Come Full Circle IFA Frustration

segovia

I have now come full circle, I posted here a few months ago as I need to move my PPP post to a SIPP, I explored the DIY approach and decided that I didn't have the time to be choosing and tracking funds and there was a slight element of anxiety, i.e. am I making the right choices.

I went down the IFA route and agreed a fixed fee of £3,000.00, negotiated down to £2,600.00 to transfer two pensions into a SIPP and a DMF OIEC. During the discussions with the IFA, I was told the ongoing fee of 0.6% was discretionary. I did my research and concluded that as my fund is a DMF I didn't need ongoing IFA advice and asked the IFA to proceed on that basis. The IFA is now saying he can't / won't do the transfer unless I agree with the 0.6% ongoing fee.

The pot is 400K and I intend to drawdown in about 4 years. Total fees over that 4 years would be in the region of £35,000.00. My gut feeling is that the £35,000.00 would be better off in my pension rather than the fund managers and IFA's pockets.

I think I can confidently transfer the post myself to a SIPP, I'll just need to choose the investment vehicles. I have the recommended DIY books so I'll revisit. I would like to move ASAP as the charges on my current PPP are a bit high, is there a safe option other than cash that I can invest in as a holding position while I do my research?

J

drumtochty

Transfer fee £2,600 plus £400,000 x 0.4% x 4 years


£2,600 plus £9,600 if no increase in pot value.


£12,200.


Where does the £35,000 come from.

JoeCrystal

Yes, my maths says the same as well regarding the IFA fees. Maybe the rest of the amount is due to DMF fees?

beamyup

If I was you I would ditch the IFA and use a SIPP provider to help you transfer your funds.

Take a look at pensionbee as they specialise in consolidation and have facilities and offer support that other sipp providers do not. (i used pensionbee for consolidating my 5 pensions)

Later, you can transfer out of pensionbee to another provider if you wish (that is a simpler transfer of course!)

segovia

drumtochty wrote: »

Transfer fee £2,600 plus £400,000 x 0.4% x 4 years


£2,600 plus £9,600 if no increase in pot value.


£12,200.


Where does the £35,000 come from.

Assume a 4% growth per annum + the fee = £33,174.54

Total charges for DMF and IFA Fees are 1.8%

I would hope it would make more that 4% PA

segovia

beamyup wrote: »

If I was you I would ditch the IFA and use a SIPP provider to help you transfer your funds.

Take a look at pensionbee as they specialise in consolidation and have facilities and offer support that other sipp providers do not. (i used pensionbee for consolidating my 5 pensions)

Later, you can transfer out of pensionbee to another provider if you wish (that is a simpler transfer of course!)

It looks too simple, is there a catch?

Is Pensinbee a SIPP?

J

SonOf

I went down the IFA route and agreed a fixed fee of £3,000.00, negotiated down to £2,600.00 to transfer two pensions into a SIPP and a DMF OIEC. During the discussions with the IFA, I was told the ongoing fee of 0.6% was discretionary. I did my research and concluded that as my fund is a DMF I didn't need ongoing IFA advice and asked the IFA to proceed on that basis. The IFA is now saying he can't / won't do the transfer unless I agree with the 0.6% ongoing fee.

The DFM does not replace the IFA. They take on some of the work but not all of it. Plus, in a number of cases, post MIFID II, the IFA carries the reporting liability.

As it is an IFA that is being used, you could tell them not to use a DFM. That would be the easist solution if you dont want ongoing services. And as they are IFAs, they have to be independent and cannot restrict in any way. Any hint of a restriction and they are not allowed to be referring to themselves as an IFA.

Is Pensinbee a SIPP?

no

xylophone

Are you happy with the investments in your PPP?

If so, would it be possible either to transfer in specie to a SIPP of your choice or to sell, transfer in cash and then replicate the investments in the SIPP?

Albermarle

In case you go ahead with DIY , you might like to be aware that :
HL will give you £500 as cashback for transferring a pension of that size to them .
Fidelity will give cashback of £750 .
Neither are the very cheapest SIPPS ( although Fidelity has lower costs than HL) but both have a simple all in charge that includes drawdown, and both have good customer service to assist any transfer issues.
Of course cashback should not be a deciding factor by any means .

beamyup

As I said - the pensionbee sipp is very good for consolidating pensions.

Audaxer

segovia wrote: »

I would hope it would make more that 4% PA

Bear in mind that 4% would be an average per annum. In some years growth may be a lot higher than that, but you are also likely to see some years with large negative percentages.

I think for a medium risk portfolio 4% average total return per annum over the medium to long term is a realistic expectation, and any more than that would be a bonus in my view. But after 1.8% fees that would significantly reduce the 4% average growth, so I can understand why you want to go down the DIY route.