Pension Charges & Fees - help

wiltshiregirl69

I have spent some time calculating the charges for one of my pensions - which are:

1. Old Mutual Wealth Fees - 0.357%
2. Financial Advisor fees - 0.5%
3. Morningstar (active/passive fund charges) - 0.73%
4. Morningstar annual Management Fee - 0.36%

Total = 1.947%

Is this usual or high? I feel uncomfortable with the financial advisor charge of 0.5%. Especially since he charged £770 for the review in the first place (in 2014) and advised a change of the pension to an actively managed morningstar fund (within the OMW wrapper). The fund is worth around £68k at the moment and I contribute approx £700/month.

bigadaj

That's pretty high, but if you are using an advisor then his rate is probably below what you would expect in that fund size.

For comparison using a platform and diying with simple, basic tracker style funds should cost around 0.5%.

tacpot12

The Old Mutual Fees are about right for platform fees.
The Fees for the Morningstar are an odd combination. I've not come across the Morningstar Funds, and can't find them on either the Morningstar or Trustnet websites, but an average of 1.09% per annum for a balanced portfolio is in the normal range, but can be improved upon.
The Financial Adviser fees are low for a discretionary management service and high for an annual review service. What are they doing for the money?

bigfreddiel

tacpot12 wrote: »

The Old Mutual Fees are about right for platform fees.
The Fees for the Morningstar are an odd combination. I've not come across the Morningstar Funds, and can't find them on either the Morningstar or Trustnet websites, but an average of 1.09% per annum for a balanced portfolio is in the normal range, but can be improved upon.
The Financial Adviser fees are low for a discretionary management service and high for an annual review service. What are they doing for the money?

I often wonder how advisors justify their fees, and why do they relate to the size of the pension? fj

bigadaj

tacpot12 wrote: »

The Old Mutual Fees are about right for platform fees.
The Fees for the Morningstar are an odd combination. I've not come across the Morningstar Funds, and can't find them on either the Morningstar or Trustnet websites, but an average of 1.09% per annum for a balanced portfolio is in the normal range, but can be improved upon.
The Financial Adviser fees are low for a discretionary management service and high for an annual review service. What are they doing for the money?

Ifa fee of £340 a year is high?

dunstonh

Charges are ballpark. In fact, the adviser charge is a tad low. 0.5% for a sub £100k fund is low nowadays. It is normal for £100k plus.

Fund charges are ballpark (OMW have superclean funds including trackers at 0.1% and managed funds at their normal price and some superclean). So, nothing wrong there.

OMW's charge is ballpark. Some cheaper, some more expensive but this is right in the middle.

3. Morningstar (active/passive fund charges) - 0.73%
4. Morningstar annual Management Fee - 0.36%

Not sure what you mean here. There is no morningstar charge with OMW. You have platform, fund and adviser. Your total figure is not correct.

I feel uncomfortable with the financial advisor charge of 0.5%. Especially since he charged £770 for the review in the first place (in 2014) and advised a change of the pension to an actively managed morningstar fund (within the OMW wrapper).

I wouldnt do it for as cheap as you are paying. The £770 was for the initial review. The 0.5% is for ongoing. And again, morningstar have nothing to do with it.

wiltshiregirl69

The charges are straight from the info sheet presumably Morningstar managed fund chosen against my risk criteria. OMW platform charge and financial advisor charge. It includes only an annual view I think, which I haven't had this year. I'm looking into this as thinking I need a new chartered financial planner to help with all my finances and I may wish to try and obtain lower charges on thus fund and transfer after new advice.

dunstonh

The charges are straight from the info sheet presumably Morningstar managed fund chosen against my risk criteria.

Morningstar are a data supplier. They do not charge you.

You have the platform, the adviser and the funds. No data supplier charge. Morningstar do not manage any of investments either.

I'm looking into this as thinking I need a new chartered financial planner to help with all my finances and I may wish to try and obtain lower charges on thus fund and transfer after new advice.

Expect higher charges if you go chartered. Plus, you may find some chartered not interested in dealing with you given your low values. There is no point paying a surgeon to put a plaster on a cut knee.

Malthusian

Morningstar offer risk-managed portfolios - in other words, the adviser determines your risk profile, Morningstar picks the funds that match that risk profile, those funds invest the money in securities. Hence there would be a charge for Morningstar's fund selection (I would guess the 0.36%) and another for the underlying funds (probably the 0.73%). However, this is all guesswork and I suggest wiltsheregirl should ask her adviser to explain the charges (which is part of what she is paying them for) as they will be in a far better position to know what they are than random people on the Internet like I.

If I am correct and Morningstar are providing "model portfolio" fund selection services then the 0.5%pa is not cheap as the IFA has outsourced what is traditionally part of their job to Morningstar. (But nor is it expensive.)

dunstonh

Morningstar offer risk-managed portfolios - in other words, the adviser determines your risk profile, Morningstar picks the funds that match that risk profile, those funds invest the money in securities. Hence there would be a charge for Morningstar's fund selection (I would guess the 0.36%) and another for the underlying funds (probably the 0.73%). However, this is all guesswork and I suggest wiltsheregirl should ask her adviser to explain the charges (which is part of what she is paying them for) as they will be in a far better position to know what they are than random people on the Internet like I.

I thought what they did was a bit like the Advisa Centa build (using FE) where it used retail funds but you are right. There is a discretionary investment portfolio used. What surprises me is that it is available through OMW. I didnt think they allowed discretionary investment management but were solely funds. That said, I am not a fan of discretionary management. So, wouldn't be up-to-date on which platforms offer DFM.

bigadaj

So OP, in summary it's bloody expensive and probably not very good!