Are we doing the right thing? Scottish widows?

Costy

Hi all, we were persuaded to transfer my husbands pension pot from Phoenix Life (was Pearl) to Scottish Widows, by an adviser who then pocketed £7k from the fund, and gets a monthly fee of £37, on top of the fee from Scottish Widows, which brings our monthly charge to £100 a month. Its now been there a year, and lost £5k already. The pot is now £211k.



Compare this to two SIPPs I have with Hargreaves Lansdown that I started for my two sons, they have gained 5% each. I haven't got much idea of what I;m doing with them, but don't seem to be doing too badly.



Scottish Widows have scrapped their exit charges. Should be transfer the pension to HL or somewhere else that has lower charges? Is it too risky to have such a large amount in a SIPP with HL when I'm not a skilled investor?


Any idvice would be fabulous, thank you.

Prism

It isn't the fact that you are using Scottish Widows for the pension pot as opposed to Hargreaves Lansdown. The fees look pretty similar. I reckon you are paying around 0.57% with SW compared to 0.45% with HL. With the SW pension you are getting ongoing service from the advisor. Why after a year do you not trust your advisor to make the best choices for you?

The difference will be mostly down to what you are invested in. Investments for your sons should likely be an entirely different level of risk than your husbands. They have much more time to recover from a stock market crash. Its not all about returns, its also about preserving what you have.

tacpot12

I would start by checking the fees charged by Scottish Widows vs. HL, and then also check that your husband is invested in the best funds offered by Scottish Widows. I would then try to find a couple of comparable funds that you could invest in via HL, and compare the costs and performance of these funds. You should get a sense as to whether to stay with Scottish Widows or not.

dunstonh

Its now been there a year, and lost £5k already. The pot is now £211k.

Given the volatility over the last 9 months, that is not a surprise.

Compare this to two SIPPs I have with Hargreaves Lansdown that I started for my two sons, they have gained 5% each.

On the exact same days? (this is important as the volatility recently has been such that you could swing from a 5% gain to a 5% loss in a matter of days.

Also, are they set up to the same risk profile?

Should be transfer the pension to HL or somewhere else that has lower charges? Is it too risky to have such a large amount in a SIPP with HL when I'm not a skilled investor?

DIY vs professional. DIY well and you can save money. DIY badly and it can be a costly mistake.

Any idvice would be fabulous, thank you.

Dont make decisions on bad assumptions. If you are going to compare you need to do it using the same days and understand the risk levels. It is very common for new DIY investors to invest way above their risk profile and/or fashion invest. The adviser's recommendation is likely to be lower risk than the DIY selection.

bostonerimus

dunstonh wrote: »

DIY vs professional. DIY well and you can save money. DIY badly and it can be a costly mistake.

I'd say that using some professionals can also be a costly mistake

dunstonh

bostonerimus wrote: »

I'd say that using some professionals can also be a costly mistake

But you get consumer protection in that scenario. You don't if you balls up yourself.

Prism

tacpot12 wrote: »

I would start by checking the fees charged by Scottish Widows vs. HL, and then also check that your husband is invested in the best funds offered by Scottish Widows. I would then try to find a couple of comparable funds that you could invest in via HL, and compare the costs and performance of these funds. You should get a sense as to whether to stay with Scottish Widows or not.

I'm not sure thats going to help here. Surely there is more going on than just picking well performing funds even if you could identify the 'best' ones. I imagine that the risk level is lower here and being managed by the advisor. The fees don't seem to be high

sandsy

Have you had a follow up meeting with the adviser since you are paying for an ongoing service? It would be normal to have one meeting each year so it must be due. You should be raising your concerns with the adviser and finding out why the pension hasn't performed as you would have hoped.

bostonerimus

The first thing to do is to understand how your Scottish Widow's pension is invested, only then can you sensibly compare it to the SIPP investments. You also need to know the relative costs.

Whether you DIY or you use an IFA it's just as important to know how your money is invested so you can see how well things are going. Unfortunately people often think that with an IFA they don't need to worry about their finances as much or understand them in great detail.....that can be very dangerous.

grey_gym_sock

i agree with the points already made about the need to understand how the different pensions are invested (and hence whether they're comparable), and whether you're comparing performance over exactly the same periods of time.

on costs: from your figures, your advisor charged over 3% initially, and is charging c. 0.21% per year on-going. the initial charge might have been high (though i don't know what is typical), but obviously that's gone now. the on-going isn't so high, so i wouldn't be in a great hurry to move, provided the advisor seems to be doing their job properly.

and your figures imply your total on-going costs (including advisor) are c. 0.57%, which is pretty good, if that does also include both the fund charges and pension wrapper (it could be mono-charged, i.e. both the latter covered by a single charge).

HL could easily be more expensive. no advisor charge. but if you hold funds (unit trust / OEICs), HL's on-going platform charge would be 0.45%, to which you need to add the cost (OCF) of the funds held. though if you held ETFs and investment trusts instead, HL's charges could be less. however, a bit more investment knowledge is needed to select suitable ETFs and ITs; funds are the more basic approach.

Costy

Thank you all, you have reassured me that actually things aren't that bad, and we are not paying too high fees. I think we'll leave it where it is for a few years and see what happens. We are due an advisor report soon, we'll do nothing until we've had a good chat with the advisor. Thanks again!