Investment and other charges - good value?

greatkingrat

TBC15 wrote: »

1% to 3% is par for the course from what I’ve experienced going from DC to Sipp. Paid 0.75% ish in the end. FA took flack from oversight part of the outfit for exposing firm to DC to Sipp advice.

Why would a DC scheme to SIPP transfer be considered a risk?

tacpot12

£10800 is way too much to setup the new pension. There is very little work involved, and all of it is basic administration. It should cost no more than £500. The amount of work is unrelated to the size of the portfolio.

When I moved my own pension from L&G to AJ Bell, it took about two hours of my time.

1% to manage the portfolio afterwards is still a lot. The question is; if you pay them to manage it will they be able to earn more than £6000 than you could earn if you managed it?

You need to ask to see their evidence that they can manage portfolios better than self-managing investors.

ams25

bostonerimus wrote: »

Why oh why would you pay 1.8% and then 1% on going fees to a finance company? That 1% will be around 25% of your drawdown income. Do some reading and then DIY with one of the low cost fund platforms......it's a pity Vanguard doesn't have anything available in the pensions/drawdown field yet, but there are lots of options.

+1
As you're retiring you have or will have some time to work out what needs to be done via the DIY route and some low cost trackers. Not difficult if you keep it simple and plenty of good info on the net. Otherwise at least try some other IFAs.

_penfold

1.8% does seem a little high on a pot this size.

One of the replies has mentioned it only takes a couple of hours to setup a new pension. This is a bit unfair as it is only taking into account the time required to open a new account. A good adviser will be doing far more than opening a new account. They should be reviewing your attitude to risk, your capacity for loss, other financial aspects of your life etc... They should then base their advice on all that information and what you wish to achieve out of your retirement. Also your existing scheme may have benefits that need to be taken into account before a transfer to a new scheme.

The adviser is putting their name, reputation and future ability to advise on the line and will have to pass their proposal past a compliance review before implementation. So there's a lot more to the what your asking them to do than simply opening up a new account and applying for the funds to be transferred.

So charging more than the couple of hours it would take to create new account on a platform is completely fine. However £10k for initial advice is at the higher end. It is usual to charge a percentage - however the adviser should also have an hourly rate you could opt to pay via instead.

As for on going servicing charge 1% on £600k is rather high. At that level 0.5% would be at the top end.

Finally, as for going it alone that is an option that is often quoted on the internet and that's always an option. However, if you met a chap down the pub who had read up on the internet would you take their advice. £600k is a large fund to risk on non-expert guidance.

coyrls

TBC15 wrote: »

1% to 3% is par for the course from what I’ve experienced going from DC to Sipp. Paid 0.75% ish in the end. FA took flack from oversight part of the outfit for exposing firm to DC to Sipp advice.

I think you mean DB to SIPP, not DC to SIPP.

TBC15

greatkingrat wrote: »

Why would a DC scheme to SIPP transfer be considered a risk?

Oops my bad it was DB to SIPP, must pay more attention.

tenchy

_penfold wrote: »

1.8% does seem a little high on a pot this size.

One of the replies has mentioned it only takes a couple of hours to setup a new pension. This is a bit unfair as it is only taking into account the time required to open a new account. A good adviser will be doing far more than opening a new account. They should be reviewing your attitude to risk, your capacity for loss, other financial aspects of your life etc... They should then base their advice on all that information and what you wish to achieve out of your retirement. Also your existing scheme may have benefits that need to be taken into account before a transfer to a new scheme.

The adviser is putting their name, reputation and future ability to advise on the line and will have to pass their proposal past a compliance review before implementation. So there's a lot more to the what your asking them to do than simply opening up a new account and applying for the funds to be transferred.

So charging more than the couple of hours it would take to create new account on a platform is completely fine. However £10k for initial advice is at the higher end. It is usual to charge a percentage - however the adviser should also have an hourly rate you could opt to pay via instead.

As for on going servicing charge 1% on £600k is rather high. At that level 0.5% would be at the top end.

Finally, as for going it alone that is an option that is often quoted on the internet and that's always an option. However, if you met a chap down the pub who had read up on the internet would you take their advice. £600k is a large fund to risk on non-expert guidance.

Yes, a lot of what you describe did take place - attitude to risk, capacity for loss and so on. Some of it was phone-based, some face-to-face. I have no problem at all with the adviser. He acted in a thoroughly professional manner. The problem is the charging model being based on fund value. He never mentioned flat rate fees, but I will look into that. It really is very hard to see the added value on £10800 worth of fees. Inevitably such a large amount of cash would have to come out of the fund itself, either as part of the 25% tax free or an initial withdrawal thereafter, so that would be to the detriment of future growth.