Which Provider for new Pension/SIPP?

iamadave

I have recently changed jobs and wish to transfer in 2 previous pensions and start increasing what I can put in.
Very unsure which platform is 'best' and cheapest, sure I have been through the compare and the %, but most of these seem rather high
Age 34
Transfer amount ~40k
Monthly 200-300, but might split between ISA first.

I was recommended a pension review via unbiased via a colleague and only spoken to one firm so far they focused on the lump and other insurances I must need from them lol.

They have come back with a medium balanced recommendation of ~14 funds which they adjust which sounds fine.

But they say it is 5% initial cost to setup! Platform costs seemed good around 0.5% no further fund charges and of course as they mange it an ongoing fee on top for a white label platform they use.

Is this setup fee normal? Does it really take for a new SIPP many many hours of costs, of course I appreciate they are qualified and have to pay insurances and do advice to prevent people claiming wrongly?

I know you could go to iii/charlesstanley,bestinvest, and the others and pay a platform fee of ~0.5 ish but with a good handful of funds these fund fees ontop will tip the costs to 3-5+% right?
If your happy to run it yourself, I dont mind arranging transfer and or running it myself but ~2K seems an awful lot before the annual fee?

JoeCrystal

Well, when I transferred from old pension to new pension with an IFA few years ago (similar to your pension pot and your monthly contribution) and it only cost me £300 fees with money taken out from the pot itself.

Are there any issues with your current work pension? Could you look at that option as well?

It may be worth checking with other IFAs as well. £2,000 is very high for my taste as well. Also, fourteen funds?! :eek:

dunstonh

I was recommended a pension review via unbiased via a colleague and only spoken to one firm so far they focused on the lump and other insurances I must need from them lol.

Not sure what the lol is for. That is what they are required to do unless you decline a full review and agree to limited advice. However, some firms are set up to only deal with full review clients.

But they say it is 5% initial cost to setup!

Your pot is small. So, 5% sounds high but relative to your value, it is not that high. You can certainly get cheaper without much effort but the root issue is your low value is not going to see many interested in dealing with you and those that do price are likely to price high to act as a passive blocker. If it was transactional, it would be cheaper.

Platform costs are usually around 0.2x% to 0.4x%. There are not many in the 0.5% range nowadays apart from a couple that are used by restricted/tied firms (who have no choice). If it was an IFA, you would not expec them to pick a platform at 0.5%. Indeed, not even sure a platform is necessary with your fund value.

Is this setup fee normal?

Upper end but can get cheaper. Main issue for me is whether you even need a platform and it doesnt sound like you are using an IFA as the platform charge is double what is available to IFAs.

Plus, cant see that you need ongoing servicing at this stage. Transactional until you build up a larger amount seems more sensible.

Does it really take for a new SIPP many many hours of costs, of course I appreciate they are qualified and have to pay insurances and do advice to prevent people claiming wrongly?

Regulatory costs, software, staff, knowledge and liability.

I know you could go to iii/charlesstanley,bestinvest, and the others and pay a platform fee of ~0.5 ish but with a good handful of funds these fund fees ontop will tip the costs to 3-5+% right?

The funds advisers use are the same ones available if you DIY (and same cost).

Also, fourteen funds?!

I havent got an issue with 14 funds. Most of our risk profiles on model portfolios have 10 funds. 2 risk profiles have 12 funds (to diversify the bonds). So, 14 is not overkill in itself. However, running a model portfolio on £40k is unnecessary.

AnotherJoe

iamadave wrote: »

I know you could go to iii/charlesstanley,bestinvest, and the others and pay a platform fee of ~0.5 ish but with a good handful of funds these fund fees ontop will tip the costs to 3-5+% right?

No. No more usually an extra 1 % or so depending which funds, and you can get much lower than that down to lowish 0.2% region

xylophone

Will your new employer's scheme accept a transfer in?

Otherwise, why not open a SIPP/other PP, transfer in the two pensions and choose your own funds?

iamadave

Thanks for the comments so far. And some great pointers. The platform I think your right they were maybe tied to was 0.56 before advice fee. I did say why not a few of the low providers and was told the fund fees would be far higher... than the 0.56 which seemed static for lower number of funds as based on pot size.

Just a couple of extra bits my new employer is only paying the min pension at moment (Royal London) I have not recieved the details yet but I could just transfer to their default fund but would prefer to kjeep it seperate then if the job changes move that into the sipp.

I will be a in higher rate tax this year by 5k ish before any bonus, so I think it would be good to merge/move and pay more in.

I thought maybe 4-8 funds max depending on fees/platform and how the pot grows.

Is there a more accurate way to work out which provider with maybe 8-10 deals/switches a year would cost including the fund % before you signup with them on say 50k starting?

dunstonh

Thanks for the comments so far. And some great pointers. The platform I think your right they were maybe tied to was 0.56 before advice fee. I did say why not a few of the low providers and was told the fund fees would be far higher... than the 0.56 which seemed static for lower number of funds as based on pot size.

General rule of thumb is to either DIY or use an IFA. Not to use restricted FAs. Otherwise you end up paying over the odds and get restrictions which mean you are not getting best advice. The advice will be suitable. Just not best.

I thought maybe 4-8 funds max depending on fees/platform and how the pot grows.

You dont pick funds by numbers. You pick funds by suitability. If the strategy requires 10 funds, that is what you use. If it requires 1 fund, that is what you use. Your value is low and there isnt really any point building a bespoke portfolio of funds until it gets higher. one or two decent multi-asset funds would do the job.

Is there a more accurate way to work out which provider with maybe 8-10 deals/switches a year would cost including the fund % before you signup with them on say 50k starting?

Are you now switching to DIY? (providers differ in the DIY market).

AnotherJoe

iamadave wrote: »

I thought maybe 4-8 funds max depending on fees/platform and how the pot grows.

Is there a more accurate way to work out which provider with maybe 8-10 deals/switches a year would cost including the fund % before you signup with them on say 50k starting?

If you are dealing 8-10 times a year you are dealing too frequently. (and by the way, mea culpa, took me some time to learn that lesson)

If you are going to DIY, pick a few funds* (with £50k I'd say stick to 5 max) and then look at the costs for buying and holding those over several years on a few platforms.

There is somewhere a spreadsheet you can put the figures in and it will give you costs.
Google snowmans spreadsheet.

* where "funds" might = funds, EFTs, ITs etc.

iamadave

I am unsure if to switch to DIY where some charge nothing for fund switch and others charge for each so if I was active I imagine maybe 5 switches a year so 10 fees so would opt for the free providers. I would hope to be focusing more on it and being able to build the pot more quickly now.

So any provider could have 8/10/14 funds for under 0.5%?

I dont mind paying for advice if the platform and initial fees seem more reasonable and if the ongoing fee is not too high if they actively re-balance or do reviews etc. And I would hope that by paying for some advice I would avoid costly mistakes or better methods.


Or I could stick with previous provider retireready 4 funds I forget the total % on funds but is high and 0.5% platform or move to default Royal London fund.

Many thanks for the pointers, sounds like DIY Sipp in a small number of multi funds or a few funds split is the way.

AnotherJoe

If you are switching 5 times a year you are most likely doing it wrong, sounds like you'd be chasing past performance.

Many funds have the same buy / sell price, but , if there is a cost, thats where the cost of buying and selling would be, in the difference between those two prices, not in a charge for buy/sell itself. What providers are you seeing where there is a charge to switch funds?

What the fee is depends on the platform fee which is generally going to be 0.25% - 0.45% , possibly with a minimum and a maximum charge on those, and then there is the fund charge.
A fund charge, which you dont actually see as a seperate cost as its subsumed within the fund price, might be anywhere from 0.15% up to 1.5% and more, all depends on the fund.