SIPP or not

MarcoRolo

I have a £1.25m pot which I won't want to access for about 7 years. It's currently managed by an IFA and invested in a portfolio of funds that matches my risk appetite. IFA takes about 0.7% and makes a couple of changes each quarter to the funds it is invested in. Any thoughts on whether I could better do this myself in a SIPP or whether that's too risky?

MallyGirl

A SIPP is a pension - so just a wrapper. It will do better or worse depending on the investments you choose.
Is it just in a standard trading account at the moment - if so then you can't just put it in a SIPP. Or is it in a DC pot?

MarcoRolo

It's in a DC pot so I could move it to a SIPP I think? As an amateur investor, just not sure whether the reduced cost would be offset by me making the wrong investment decisions!

MallyGirl

yes you could move it but you could make a much bigger loss than 0.7% if you don't have some idea on what you are doing.
Do you have the time and interest to do your own research - 0.7% is a little high but not that bad.

ColdIron

MarcoRolo wrote: »

It's in a DC pot so I could move it to a SIPP I think?

Yes but your contributions are limited to your relevant earnings. So, broadly, if you earn £40,000 pa it will take you nearly 40 years to achieve

pvt

ColdIron wrote: »

Yes but your contributions are limited to your relevant earnings. So, broadly, if you earn £40,000 pa it will take you nearly 40 years to achieve

I think the OP was talking about transferring it not contributing to it.

OP - I presume you're aware of the fact that you're well over the LTA, unless that is you stopped adding to the pot before the LTA dropped to where it is now?

Shelling out £9k per annum in charges may be a bit galling, but as MallyGirl points out, you only need to one poor decision to lose a lot more than that.

Only you can judge if your IFA is worth his money. You're unlikely to find an IFA wanting much below 0.7% because they are all being hammered with punitive PI insurance premiums.

ColdIron

pvt wrote: »

I think the OP was talking about transferring it not contributing to it.

Yes you're right. DC pot as per post #3

Thrugelmir

MarcoRolo wrote: »

IFA takes about 0.7% and makes a couple of changes each quarter to the funds it is invested in. Any thoughts on whether I could better do this myself in a SIPP or whether that's too risky?

What do the funds themselves charge in fees? If the markets were to downturn for a period the returns could be disappointing. Taking all charges into account.

Rather than doing better so to speak. With 7 years before you intend withdrawing the money. Perhaps the focus should be on capital retention. With stock market investments there's no guarantee as to when the next bear market will commence.

Prism

Why all or nothing? You could always move some of it to manage yourself

MarcoRolo

Yes am aware I’m over the LTA...no longer contributing. Thanks for your thoughts .

OldMusicGuy

I am in a similar situation to you (although I am retired). I have a large DC pot (not over LTA but still pretty large) which is invested in a small number of low cost multi-asset funds. I don't need significant growth, just need to match inflation and so far my goal is being met. I cannot bear the thought of paying something like 0.7% on a large pot for an IFA to do pretty much nothing.

I spent some time reading up and am very happy to manage all of this myself. In fact, I don't have to do anything except maybe some occasional rebalancing. It's pretty much "fire and forget".

Read these books:

Investing Demystified by Lars Kroijer
DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing by John Edwards

Also look at the Monevator website. Once you have done that, make a decision either to stick with your IFA or put it in a SIPP and save yourself a lot of money.

You might find this blog post of interest: https://theescapeartist.me/2015/09/07/honey-i-fired-the-financial-adviser/