Ongoing IFA or not

Rayling

Hi
I have an Aviva Private pension at present the Aviva mixed asset 20-60% which includes 45% equities.

I contribute £265 per month which includes my tax relief and my pension fund is as of today £127,000.

I must admit Ive panicked a few times of late when i have seen my pension fund loose £1000 each day.

I have 9 years left to go before I retire and have again started to think about paying for ongoing advice with a local IFA

I talked over the phone with him yesterday with a view to meeting with him for a free 1 hour chat, he really sounds like he knows whats what and told me he would hold reviews every 6 months and manage my pension by switching funds when appropriate.

For this work he would want 0.75% per annum.

My question is, would this ongoing help be money well spent and I'm hoping would pay for itself just by seeing my fund grow with someone at the wheel who can manage things, or on this type of fund would it be a waste of time paying for an IFA.

I guess I'm being a little cautious as my last IFA was a lazy slob who took the ongoing fee and didnt even contact me in 18 months

Any help or advice greatly appreciated
Thanks

AnotherJoe

If your IFA knows what the market is going to do over the future, he's not really going to be needing to collect 0.75% from you, since he'll be too busy buying his own country

They have no more idea whats going to happen than you do.And if you have no idea, then that statement still stands

Five years ago do you think anyone thought oil would be 30$ a barrel now? I've still got stored somewhere a financial article from about 6 or 7 years ago stating that the mortgage interest rate would be at 12-15% by now.

So, I'd say you'd do as well to go into one of those managed mass market pension funds like HL have, or Nutmeg or similar. They do of course also charge but i think its all bundled in to the cost of their plan rather than an add on on top of a SIPP fee. I dont use Nutmeg but I've played with their site, basically you decide your risk profile and then they put you into one of ten different sets of investments that they will manage. As I say pretty sure HL and others also will do the same sort of thing.

Something like that might give you the confidence your money is being managed by someone that has more of a clue than you, though likely they dont, since no one has.

Rayling

Thanks for the reply, so if HL and Nutmeg charge around 0.45% I am still paying for an IFA and I am not really sure just how beneficial this will be

I guess I would expect no IFA to own a crystal ball but maybe they would still have a better idea than I would, as I really have no real interest in investing I just want my pension to do the best it can so I can retire with a reasonable amount.

dunstonh

IFAs will not mitigate losses or increase gains unless you are badly invested in the first place.

The IFA ensures the investments are suitable for you and keeps your knowledge and information there and makes sure changes are made when needed etc. Many clients will contact the servicing IFA for a sounding board on things as well.

I guess I'm being a little cautious as my last IFA was a lazy slob who took the ongoing fee and didnt even contact me in 18 months

And what happened in that 18 months that needed changing? Many people dont need annual reviews. 2 or 3 years is fine. Then as you get closer to retirement, you may want it more frequent. Or if you have a larger amount and it is a more advanced investment than what you currently have then it will need more.

, so if HL and Nutmeg charge around 0.45% I am still paying for an IFA and I am not really sure just how beneficial this will be

Nutmeg is largely pointless as its the worst of both worlds. It is non-advised but charges an amount that is similar to advised. So, you neither get the cost saving of DIY or the advice benefit of an IFA.

AnotherJoe

I guess I would expect no IFA to own a crystal ball but maybe they would still have a better idea than I would, as I really have no real interest in investing I just want my pension to do the best it can so I can retire with a reasonable amount.
======

This is the thing that's hard to understand. No, they really dont.

They'll just have a set of formula, will work out your risk level, and arrange your funds accordingly. That might mean you end up with shares in say, oil companies,and then it falls off a cliff. They arent savvy enough to know whats happening, because no one is.

Bigger companies are now getting into this act, realizing that actually there arent that many variations, for example there might only be say 10-20 (tops) different "schemes" anyone would fit into, so they can decide which their client is and just put them in one of those, with thousands of people all in the same scheme. So lets say there's you aged 50 witha medium risk level intending to take drawdown when you retire. So, everyone in that bracket goes into "Scheme A" whereas lets say someone 20 years younger with a high risk appetite goes into "Scheme C" and so on.

Thats a lot cheaper to arrange than doing the same but individually but in effect creating those same sort of schemes one at a time.

p.s dunstonh re Nutmeg and HL etc dont they wrap the SIPP fee into their scheme ? Or do they charge on top? If so you can always DIY it by putting your details into Nutmeg, they tell you what they would invest in, then do it yourself. Difference is they woudl rebalance, you'll have to DIY that. If the OP uses an IFA they will pay a SIPP fee plus IFA as well right? Are you saying these companies charge about the same as both combined?

woolly_wombat

Don't forget Pound Cost Averaging. As markets fall you will be getting more for your money, then when markets rise again you will get less.

There's a good explanation here:
http://www.morningstar.co.uk/uk/news/62457/the-benefits-of-pound-cost-averaging.aspx

Nine years is a way off.

maximumgardener

woolly_wombat wrote: »

Don't forget Pound Cost Averaging. As markets fall you will be getting more for your money, then when markets rise again you will get less.

There's a good explanation here:
http://www.morningstar.co.uk/uk/news/62457/the-benefits-of-pound-cost-averaging.aspx

Nine years is a way off.

I agree here 100% .....you have 9 years till retrial then maybe even longer till you require funds from your pension pot. It will go up & down . thats what happens.
keep investing in regular amounts.whatever you can afford

the question on whether an ifa is worthwhile for you seems more complex.
a change over will depend on your exact instructions / requirements.
only after you meet someone you are comfortable working with can you decide the way forward here. you may be asked to transfer your aviva pension to a low cost fund supermarket with a wide fund choice.??:T

tell_it_how_it_is

dunstonh wrote: »

And what happened in that 18 months that needed changing? Many people dont need annual reviews. 2 or 3 years is fine. Then as you get closer to retirement, you may want it more frequent. Or if you have a larger amount and it is a more advanced investment than what you currently have then it will need more.

A round about admittance then that IFAs will still take a punter's money despite doing absolutely nothing for it! Why do you/they not, say, consider at least partial refunds when no review is required or undertaken?

A work colleague of mine paid nearly £60 a month for over three years for supposed 'ongoing advice/review'. That was well over £2k without any contact whatsoever! Plain wrong in my view, to put it mildly.

Rayling

I'd like to thank everyone for your detailed and helpful replies
I cant help agreeing with the above quote:o

greenglide

A round about admittance then that IFAs will still take a punter's money despite doing absolutely nothing for it! Why do you/they not, say, consider at least partial refunds when no review is required or undertaken?

A work colleague of mine paid nearly £60 a month for over three years for supposed 'ongoing advice/review'. That was well over £2k without any contact whatsoever! Plain wrong in my view, to put it mildly.

You can get a plan set up by an IFA without any ongoing service if that is what you want and only pay when a change is to be made. Most people will tend not to require changes annually.

Presumably paying for an ongoing service will make any changes that are made cheaper.

Some people feel safer with an IFA to point them in the right direction, many people desperately need one (just read how many people come on the board proudly stating "I know nothing about pensions ....") and some genuinely don't need one.

Horses for courses.

Rayling

greenglide wrote: »

You can get a plan set up by an IFA without any ongoing service if that is what you want and only pay when a change is to be made. Most people will tend not to require changes annually.

Presumably paying for an ongoing service will make any changes that are made cheaper.

Some people feel safer with an IFA to point them in the right direction, many people desperately need one (just read how many people come on the board proudly stating "I know nothing about pensions ....") and some genuinely don't need one.

Horses for courses.

Thanks for the reply
But I am struggling at the moment to see if an IFA can actually do anything for me that's worthwhile or not
I have no intention of changing, or moving my current pension so i guess no help required there

BUT I am not sure if an IFA could monitor my pension then maybe phone me one day and say " hey I advise you switch funds" to this due to the way markets may be at that time.

Or

"Hey your getting dangerously close to retirement now I recommend derisking to a safer fund"

Or

Maybe I can afford more disposable income per month and considering adding more to my pension contributions he/she could then advise on either yes add this on or no put any extra in an isa for example.

I guess the above scenarios are what I personally would thing IFA was for me.

Or finally I could skip the IFA and ask you good people who are really kind and knowledgeable with your help