SIPP / Investment advice

Goldman2020

[FONT=&quot]I am approaching my mid-sixties and would like to invest approx. £100K from a Stakeholder Pension into a SIPP (I have some annuities which come with guarantees. I am not taking any money out of these annuities at the moment and plan to keep them separate from the SIPP).[/FONT]

[FONT=&quot]I may keep the SIPP for at least five years before taking flexi access drawdown.
[/FONT]
[FONT=&quot]There are a wide range of SIPP providers however, I have narrowed down my choices to the following possible providers (I may consider others) which are listed in no set order of preference below:-[/FONT]

· [FONT=&quot]AJ Bell[/FONT]
· [FONT=&quot]Fidelity[/FONT]
· [FONT=&quot]Interactive Investor[/FONT]

[FONT=&quot]Although I have a few funds invested with Interactive Investor (II) I only have limited knowledge of investing (I realise that I need to expand my knowledge of investing).[/FONT]

[FONT=&quot]My questions are as follows:-[/FONT]

[FONT=&quot]1/ Based upon paying in £100K into a SIPP, which out of the above three providers would provide all of the following:-
[/FONT]
[FONT=&quot]a) Value for money,[/FONT]
[FONT=&quot]b) Good customer service,[/FONT]
[FONT=&quot]c) A straight forward and clear SIPP investment online platform?[/FONT]
[FONT=&quot]
[/FONT][FONT=&quot]If you are able to rank the above in order of choice that would be helpful.
[/FONT]
[FONT=&quot]2/ Are there any other SIPP providers worth considering which will meet a) to c) above?
[/FONT]
[FONT=&quot]3/[/FONT][FONT=&quot] With a £100K invested in a SIPP are the above providers safe and if they went bust or were taken over would my investments/money be safe?[/FONT]

[FONT=&quot]4/ Having limited knowledge of investing, in a nutshell what are your thoughts on paying for a regulated Financial Advisor to choose initially the investments for a diversified portfolio (and then i take it over from there) or is this going to be expensive and in your opinion unnecessary?[/FONT]

[FONT=&quot] 5/ If I were to choose the investments for a diversified SIPP portfolio and was prepared to be a moderate risk investor, what in percentage terms would be the best investment types (asset classes) for me to include within a diversified portfolio and what would be their attributes?[/FONT]

[FONT=&quot]Thank you in advance for any constructive answers and advice you can provide.[/FONT]

dunstonh

3/ With a £100K invested in a SIPP are the above providers safe and if they went bust or were taken over would my investments/money be safe?

FSCS protection is to 85k from April next year. However, it's not really that important on the platform if you are using mainstream providers as a SIPP provider is just an administrator. You are not investing in them. You invest in the assets you select and a SIPP can have assets with 50k (85k from April) FSCS protection per fund house to no FSCS protection at all. Some SIPPs offer insured funds with 100% FSCS protection regardless of value.

4/ Having limited knowledge of investing, in a nutshell what are your thoughts on paying for a regulated Financial Advisor to choose initially the investments for a diversified portfolio (and then i take it over from there) or is this going to be expensive and in your opinion unnecessary?

Never use an FA. If you need advice, you an IFA. It is unlikely an IFA would choose one of your three providers. Also, providers to the IFA market are mostly different to the DIY market.

The IFA will consider your investment experience and forward plans. If you intend to take it over then an IFA will not recommend their portfolio they use for their ongoing servicing clients. Portfolios need ongoing rebalancing and adjusting and if you are employing the adviser on a transactional one off basis, it would not be considered good advice to put you in a portfolio that isn't suited to one-off advice.

It may not be as expensive as you think. It could be more then you doing DIY. It could be less. It all depends on what sort of portfolio you build.

5/ If I were to choose the investments for a diversified SIPP portfolio and was prepared to be a moderate risk investor, what in percentage terms would be the best investment types (asset classes) for me to include within a diversified portfolio and what would be their attributes?

What is your definition of moderate? How much loss could you tolerate in 12 months before getting cold feet?
How much you afford to lose before it has an impact on your retirement plans?

Allocations to different sectors would depend on the portfolio model and method you are following. Trying to pick flavour of the month assets would usually result in lower returns over the long term as the ones that are best now are unlikely to be the ones that are best in the next period.

tacpot12

As a retail investor I can't add too much to what Dunstonh has said, but I use AJ Bell and would say that they meet all three of your requirements (a/b/c).

One of the choices you will have when constructing your portfolio is whether to focus on growth or income, or a blend of these. You will also need to be clear on the purpose of the investment in the SIPP; is to provide a short term or long term income for yourself or is it to pass onto your relatives. Your life expectancy will feed into this.

EdSwippet

Goldman2020 wrote: »

There are a wide range of SIPP providers however, I have narrowed down my choices to the following possible providers ...

With respect, your decision framework here may be somewhat upside-down. Or at least, that is what your order of questions suggests. The first thing to work out would be what investments you want to hold. From there, you can then identify the platform that is best placed to provide those cost-effectively and with the appropriate level of service.

For example, Fidelity will charge 0.35% of your holdings annually, AJ Bell will charge 0.25% annually for holding unit trusts and OEICs (funds), but not for shares, investment trusts or ETFs, and Interactive Investor will charge £120/year plus £22.50/quarter flat fees.

At £100k in funds or OEICs there isn't much to choose between these, but as your investments grow the percentage based fees will also grow, but the flat fee option remains the same, so that will likely become the more cost-effective choice over time. (And from the look of things you are already paying the £22.50/quarter Interactive Investor fee, so unless you propose to move out that may make them the cheapest for you now, given your current circumstance.)

On the other hand, if you choose to hold only ETFs, shares, and investment trusts then AJ Bell is probably going to be your current cheapest option.

None of these will offer advice, and all will allow you to buy mainstream investments with minimum fuss and bother (this is after all what they are for!), so in general I would tend to place customer service as lower priority than value for money, although that may just be me.

As for choosing investments, it is quite possible these days to construct an adequately diversified multi-asset portfolio out of just one or two funds. Maybe start by looking at Vanguard's LifeStrategy range, Blackrock's Consensus funds, and Legal and General's Multi-Index fund range.

Albermarle

A comparison of Sipp platform costs can be found here:

https://www.moneyobserver.com/best-sipp-platforms-your-portfolio-2018

bostonerimus

Before you can seriously decide what to do with your 100k you need to understand how it fits into your retirement income plan: do you require income from it to keep body and soul together or is it extra to your basic needs? The answer will influence the amount of risk you might take with it.

So first sit down and do a detailed budget and then write down all your income sources and see where you stand.

BobQ

dunstonh wrote: »

FSCS protection is to 85k from April next year. However, it's not really that important on the platform if you are using mainstream providers as a SIPP provider is just an administrator. You are not investing in them. You invest in the assets you select and a SIPP can have assets with 50k (85k from April) FSCS protection per fund house to no FSCS protection at all. Some SIPPs offer insured funds with 100% FSCS protection regardless of value.

dunstonh, is there a simple way of identifying what level of FSCS protection an asset within a SIPP carries?

dunstonh

BobQ wrote: »

dunstonh, is there a simple way of identifying what level of FSCS protection an asset within a SIPP carries?

It has to be a regulated investment. (so forget cape verde property, biofuels, car park spaces, storage units and forestry)

So, regulated unit trusts and OEICs will give you £50k per fund house. Shares, Investment trusts and ETFs have no FSCS protection

I don't believe any of the DIY platforms issue insured funds. They only exist on some of the adviser platforms.

bostonerimus

I would not worry too much about the need for FSCS protection as long as you stick to major platforms and regulated investments. The things you should be worrying about are ongoing fees eating into your money and avoiding poor planning and management choices.

ProfessorPension

I did something similar and opted for the Interactive Investor SIPP.

I'd recommend trying one of the other ones! There's nothing terrible about Interactive Investor, but the website is pretty clunky and you often have to print stuff off and send it in (which takes me about a month, as I don't have envelopes or stamps anymore!). I get the impression the Interactive Investor SIPP is just a front end to the AJ Bell service, so I'd try them if I was you.

EdSwippet

ProfessorPension wrote: »

There's nothing terrible about Interactive Investor, but the website is pretty clunky and you often have to print stuff off and send it in (which takes me about a month, as I don't have envelopes or stamps anymore!).

Every pension transfer I have ever done -- and I've hopped around several SIPP providers over the years -- has required printed paperwork with a 'wet signature', so Interactive Investor won't be an outlier here.

Aside from transfers (and perhaps moving to drawdown as a one-off) what else has required you to print and post stuff? I have an Interactive Investor SIPP, and have not experienced anything like what you describe. Aside from my transfer in, I have never had to send them anything else on paper. Also, what about Interactive Investor's web site is clunkier than any other?

ProfessorPension wrote: »

I get the impression the Interactive Investor SIPP is just a front end to the AJ Bell service, so I'd try them if I was you.

Not at all. There is no connection between Interactive Investor and AJ Bell.