SIPP run by IFA rather than myself?

BossHogg

Apologies if already been asked, or wrong place, but tying to work out if I would be jumping from frying pan into fire by changing my independent financial advisers who had me consolidate pensions into a (AJ Bell) SIPP that they then manage on my behalf, or better to manage it myself? My situation...

• My wife and I had a financial review at start of 2019 and outcome was a recommendation to consolidate the various pensions (apart from old final salary ones of course) spread across many pension companies into a SIPP each, and then invest into a low/medium risk fund. 
• This took many months to (partially happen) possibly due to my adviser leaving the original firm and their back-room people not picking up the pieces. I ended up with bulk of my pension sitting uninvested as cash amount in my SIPP just getting quarterly charges, and my wife's never moved from where it was.
• I complained as I thought the market had moved up in mid 2019, and they analysed price changes for the 4 - 6mth it sat doing nothing and apparently it was about neutral on gains/losses across that time. They would however waive some costs and would now invested it across 4 months from End-Dec in 25% chunks. 
• Given market crash I seem to have scored (?) as they were able to use the last 50% to buy at almost market bottom.
• Original IFA has now setup with new partnership and I'm tempted to use him again given problems at original firm, but wonder at initial 'one off' cost of going over same ground again and then the ongoing 1% feed for annual 'maintenance'. This seemingly will be to review if still invested in best place/way.
• I'm happy enough with the Fund that has been invested in, and see no reason to change, I just want my wife's transfer to be concluded into her SIPP as planned over a year ago.
• Can I just ask original firm to hand me the reigns of my SIPP to manage it myself? I mean that's what the 'S' is right? 'Self'?
• Presumably if I'd have stayed with original regular pensions, once each buys an annuity there would be no further ~1% pension administration costs, but seems like having my SIPP managed will be just ongoing indefinitely?

Marcon

BossHogg said:

Apologies if already been asked, or wrong place, but tying to work out if I would be jumping from frying pan into fire by changing my independent financial advisers who had me consolidate pensions into a (AJ Bell) SIPP that they then manage on my behalf, or better to manage it myself? My situation...

No, they didn't 'have you consolidate' - they may have suggested/recommended it, but you chose to go ahead with the consolidation. Before you go any further, think about why you chose to do so and why you chose to let them manage the funds? What's changed that you now believe you are better placed than they are to select funds? I'm not saying you aren't, I'm just suggesting you consider the point.

dunstonh

Original IFA has now setup with new partnership and I'm tempted to use him again given problems at original firm, but wonder at initial 'one off' cost of going over same ground again and then the ongoing 1% feed for annual 'maintenance'. This seemingly will be to review if still invested in best place/way.

There may not be an initial cost.   Many advisers will take over an existing investment without laying on an initial charge where there is ongoing servicing.  It really depends on the value.

I'm happy enough with the Fund that has been invested in, and see no reason to change, I just want my wife's transfer to be concluded into her SIPP as planned over a year ago.

Fund or funds?

Can I just ask original firm to hand me the reigns of my SIPP to manage it myself? I mean that's what the 'S' is right? 'Self'?

yes.

Presumably if I'd have stayed with original regular pensions, once each buys an annuity there would be no further ~1% pension administration costs, but seems like having my SIPP managed will be just ongoing indefinitely?

PPPs and SIPPs are very similar and the type has nothing to do with it.Most PPPs no longer have in-house annuities and can be open ended.

Albermarle

Presumably if I'd have stayed with original regular pensions, once each buys an annuity there would be no further ~1% pension administration costs, but seems like having my SIPP managed will be just ongoing indefinitel

Only a minority of pension pots are nowadays used to buy annuities. Most stay invested during a drawdown process as this is seen as a better route for income maximisation . By the way 1% ongoing charge is a bit on the higher side , unless the pot is not very big, say less than £150K.

BossHogg

Thanks all for feedback... 

• @Marcon - Yep, of course it was "advice" based to consolidate, but badly executed and I still seem to be the only one prompting things to be done. I am "considering the point" if 1% ongoing is worth it for them (obviously) being better placed to advise.
• @dunstonh - Single fund (a Vanguard one). Thanks for info, had not appreciated that
• @Albermarle - 1% is about what original pensions were charging, but it it all comes down to value for money. Pot is not huge so talking about a couple of grand a year.

I suppose it comes down to how likely is it that the 1% can be more than made up for by good IFA management (and annual situation review) , vs. just leaving it where it is and hoping the fund is well managed.

OldMusicGuy

BossHogg said:

I suppose it comes down to how likely is it that the 1% can be more than made up for by good IFA management (and annual situation review) , vs. just leaving it where it is and hoping the fund is well managed.

One point of clarification - you seem to think IFAs are "managing" something. They are not. They add nothing to the underlying management of any fund, and they are not your personal "fund manager". They are not investment specialists, they are not proactively watching the market and making investment decisions on your behalf. What they do is help YOU make asset allocation choices. They know a lot more about the funds and other investment choices available than most individuals would, so they can help you choose how you allocate your money in a SIPP. But they are not investment gurus that have an insight into what is happening in the global economy.

If all you want to do is to keep the SIPP in a single multi-asset fund, there's no need to pay an IFA to do that. You can "manage" that yourself. Many of us on here do that, me included (although most will use more than one fund and some are quite sophisticated in their approach). Your situation is a great example of why many of us feel that IFA/FA fees are not worth paying, although in your case it appears their mismanagement has served you well!

However, before taking the plunge I would recommend you do some reading and make sure you really know what you are taking on. For example, your comment about "well managed" funds implies you may not know the difference between active and passive funds.

The "self managers" on this forum often recommend these books as a starting point:
John Edwards: "DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning" and "DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing".
Lars Kroijer: "Investing Demystified" (he also has a number of good videos on his website).
Also check out the "Monevator" website.

It's not complicated to manage a SIPP but many people prefer to have an IFA to guide them. That's their choice and understandably it comes at an additional cost.

Albermarle

I suppose it comes down to how likely is it that the 1% can be more than made up for by good IFA management (and annual situation review) , vs. just leaving it where it is and hoping the fund is well managed.

This subject is a common theme on this forum with some polarised views . In the end it is your call .

Just to add to the sensible post above . If you go without an IFA , then apart from the investing side , make sure you understand about tax relief and options to take the pension when the time comes, whilst not overpaying tax. 

segovia

The answer to your question is in the title SIPP "SELF INVESTED", I would not pay an IFA an annual fee to chooses a fund for you, maybe a one-off fee to select a fund or funds to match your financial profile and retirement strategy but not annual and 1% is very high, 0.5% is more common for larget pots. Once you have decided on you investment strategy there should be no need to swap and change funds, they all move more or less in the same direction at the same time unless you invest in some emerging markets or high-tech which can be high risk.   300K at 6% growth is 18K, 300K at 1% is 3K ,  3K of 18K is 16% of your profit, do you want to give 16% away? Also if the market drops your IFA still gets his 1% so it's Win/WIn for the IFA.      

dunstonh

Once you have decided on you investment strategy there should be no need to swap and change funds

So, everyone should have stayed in Woodford  for example because there is no need to change funds?

they all move more or less in the same direction at the same time unless you invest in some emerging markets or high-tech which can be high risk. 

No they don't.   Fixed interest and property wil not.    Also sectors will vary. UK equity has performed very different to Asia for example.