How to manage my SIPP?

mrs_slapshot

I am hoping for some advice as to whether to go it alone with my SIPP or if I change advisor, the most cost effective way to do it.

I had a career break in 2014, and my previous pension (with the University SS) was frozen. I began new job in education in August 2015 and have been paying into the Local Gov Pension Scheme since then – my contribution is 8% and my employer’s is 18%. I met with a financial advisor and decided not to transfer my previous pension in – the value was £263.6K as at Feb 2016. I decided to open a SIPP – mainly because as a single mum I wanted my son to inherit that money if anything happened to me – I also didn’t want to hang on to it until I was 67 to be guaranteed a pension of £19K per year – although the advisor told me this was a good amount, I wanted to be able to draw on the money earlier than 67 and didn’t mind that I wouldn’t be guaranteed £19k/pa.

I’m now 52 (53 in December) and am thinking about my future. I have a mortgage of £126k against a property value (currently) of £240K. The mortgage has 12 years to run but I am aiming to clear it before then. I earn £49K per year currently (since May – my previous salary was £45K).

I am unhappy with how my SIPP has performed since I have had it. My advisor initially invested as follows:

M & G Feeder of Property Ptfl I Acc 49%
CF Woodford 19%
Standard Life My Folio Mgd III 29%
Std Life SIPP Bank acc 3%

I queried the property % at the start as I thought it was quite high but my advisor persuaded me he was right – and the fund took a huge hit with the referendum and has only just recovered what it lost. He conceded to me at a later date that I had been right to query it.

I am also unhappy with how my advisor has managed my account – as well as the initial issue investing too much in property, I was due to meet him in August (an appointment made 6 months previously – I have very specific dates when I can take holiday from work) and he cancelled with a week to go as he had booked a holiday. I made an appointment with another staff member and at the meeting discovered that I was still holding funds in Woodford, when my advisor had recommended 6 months previously that we move that money to a different fund. I was eventually told he hadn’t moved them as we agreed as the fund experienced some volatility in the following days – but I was never told this. He has also recently emailed a performance report to the wrong email address, this only came to light when I chased for the information and then saw it had gone to the wrong address. I have been told (when I asked for the information) that my fund has had charges of £12.3K since Feb 2016, and the total value now stands at £272.3K – so the value has only increased £8.7K in just over 2.5 years.

My SIPP is currently as follows (in a Standard Life wrapper):

Std Life My Folio Mgd II £115.2K 42.3%
Premier multi asset growth & Income £32.8K 12.05%
Schroder Strategic Credit L acc £30.8K 11.34%
Std Life MyFolio Mgd III Pn B £93.3K 34.28%
Total £272.3K

I think I have already decided to move away from my current financial planner due to the reasons outlined but my question is – can I just run the SIPP myself or do I need to go through a planner/specialist? Would I be better finding an alternative provider and if so how can I keep the costs down (I think these have been significant – for not much benefit).

My most recent risk profile was via Finametrica and I scored 41, so, on the risk avoidance side. I have a very stressful job and my plan is to pay off my mortgage as soon as I can (so I have considered whether to withdraw 25% of my SIPP once I hit 55), and then to work less hours – so I would still do some form of work into my 60s but certainly not at the pace I work now! My son will be 18 next Spring and has no plans to go to university – I think he will either do an apprenticeship or get a job, so I don’t anticipate having to fund his education (and hopefully he will be working!).

I understand relatively little about pensions, SIPPS etc which all seem quite complicated, but I do take a keen interest in money and would like to become more knowledgeable within my limited spare time. But please go steady on me – I really appreciate any advice you could find the time to give

xylophone

If you are happy to DIY then you can certainly do so.

This comparison spreadsheet may be worth a look.

https://forums.moneysavingexpert.com/discussion/5583030/coolly-comparing-investment-platform-charges-snowmans-spreadsheet

https://www.moneyadviceservice.org.uk/en/articles/pension-investment-options-an-overview

You could look for an independent financial adviser specialising in pension advice.

https://adviserbook.co.uk/

Input your location then you can filter by confirmed independent, chartered financial planner, pensions and retirement etc.

kidmugsy

mrs_slapshot wrote: »

and my previous pension (with the University SS) was frozen.

Nah; it was deferred.

mrs_slapshot wrote: »

I began a new job in education in August 2015 and have been paying into the Local Gov Pension Scheme since then. I met with a financial advisor and decided not to transfer my previous pension in – the value was £263.6K as at Feb 2016. I decided to open a SIPP

Do you mean that you transferred your USS pension into a SIPP?

And you appointed a dud adviser who, with the benefit of hindsight, you reckon has done a lousy job of allocation?

Mind you, with the benefit of foresight I wouldn't have thought much of that allocation. Oh dear. But we are where we are.

In your shoes I'd start by finding out whether Standard Life will let you manage the SIPP yourself or whether it is a wrapper for advisers only. If the latter, do they offer a SIPP for customers to manage, and will they let you transfer to it without cost? What would the latter, if it exists, cost you per annum?

If I wanted to manage a SIPP of that size I'd probably do three things.

(i) I'd split it across two or three providers - probably two.

(ii) I'd invest one of the SIPPs in one of the Vanguard Lifestrategy thingies and just leave it alone: "passive" investment it's called. (Vanguard are going to launch their own SIPP before the end of the year, apparently.)

(iii) The other I might manage actively if I thought I had the time and energy to learn about the topic. I'd aim to diversify, to include things that the Vanguard investment wouldn't. Or maybe I'd just plump for investment companies that prioritised protecting my capital rather than growing it, by suitable "active" investment. For example I might split it across Personal Assets Trust, Ruffer Investment Company, and Capital Gearing Trust.

I know I should recommend that you consult an IFA but given your recent experience would you want to?

mrs_slapshot

Thank you Xylophone, very helpful!

xylophone wrote: »

If you are happy to DIY then you can certainly do so.

This comparison spreadsheet may be worth a look.

https://forums.moneysavingexpert.com/discussion/5583030/coolly-comparing-investment-platform-charges-snowmans-spreadsheet

https://www.moneyadviceservice.org.uk/en/articles/pension-investment-options-an-overview

You could look for an independent financial adviser specialising in pension advice.

https://adviserbook.co.uk/

Input your location then you can filter by confirmed independent, chartered financial planner, pensions and retirement etc.

mrs_slapshot

kidmugsy wrote: »

Do you mean that you transferred your USS pension into a SIPP?

And you appointed a dud adviser who, with the benefit of hindsight, you reckon has done a lousy job of allocation?

Mind you, with the benefit of foresight I wouldn't have thought much of that allocation. Oh dear. But we are where we are.

Yes - as I said, I don't know much about pensions but this is why I am posting here for helpful advice....

Thanks for posting - I had wondered if I should spread it across more than one provider so that's definitely something to look at.

I've also heard of Vanguard so will look into that.

And no, I'm not sure about using an advisor but it's a lot of money (to me, anyway), and it is hugely important to me that it does well so I will look at the link Xylophone posted.

Thank you for taking the time to reply in detail!

OldMusicGuy

You've had a poor experience with an IFA and there's no guarantee the next will be any better. That's the problem here. A DIY approach can be attractive (that's what I do, and my DC pot is larger than yours). If you want to consider that, I suggest getting this book by John Edwards:

DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning

It will help you down the path of deciding if you want to DIY or stick with an IFA.

dunstonh

Not impressed with the selection made previously. 49% property is far too high.

DIY may be an answer but it may not be. I have had plenty of DIYers return to advice. Sometimes because they value their time and dont mind paying once they realised they didnt have the time themselves or because they realised they couldnt do it. Some made a right pigs ear of it. DIY in investing is like any job. Do it well and you can save money. Do it badly and it can be costly.

Albermarle

In your shoes I'd start by finding out whether Standard Life will let you manage the SIPP yourself or whether it is a wrapper for advisers only. If the latter, do they offer a SIPP for customers to manage, and will they let you transfer to it without cost? What would the latter, if it exists, cost you per annum?

For sure Standard Life offer a Sipp direct to the public /retail investor . Fund charges are on the high side but with a pot this size there are discounts . It's all pretty clear on their website .
However if the original sipp was set up via an advisor, there might have to be some kind of internal transfer ( just guessing)

Thrugelmir

mrs_slapshot wrote: »

I understand relatively little about pensions, SIPPS etc which all seem quite complicated, but I do take a keen interest in money and would like to become more knowledgeable within my limited spare time. But please go steady on me – I really appreciate any advice you could find the time to give

SIPPS are just a wrapper for investments.

I wanted to be able to draw on the money earlier than 67 and didn’t mind that I wouldn’t be guaranteed £19k/pa.

A high proportion of the UK workforce would bite your had off for a guaranteed indexed linked income of that level. Using it as a base foundation. Investing new money into more speculative investments.

Hindsight is a great human invention. If you want to grasp some of the fundamentals in a straightforward manner. I'd recommend a read of

Harriman's New Book of Investing Rules: The do’s and don’ts of the world’s best investors

The advice given in the book is contradictory. For example there's arguments for Vanguard (by Bogle) and corresponding arguments against. As trackers aren't all they seem.

The beauty is it'll make you think. You'll be a lot wiser afterwards. Investment is about listening, watching, reading, attending. You'll form your own ideas as to what areas you will wish to consider.