doubtful unless you are really unable to do a bit of homework and apply basic common sense.
Am now about to set up SIPP for my son.

Jonah01

Hi,

Thanks. I would like to give doing it myself a go.

Does anyone have some good links or references as a starter for understanding the basics.

I suppose I would be so scared of losing my money.

I need this thing setup before the end of the tax year as I want to lower my tax liability with some pension contributions.

Does this timescale sounds realistic if I am doing it myself?

I am going to invest a lump sum and also do a salary sacrifice which will give me the bonus of NI and the company are also going to give the NI they save.

Cheers

gadgetmind

spakkaman wrote: »

The value of an IFA on straight forward transactions is doubtful unless you are really unable to do a bit of homework and apply basic common sense.

As long as "common sense" covers the fundamentals of asset allocation and rebalancing, then I agree.

kidmugsy

Jonah01 wrote: »

Thanks. I would like to give doing it myself a go.

Does anyone have some good links or references as a starter for understanding the basics.

I suppose I would be so scared of losing my money.

John Kay's The Long and the Short of it: Finance and investment for normally intelligent people who are not in the industry (2009).

As for losing money: you will from time to time. What you mustn't do is panic, sell up, and thereby crystallise your losses. You have to stick around for a recovery. You also have to accept that you can find yourself in a long bear market.

"The initial investment would be 15k followed by monthly payments." Consider putting the initial lump into some cautious investments, and put the monthly money into something more volatile. Then don't check how it's doing except annually. More frequent checking leads to fretting and fidgeting, with their emotional and financial costs, respectively.