SIPP advice moving from Aegon Retiready

dunstonh

Any recommendations for better platforms than Aegon for the amount I have?

For just 11k, then the Aegon workplace option is actually pretty good. They have a number of passive multi-asset funds at 0.05% which is dirt cheap. The platform charge, in your case, is not the cheapest but at 11k, that is not unexpected. A total cost of 0.44% is great on 11k. It is only £48 a year.

Maybe take a read of this thread:

https://forums.moneysavingexpert.com/discussion/5334164

Post #21 most relevant but lots of discussion on robo.

I notice that one is from 2015 including upto 2014 figures. They increased both their turnover and losses in 2015 and 2016 (2017 not yet published). Their losses are at 9.3m now on a turnover of £2.6m. It also had to get £36m from new backers in that period (as predicted). Additionally, the directors have said they will likely have to get more money from backers. They now have around £600m in assets under management.

They are spending big to get as many customers as they can. Offering cashbacks that the margin is never likely to recover. It is known as buying market share. An article in September 17 on FT found that robo-advisers are spending upto £500 acquiring a customer. On your investment, they would make around £15 a year.

They would need around £5bn under management to cover their current expenditure. Problem is as you grow, so do your costs. And just as you start getting big enough, you realise your software is now long in the tooth compared to other more recent upstarts and all those investors that measure quality by their profile on social media and how the app works will move their money to the new upstart.

There are three scenarios likely. 1) they hit critical mass and become profitable. Typically, that needs 10s of billions under management. 2) they get enough market share that they become attractive to a buyer 3) they fail and their carcass is bought cheaply from the administrator.

MiFID II is potentially going to hit the costs of robo-advice as they have to comply with the changes (which increase costs).

Robo-advice certainly has a place in the market. However, the cost is too high at the moment and most are expecting failures. It took 10 years for the first platforms to fail and the original players have issues now. Indeed, 2018 will see the end of one of the first big ones which was sold cheaply by its owner in 2017 because it needed spending in the billions to bring it upto date. The UK's largest platform is being dumped by its owner as it feels the money is better spent elsewhere. It is also spending large on moving to new software.

Nutmeg is not cheap either. It is 0.75% plus 0.19% (0.94%) for the managed portfolio using underlying passives. Double your Aegon.

isayhello

Thanks @dunstonh I took a look at that thread and also some more recent articles on Nutmeg, I guess they're still delivering returns and people are using them even if they're not making a profit and their new ceo seems to be more focused on customer growth but still it does make me wary and with their high charges, I'll keep away

I was looking at retireready and they also have an investment charge of 0.3-0.82% on top of their service charge.

https://retiready.co.uk/public/shop/retiready-pension.html?u=P

I will see what the other funds they offer are like and then decide. I think Best Invest and AJ Bell seem good so far with more investment choices.