Cavendish or AJ Bell for Vangaurd

LateStarter

Hello again,
I've decided to put a together a small SIPP based on the Vanguard Lifestrategy range. I'm 53 and will run it for at least 10 years, possibly more as it will not be my main source of retirement income.

I'll be starting with a lump sum of 3k, and putting in a couple of hundred when I can (so the contributions in will be irregular). The total size of the pot won't get above 50k, if that matters.

My initial googling suggests that Cavendish Online would have the lowest charges, but seaching this forum results in more references to AJ Bell. Can anyone point me in the right direction?


Thanks
LS

Clive_Woody

You could just go direct with Vanguard

https://www.vanguardinvestor.co.uk/

EdSwippet

Clive_Woody wrote: »

You could just go direct with Vanguard ...

Not yet, for a SIPP.

https://www.vanguardinvestor.co.uk/need-help/answer/do-you-offer-a-pension-or-a-sipp

We don't offer a pension at the moment, but we're working hard to add one shortly.

LateStarter

EdSwippet wrote: »

Not yet, for a SIPP.

https://www.vanguardinvestor.co.uk/need-help/answer/do-you-offer-a-pension-or-a-sipp

Exactly, thank you. They've been "about to launch one" for about 6 months now.

bowlhead99

I use Bell (for a bigger account with funds, investment trusts and individual company shares) and they have been fine. Not that you are going to need much in the way of customer service to buy and hold one fund and add a bit of cash to the account from time to time.

AJ Bell have been doing pensions fund administration (under their own brand and white-labelling for other investment houses) and offering investment platform /stockbroking stuff for years and seem to have a decent set up - lots of public domain information on them since they listed on the stock exchange.

Cavendish Online were known more as a low cost execution-only intermediary who could hook you up with underlying investments (eg pension providers or fund holdings) without advice for a nominal fee; they have recently expanded what they offer, but if you pay them 0.25% a year to hold a fund, you're really paying their negotiated 0.2% to Fidelity FundsNetwork who run the platform and 0.05% to Cavendish to cover their costs and profit and front end operations.

Some might take the view that they'd rather pay a smidge extra to use a bigger business who handles both the front end and the back end administration, rather than effectively a middleman. But when your needs are simple, why pay more than you need for the basics of what you want? When your objective is holding a single fund for a decade which you can't touch until pension age, there is no point paying much more for bundled stuff like Morningstar investments research, online access to Shares magazine, a smartphone app that lets you check the value of your holding at 3am while on a beach holiday, have a 'family login' to check on the investments of your spouse from your own profile, etc. None of that has much tangible value if you are trying to just buy and hold one asset for the lowest cost with occasional top ups.

If you're going to be throwing a few hundred quid into the fund every couple of months or so, at AJBell / Youinvest you'd incur 6 x £1.50 transaction charges a year, on top of the 0.25% custody fee.

Really that nine pounds a year of transaction fees isn't going to make the difference between a lavish retirement and a frugal one. And when you actually reach retirement and want to think about taking out lump sums or putting the pension into drawdown, you can shop around for the best providers on the market at that time, more than a decade from now.

So: I use AJ Bell for a range of investment types and would recommend them to others. But if you are not doing anything complicated and just want a low cost solution (this is a Money Saving Expert site after all), you don't need much of what AJ Bell offer for the extra nine pounds a year it would cost.

Searching the forum for hits would probably result in more references to AJ Bell, AJBell, Bell, Youinvest, You Invest etc than Cavendish, but that's because they are a bigger, more well-advertised operation and have more customers. It doesn't mean those customers have the exact same needs as you, or that the customers at AJ Bell have experience of both providers and prefer AJ Bell.

EdSwippet

bowlhead99 wrote: »

... there is no point paying much more for bundled stuff like Morningstar investments research, online access to Shares magazine, a smartphone app that lets you check the value of your holding at 3am while on a beach holiday, have a 'family login' to check on the investments of your spouse from your own profile, etc. None of that has much tangible value [STRIKE]if you are trying to just buy and hold one asset for the lowest cost with occasional top ups[/STRIKE].

Fixed that for you :-)

LateStarter

Thanks very much bowlhead99, exactly what I was looking for.

The big negative I've seen with Cavendish is that they don't do drawdown, but their website says "We do hope to be able to provide our clients with access to drawdown at some time in the future." I guess 10 years is a long time, and if they still can't do drawdown when I want the funds, I could transfer to another provider?

Joey_Soap

If you are happy with 0.25% charge, also look at Close Bros. Their fee is 0.25% too.

AlanP_2

Check the minimum lump sum contribution levels for the likes of Cavendish, they are higher than the monthly regular investment levels.

LateStarter

AlanP wrote: »

Check the minimum lump sum contribution levels for the likes of Cavendish, they are higher than the monthly regular investment levels.

Thanks Alan - for anyone else reading this thread, the website says:

"If you wish to make a monthly contribution the minimum amount is £50 gross (£40 net).
The minimum lump sum contribution is £1000 gross (£800 net)."

bowlhead99

LateStarter wrote: »

The big negative I've seen with Cavendish is that they don't do drawdown, but their website says "We do hope to be able to provide our clients with access to drawdown at some time in the future." I guess 10 years is a long time, and if they still can't do drawdown when I want the funds, I could transfer to another provider?

Correct, you can transfer your pension to a different provider who provides the services you want. At the moment you're not in the market for drawdown services and the going rates and top service providers will have changed by the time you are.

I am with Bell and they allow drawdowns or UFPLS etc but I couldn't tell you (and don't care) what the price is as the service isn't relevant for me for the next decade plus. At the moment I'm building my assets. I'll shop around for other services when I need them.