Discretionary Fund Management Charges

Chris_Mac

My IFA charges me 0.65% for Discretionary Fund Management as well as a similar size charge for his services. This seems excessive since I thought that their value add was their ability to manage my investments appropriately.

Any advice appreciated.

Chris

Dox

Not clear what you are paying for (possibly you aren't either!) - does your IFA have their own investment business (for which you are paying 0.65%) and then ongoing servicing/advice, for which they make a separate charge?

Chris_Mac

My IFA gives advice for my pension fund. The funds selected are held on the Transact platform.

Chris

BLB53

Is it possible to take control and learn to manage the pension yourself? In the long term it sounds like you could save a lot in fees.

Chris_Mac

That's exactly what I plan on doing. I am currently doing the maths. Monevator seems really helpful, as is this forum. My IFA's fees seem high to me, for a portfolio that is averaging around the benchmark before charges are deducted.

Any advice about a good platform for a pension that is valued at around £250k. I intend on investing primarily in a mix of trackers?

Regards,

Chris

tacpot12

To reduce the risk of taking you whole portfolio under your own management, you might ask to have half the portfolio transferred to a new platform under you control and see if you can beat the performance of the part of the portfolio under their control over a three year period. If you win, transfer all the portfolio to your own control, if you lose transfer it all back to them.

0.65% is pretty good for Discretionary Management, but you are wise to keep their performance under review.

Chris_Mac

Thanks for the advice Tacpot12. My concern is that I'm actually paying closer to 1.3% for the 'Normal' service and the Discretionary Management. It does annoy me that when checking through the annual report and paperwork it's really hard to see exactly what I'm paying, and for what? {Whinge over}. That alone, made me suspicious and I feel as if I've opened a can of worms. I have asked my IFA some pretty basic questions about fees, and I am finding it difficult to get straight answers.

Chris

BLB53

Any advice about a good platform for a pension that is valued at around £250k. I intend on investing primarily in a mix of trackers?

I am with AJ Bell Youinvest and no complaints so they are worth a look but will you hold funds or ETFs - charges are 0.25% for the former but capped at £100 for the latter.

Here's an article on the DIY Investor which covers SIPP providers
http://diyinvestoruk.blogspot.com/2016/08/selecting-your-diy-pension-platform.html

also check with the Monevator comparison
http://monevator.com/compare-uk-cheapest-online-brokers/

dunstonh

My IFA's fees seem high to me, for a portfolio that is averaging around the benchmark before charges are deducted.

0.5% is the dominant figure for advisory IFAs. Discretionary does add a cost as the IFA is taking on further administration and regulatory requirements. Most IFAs are not discretionary (and personally, I am not a fan of it as it adds an extra layer of costs that really isnt necessary.

It does annoy me that when checking through the annual report and paperwork it's really hard to see exactly what I'm paying, and for what? {Whinge over}.

So, what has changed since you employed them at the start?

You are paying for the investment decisions, due diligence, research and consumer protection.

I intend on investing primarily in a mix of trackers?

What investment strategy will you be following?
How often will you be rebalancing?
Limiting yourself solely to trackers could cause lower returns (our hybrid portfolio outperforms the passive portfolio consistently). So, you could be going for false economy. If you want to focus charges ahead of returns that is fine but you need to be aware of the consequences.

Chris_Mac

Thanks Dunstonh for your information regarding fees, particularly Discretionary.

The main thing that's changed, since I started my pension with my employer, is that I am now taking more of an interest in my finances; better late than never!

Regarding strategy, rebalancing, fund choices etc, I am researching them right now. Hence my post.

Chris

zagfles

See here for a useful platform comparison tool https://forums.moneysavingexpert.com/discussion/5583030/coolly-comparing-investment-platform-charges-snowmans-spreadsheet