Fidelity v's Interactive Investor

Bobski

Hi All,

In a slight dilemma and I wondered if I could ask your collective wisdom. I would call myself a novice investor. I am in my sixties but no plans to retire or draw down for at least 10 years

I have 2 pensions worth collectively about £166k which I would like to consolidate into a SIPP. Following the good advice here I went to a IFA and he offered a deal of £1250 for one time advice or for it to be reduced to £850 if I take ongoing advice at 0.5% pa.
He has suggested the Fidelity platform with a mixture of ishares

15% UK Equity, 15% North American Equity, 5% Japanese Equity, 10% European Equity, 5% Asia Pacific Equity and 5% Emerging Markets. and
10% in Overseas Corporate Bonds, 14% in UK Index Linked Gilts and 14% UK Corporate Bonds. 7% in UK Commercial Property.
This sounds fine. I am mainly interested in passive investments.

My question is whether to go for the Fidelity platform with a percentage charge or go for something like II which I understand charges a fixed fee. The advisor seemed to be recommending Fidelity because it was easier for him to take over the portfolio. Having said that the charges do not seem unreasonable and the revised website is supposed to be easier to use.

My one real concern is to have a platform where I can easily track the investments and compare how my money is doing to other investments, like having the money in a FT100 tracker. Largely I was thinking of keeping it fairly passive but might want to experiment a bit once I had gained some confidence.

My 2 questions are 1) Given my requirements and portfolio size would the II or Fidelity be a better bet? I wonder how much difference the charges would make in the medium term - say 10 years. 2) How does a novice decide if the managed service he is offering at 0.5% is worth it or not? I was wondering if there was anything else I should be thinking about.


Would be very grateful for some advice.
Cheers

Albermarle

How does a novice decide if the managed service he is offering at 0.5% is worth it or not?

There is no easy answer to this , in the end it is your decision.
On side your requirements and investment preference are relatively straightforward , so it sounds like you could DIY. On the other side 0.5% is at the low end of IFA ongoing charges .

Regarding Fidelity vs II . If you DIY , then II will be cheaper, unless you are close to drawing the pension and then the calculation is less clear . However the advisor will probably get a better deal from Fidelity than you can .

Lokolo

As Albermarle points out, ii is cheaper* for your portfolio size vs Fidelity, but you do everything yourself.

*ii do charge for transactions, so if you are rebalancing your portfolio or purchasing multiple times in short period, the fees soon add up.

The question is - what do you get for that 0.5%? If it is a simple rebalancing, don't bother. If it's an annual or even 2 year review, then perhaps it could be worthwhile. The other thing is, what are the platform charges going to Fidelity via the IFA, these could offset the fact there is the 0.5% charge.

ii's platform has changed twice for charges since I've been with them (18 months), so there's nothing really stopping them changing it again.

Sue58

If your ishares investments could be ETF’s then Fidelity is cheaper as it is capped at £45 per annum for holding ETFs or ITs and there are no charges for drawdown or exit fees.

MallyGirl

ii do charge for transactions but they can come from the service plan. For example the basic fee is £9.99 per month but that gives you a £7.99 service credit (i.e. one transaction).
There is a fee for a SIPP on top of this

Alexland

I would prefer the financial stability of Fidelity and they have provided me a good service over the past 15-20 years. If the advisor is recommending a mix of iShares ETFs via a retail Fidelity SIPP then the custody fee is capped at £45 and trades are £10 each. The skill will be in keeping trade costs to a minimum.

I am surprised your IFA has suggested using iShares (ETFs have no FSCS protection) in a SIPP (which only has £85k FSCS protection). I would expect them to have suggested a 100% protected option. Not saying it's a bad choice (I have a high value of ETFs in my Fidelity SIPP) but advisors tend to value the protection more. I assume they have explained the limited protection and you are comfortable with the risk?

The advisor charges seem reasonable for your portfolio value.

Alex

Voyager2002

Albermarle wrote: »

Regarding Fidelity vs II . If you DIY , then II will be cheaper, unless you are close to drawing the pension and then the calculation is less clear .

I question this.


The Fidelity 'platform fee' is capped at £45 pa for portfolios comprising ETFs and similar. In addition there is a fee for each trade, but no fee for having a SIPP. The II fixed fee is £9.99 per month, but most of this is used to cover the cost of trades. In addition, II charge an annual fee for a SIPP.


On the other side of the coin, the Fidelity website is dreadfully uninformative whereas the II website works quite well for me.

cloud_dog

Additionally, Fidelity do not make a charge for draw-down (unless they have changed their T&Cs since I last looked).

Albermarle

Additionally, Fidelity do not make a charge for draw-down (unless they have changed their T&Cs since I last looked).

That is still the case . In fact that is one of the main positive points about Fidelity . There are no extra charges for anything ( except trades) .

SonOf

Is the recommendation using ishares Unit Trust/OEICs range or their ETF range?