Lowest platform costs for drawdown scheme?

OldMusicGuy

dunstonh wrote: »

If you think 12 funds is overkill, then why are you holding over 20 funds in your portfolio?

I didn't say it was overkill, I said it suffered from diworsification. When some funds were doing well, others weren't when overall markets were pretty positive. All were activley managed funds.

dunstonh wrote: »

You have not taken control. You have passed it to three fund houses and are running three different strategies using at least double the number of funds

I take your point that I am not in control of the actual investments but then neither was I with the previous funds. Maybe I should have said I decided to take responsibility for the fund choices rather than "take control". I've got a mix of equity focused investments, a more conservative VLS fund and dividend focused income fund (which is not a low cost fund). That suits me given where I am now.

I don't want to sound too critical of the FA I used. Part of the issue is that I am conservative by nature and the fund choices he made based on my instructions were on the cautious side which is likely a part of the reason the portfolio didn't look to be doing that well. But rather than pay more money to try a different allocation I decided to take more responsibility myself. I'm happy with where I am right now but will obviously be reviewing the situation over time.

dunstonh

I didn't say it was overkill, I said it suffered from diworsification. When some funds were doing well, others weren't when overall markets were pretty positive. All were activley managed funds.

That will still be the case with the funds you have now. They will have underlying funds that are doing badly when others are doing well as different areas perform in different ways at different times.

For example, in our hybrid portfolio we have 10 funds and one fund that is quartile 4 and another that is quartile 3 with the rest in quartile 1&2. The one that is quartile 4 is a Vanguard fund that has returned -3.47% over the last 12 months. Whereas the top fund is an active fund returning 32.12% The portfolio is no worse by having that poor performing vanguard fund in it because it is needed. It may be the best fund in the next 12 months and its low volatility brings the overall volatility level of the portfolio down. So, its naff now but there will be a period when its not.

That same Vanguard fund is used in VLS.

"All active" portfolios are not that great any more. Indeed, our all active spread (which is rarely used nowadays) is underperforming VLS40 but the hybrid spread is outperforming VLS40 (over 1, 3, 5 yr and launch). I prefer the hybrid approach of using best of both and not restricting myself to just passive or just active. As technology improves, information improves and charges change, you need to adapt and not stand still.

investing is about opinion and there are not many right or wrongs. The most important thing is making sure you have the right risk level. Most other things are just opinion. So, if you are happy with the risk and there is nothing wrong with having multiple multi-asset funds, then it doesnt matter what others have or think. It just makes good discussion.

EdSwippet

Mutton_Geoff wrote: »

I'm looking to move my pension pot to a SIPP, buy two "lifestyle" funds, eg one Vanguard Lifestrategy and one Blackrock Consensus in equal portions. Hold for around three to four years before starting drawdown.

I am in a similar situation, so I'll be interested as well in any responses you get. As of now I have SIPPs with Interactive Investor and Alliance Trust, and a GPP from a previous employer with Friends Life. In total they come to around the LTA. I'm expecting to crystallise all of them within the next year or two as growth alone starts to take them towards LTA excess charges.

Once crystallised, the annual flat-fee costs of both SIPPs doubles, from around £160 to around £320, so one obvious thing to do is to combine these into one. There doesn't seem to be a clear winner across the two, though. I could also move both to a different provider such as Halifax or iWeb, but again no clear benefit to that either. The same funds are available in all SIPPs; a globally diversified range of vanilla HSBC and Vanguard trackers.

For Friends Life, they claim to offer flexi-drawdown. Their docs are very sketchy on this, but if it's a reality there is no additional charge with them for crystallising. I hold Blackrock trackers in here, so again I'm happy with the fund offering.

Once crystallised, I'm not sure if I will be able to subsequently move pensions around in the same relatively easy way that I have been able to before entering drawdown. And while funds can be moved in specie across SIPPs -- at least, before crystallising -- to eliminate time-out-of-the-markets issues, this isn't the case for transfers into or out of the GPP.

I am unclear then on whether it is best to coalesce all three pensions into one place before crystallising so that I can stage the crystallisation events to optimise timing -- in particular, so that my funds balance doesn't suddenly shoot through the LTA overnight after another Brexit-like bump. Or after crystallising (if possible). Or something else. It really shouldn't be this involved, but once you creep up on it the LTA is a planning nightmare.

Mutton_Geoff wrote: »

AMC is the most important initially since I won't be dealing. When I start drawdown, that could either be monthly or quarterly. I assume each drawdown payment is a "trade" of the fund so max 12 trades a year.

One annual drawdown activity might also suffice. I see monthly as a bit of a 'crutch' for people who want a seamless transition from a salary, nice if available but not worth paying extra for.

Mutton_Geoff wrote: »

Looking at usual suspects, HL, III, TD (owned by III now) but only finding out of date articles online.

As already mentioned, for a £1mm pension a flat-fee provider is going to be the best route for fund holdings. The saving over the 0.45-0.25% HL platform fee for funds is large -- costs are perhaps £200-£300 for flat-fee versus perhaps £3,000 for HL. I have accounts with Interactive Investor and Alliance Trust and both are fine holding pens for tracker funds. But not yet in drawdown, so unfortunately this isn't the 'review' you are seeking. Also an account with iWeb (Halifax), again perfectly fine.

Mutton_Geoff wrote: »

Pension pot is c £1m.

As well as IP2016, I presume you have also looked into FP2016? Only available if you have made no pension contributions since April 2016; your IFA should already have mentioned this. No problems holding both protections if applicable.

bostonerimus

OldMusicGuy wrote: »

I take your point that I am not in control of the actual investments but then neither was I with the previous funds. Maybe I should have said I decided to take responsibility for the fund choices rather than "take control".

I like the way you put that. With or without a financial adviser you must take responsibility. Nobody is going to be as concerned about your money as you.

coyrls

EdSwippet wrote: »

Once crystallised, the annual flat-fee costs of both SIPPs doubles, from around £160 to around £320, so one obvious thing to do is to combine these into one.

The Alliance Trust Savings flat fee doesn't increase when you crystallise, it only increases once you start to take an income from the crystallised funds (not including the PCLS). In fact I took one payment last tax year and they didn't increase the fee. Their wording is not really clear but I think they didn't increase it because I'm not taking a "regular" income. They say the fee is increased:

Once you start taking an income (that means once you move into Income Drawdown or if you ask us to pay you an Uncrystallised Funds Lump Sum Payment’ (UFPLS) on anything other than a one-off or very occasional basis)

OldMusicGuy

dunstonh wrote: »

"All active" portfolios are not that great any more. Indeed, our all active spread (which is rarely used nowadays) is underperforming VLS40 but the hybrid spread is outperforming VLS40 (over 1, 3, 5 yr and launch). I prefer the hybrid approach of using best of both and not restricting myself to just passive or just active. As technology improves, information improves and charges change, you need to adapt and not stand still.

In my own simplistic manner I had come to a similar conclusion. I've shifted to passive multi-fund funds but stayed actively-managed for dividend income (because I think that's something that analysts can identify through research).

Mutton_Geoff

EdSwippet wrote: »

As well as IP2016, I presume you have also looked into FP2016? Only available if you have made no pension contributions since April 2016; your IFA should already have mentioned this. No problems holding both protections if applicable.

I am still in a DB scheme that is too attractive to take FP and stop contributing but that matures within the next 12 months (although I can continue to work beyond if I wish).