Financial advice - ignore it and then DIY

bostonerimus

AlanP wrote: »

I
As regards the DB transfer can anybody in the US just transfer 250k, 500k, 750k, 1m or whatever it may be from the equivalent of a UK DB scheme with no hoops to go through?

Yes. A DB pension plan can offer a cash equivalent sum based on Federally set interest rates and life expectancies which is deposited into an IRA (the US equivalent of a SIPP) at no cost. However, the employee cannot demand this payout, it is at the discretion of the pension administrators, but many pension plans are offering it to get liabilities off their books. A few years ago I took a $37k payout for a small pension I had as I figured the lump sum was better to have than the meager DB pension. I signed one form told the administrator where to send the check and a week later the money showed up in my Vanguard IRA.

I could be wrong.....I often am....but setting up drawdown plans in the UK seems a bit fraught and fees often seem to apply from what I read. Maybe with the right company drawdown from a SIPP is easy and free. With US Vanguard I can have my dividends from my pension pot deposited directly to my bank account and make other withdrawals at no charge. At then end of the year Vanguard sends me a tax statement showing my taxable income. However, the US tax system is a nightmare and far worse than UK filing from what I've seen.

Alexland

bostonerimus wrote: »

I could be wrong.....I often am....but setting up drawdown plans in the UK seems a bit fraught and fees often seem to apply from what I read. Maybe with the right company drawdown from a SIPP is easy and free.

There are companies that offer SIPP drawdown with no additional fees but they tend to have higher percentage ongoing fees. In the UK we have unbundled the charges to such an extent that the choice might be seen as overly complex.

Alex

Gadfium

@CapitalOne

Here, show us on this doll where the bad IFA once touched you.

atush

capital0ne wrote: »

Do you need a financial adviser?
If you’re looking to invest, buy a financial product or plan for the longer term, whether or not you need financial advice will depend on a number of factors such as what product you are looking for, how complicated your finances and personal circumstances are and your short and long-term goals.

Fair enough, but a little known fact is that once you've received the advice you don't need to take the specific advice, you can do what ever you like.

So knowing that, shop around for the cheapest advice you can get, then do your own thing.

Simple!

]

Not really simple no.

Many people have no idea of risk and what it really means (probably includes you). They have no idea about investing, diversification and portfolio building. Tax wrappers etc.

Many people are just lazy.

dunstonh

However, no one tells you what to do with your pension money and transfers of the equivalent of SIPPs and ISAs are trivial and cost nothing.

The USA has sales reps still as well as advisers. I have clients with US holdings where the charges are higher than here. The charges are also bundled still. Unlike here.

Modern products in the UK are mostly free to exit.

And the only area in the UK that mandates advice is DB pension transfers with a CETV over £30,000 or pensions with safeguarded benefits with a value over £30,000. And the reason for that is historical. 9 times out of 10 it is best to leave those where it is.

Whatever the differences in the financial products available in the US and the UK the main difference is the way people in the UK have barriers placed between them and their money and are continually made to jump through hoops and justify their decisions.

DB transfers account for under 1% of regulated transactions. So, no barriers on the other 99%. You make it sound like it is the other way around.

However, the employee cannot demand this payout, it is at the discretion of the pension administrators, but many pension plans are offering it to get liabilities off their books.

Isn't that a barrier? If you don't have control and need permission then that is a barrier in my book.

I could be wrong.....I often am....but setting up drawdown plans in the UK seems a bit fraught and fees often seem to apply from what I read.

Most modern plans have little or no charges to utilise drawdown options. Some legacy plans, where they have had to build in options, sometimes carry small costs. Or the plans that have very low annual charges and charge more explicitly for features or options. Different models can suit different people. It is good that we have the choice.

Reading comments here is not a good way to look at the UK market. If you get someone who doesnt know what they are doing, doesnt know the product types and differences available and they select the wrong product type, then any post they make here on that subject is going to make it look wrong.

With US Vanguard I can have my dividends from my pension pot deposited directly to my bank account and make other withdrawals at no charge.

The same with every provider in the UK.

Linton

dunstonh wrote: »

.........
Most modern plans have little or no charges to utilise drawdown options. Some legacy plans where they have had to build in options, sometimes carry small costs. Or the plans that have very low annual charges and charge more explicitly for features or options. Different models can suit different people. It is good that we have the choice.
....

??? Every SIPP I have looked at other than H-L charge about £100/year for drawdown if you have less than £100K in your pension.

“ With US Vanguard I can have my dividends from my pension pot deposited directly to my bank account and make other withdrawals at no charge.
”
The same with every provider in the UK.

Not available with SIPPs in general.

I guess the added cost/complexity in the UK results from the need to go through PAYE. In the US is tax deducted at source or do you have to pay your tax bill at the end of the year?

Dox

capital0ne wrote: »

... a little known fact is that once you've received the advice you don't need to take the specific advice, you can do what ever you like.

So knowing that, shop around for the cheapest advice you can get, then do your own thing.

What utter garbage! Of course people know they don't have to follow advice they've received, financial or otherwise. You only need to look at how many don't follow advice, however good.

As for getting the cheapest advice...it's your financial future; how little value do you place on it?

Is this just an anti-IFA post, or what? Serves no useful purpose that I can see.

StellaN

Linton wrote: »

??? Every SIPP I have looked at other than H-L charge about £100/year for drawdown if you have less than £100K in your pension.

Fidelity do not have any charges at all to go into drawdown in a SIPP, and if you only hold IT's then the overall charge is capped at £45 per annum.

dunstonh

??? Every SIPP I have looked at other than H-L charge about £100/year for drawdown if you have less than £100K in your pension.

its the other way around on the advice side. Indeed, annual drawdown charges are quite unusual. Its more a case of no drawdown charge or a one off the first time drawdown is used.

Possibly different as drawdown was originally something you only did via IFAs. IFAs also tend to have clients with higher fund values than DIY investors. Indeed, small investors are a significant drag for DIY providers. Some of their charges appear to be in place to act as a passive blocker. Whereas drawdown on IFA cases has historically been mostly over £100k pots. (partly down to the regulator stating that £100k was generally seen as the minimum pot side it would consider suitable.

Plus, most of the IFA providers came through the 2001 changes which saw multi-charge as bad and mono-charge as good. The DIY market didnt go through that and it didn't impact on the specialist providers, a number of whom now have DIY offerings.

bostonerimus

dunstonh wrote: »

Isn't that a barrier? If you don't have control and need permission then that is a barrier in my book.

There is no legal right to get a CETV from a US DB plan, but most plans offer them, so you could describe that as a locked door rather than a barrier and only the pension administrator has the key. But once the door is opened, it's fully open and you get access without the charge or any requirement to get advice....that's totally up to you.