Question about Independant Financial Advice and opening a SIPP

NearThere

What is the difference between

1, Opening a SIPP (for example Hargeaves Lansdowne - medium risk)

and

2, Going to an IFA and telling them that you want to invest in medium risk.

I know that the SI in SIPP is self invested but there seems to be the opportunity to use pre-selected options when opening a SIPP making options 1 and 2 similar if not the same.

greenglide

The IFA would assess you situation and advise whether this is a sensible this to do? Maybe recommend a personal pension rather than a SIPP? Recommend provider other than HL? Consider whether you want him to manager investments?

It is all down to costs and the importance to you of the investments. If this is your sole pension provision and you expect to amass many hundreds of thousands of pounds in the funds you might consider an IFA vital to minimise risk?

If you have an employer DB scheme that will see you through a comfortable retirement and this is simply a fund to give you an even better retirement then it is a different ball game?

dunstonh

1, Opening a SIPP (for example Hargeaves Lansdowne - medium risk)

and

2, Going to an IFA and telling them that you want to invest in medium risk.

HL dont recommend funds. You have to pick your own investments. An IFA will ascertain your risk profile and not rely on you saying medium risk (as that has no context as one persons medium is another persons high or another persons low). The IFA will then pick the product, provider and investments suitable for you.

Use of an IFA gives you consumer protection regarding suitability. Going DIY with HL means you made the decisions so you dont get that level of consumer protection.

I know that the SI in SIPP is self invested but there seems to be the opportunity to use pre-selected options when opening a SIPP making options 1 and 2 similar if not the same.

pre-selected would indicate that perhaps you are not ready for a SIPP.

NearThere

I have visited an IFA (2 actually) and am awaiting on a proposal from them.

I am still mulling over the original question. I am working on the idea that the IFA will suggest investing in a pension (actually amalgamating 3 existing pensions into one) which will then be in managed investments.

Why not go straight to an HL SIPP and get the IFA to manage the investments.

I realise this may not be popular but that would avoid the IFA's (relatively) high initial charges and settle for the more affordable ongoing charges.

The HL SIPP is simply a product (wrapper?) for the actual investments and it seems to me that HL are very flexible in where the investments can be put and how they can be accessed.

Would this be a good course of action?

dunstonh

which will then be in managed investments.

All investments are managed. Passive is just a management technique following a strategy. It makes no difference to an IFA whether they recommend managed or passive.

Why not go straight to an HL SIPP and get the IFA to manage the investments.

The HL SIPP is expensive. The IFA can get cheaper. Plus, HL wont supply data to the IFA electronically. So, it makes the whole process harder (which would probably lead to higher IFA costs - personally I wouldnt do it as it would not be best advice).

I realise this may not be popular but that would avoid the IFA's (relatively) high initial charges and settle for the more affordable ongoing charges.

You need to look at charges again then. And look at charges for the adviser. Many advisers are pitching their initial charge between zero and £1500 nowadays if you are using them for ongoing servicing.

The HL SIPP is simply a product (wrapper?) for the actual investments and it seems to me that HL are very flexible in where the investments can be put and how they can be accessed.

Would this be a good course of action?

No. It would cost more in annual costs and be inconvenient and would reduce your consumer protection.