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DB pension transfer - IFA fee

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  • cloud_dogcloud_dog Forumite
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    If you're going to transfer to a SIPP anyway, and you're going to buy VLS60 anyway, here's my 2p on the subject.
    Vanguard have a SIPP now but it's new and they haven't sorted out the drawdown yet. If you definitely want to drawdown very soon, HL's actual service may be better for you, but Vanguard's platform fee is 0.15% Vs 0.45% for HL so on a £110k pension you would basically be paying HL £330 a year extra for  
    those advantages.
    The 0.75% is the IFA milking you.
    IFA in HL vs VLS60 in Vanguard - 1.1% total difference in fees. Vanguard publish return expectations/outlooks/projections/forecasts every so often (some people are sensitive about which word I use) and VLS60 based on 1% bond yields and 4-6% global equity returns, has an expected return of maybe 4% before fees, 3.6% after fees on the Vanguard platform, so if the IFA was to invest similarly for similar returns - let alone more expensive actively managed funds - that 3.6% you get with vanguard turns into 2.5%. That's almost half your market return expectation of 4% gone.
    In previous posts i have used even more conservative numbers based on my own working out but that made some people a little bit upset.
    Ah, the Church of Vanguard.  A little bit of knowledge, and all that.

    Based on the OP's requirements (and I'm not going to comment on whether transferring is a good option or not)... There are other, better options out there, and you should probably consider the holistic situation rather than basing it on simple platforms costs.

    Assuming you can transfer, a final place which may work out better for you is Fidelity (no drawdown charges) or II (fixed fee).  You'll need to evaluate the best option based on your own specific needs.

    WRT VLS, there are better out there and I would echo the preference for HSBC Global Strategy (Balanced in this particular instance).
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • AlbermarleAlbermarle Forumite
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    Brynsam said:
    Probably the IFA will be more likely to recommend a transfer if he/she is at least knowing the funds will be in a portfolio they control and the client will not blow the money and then make a claim for bad advice.
    Doesn't matter - the requirement is for OP to show they have received advice; they don't have to follow it.
    As you already said there are lots of threads on this subject.In some I have seen comments that indicate that you are more likely to get an IFA to agree to investigate a transfer if you are not too overconfident about managing the investments yourself and that you could let the IFA do it .
  • BritishInvestorBritishInvestor Forumite
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    cloud_dog said:
    WRT VLS, there are better out there and I would echo the preference for HSBC Global Strategy (Balanced in this particular instance).
    Better in what respect?
  • cloud_dogcloud_dog Forumite
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    Charges and coverage, in my very humble opinion.
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • BritishInvestorBritishInvestor Forumite
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    cloud_dog said:
    Charges and coverage, in my very humble opinion.
    Fair enough. As long as you are aware of their approach to asset allocation
    https://monevator.com/passive-fund-of-funds-the-rivals/
  • ossie48ossie48 Forumite
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    Thanks for the replies. 
    The IFA was a little concerned that they would be squeezed in relation to timing issues. I got the transfer quote three weeks ago and its valid for three months. We haven't started the process yet, just had the initial free chat. 

    Additionally I need to wait a couple of weeks for the pension provider to clarify the pension forecast aged 60. I believe it will be in the range of £300 a month before tax. As stated that won't be an issue but It would be nice to have a definite figure.

    Would I be best waiting for the three months to be up then Instigate the process afresh ? He said something about if there was a 5% fluctuation in transfer value they were working on before completion it would complicate things.   
  • p00hsticksp00hsticks Forumite
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    ossie48 said:
    Would I be best waiting for the three months to be up then Instigate the process afresh ? He said something about if there was a 5% fluctuation in transfer value they were working on before completion it would complicate things.   
    You may well have to pay to get another CETV - my understanding is that you're only entitled to one free one a year.
    I also think that the current situation has led to delays in schemes providing them at all.
  • dunstonhdunstonh Forumite
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    IFA in HL vs VLS60 in Vanguard - 1.1% total difference in fees.

    An IFA would not use HL.  HL doesn't offer IFAs the functionality they need and HL's platform charge is nearly double what IFAs can get.

    so if the IFA was to invest similarly for similar returns - let alone more expensive actively managed funds
    Why are you assuming active managed funds?    Most of the IFAs I know use hybrid portfolios nowadays.  i.e. a mixture of managed and passive.  Not one or the other.  And the cost difference between VLS and the portfolios is ofen very small and in some cases less (i.e. ranging from 0.11% to 0.75% (lower risk being cheaper and higher risk being more expensive due to higher risk assets being more expensive.  The risk level equivalent to VLS60 being 0.28% which is barely different).

    Lower cost does not mean better returns.    Higher cost does not mean better returns.   It is how you invest and what you invest in that matters.  Hybrid can give you the best of both worlds.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • edited 13 July at 2:40PM
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    edited 13 July at 2:40PM
    cloud_dog said:
    Charges and coverage, in my very humble opinion.
    Fair enough. As long as you are aware of their approach to asset allocation
    https://monevator.com/passive-fund-of-funds-the-rivals/
    / How do I counter being accused of being a Vanguard zealot by saying burn the active heretic!
    But seriously.
    Unhedged global bonds, active management, derivatives and a 100% global equity bias? No thank you 👍
    That said, VLS are passive to a fault and even own European and Japanese 0% or negative yielding bonds. The small property allocation is HSBCGS is nice too. I also prefer the range of assets allocations.
    I don't personally use blended funds but for the average retail investor who doesn't know/isn't interested and just wants a set and forget option, a blended fund in principle is probably a generally good idea.
  • dunstonhdunstonh Forumite
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    But seriously.  Unhedged global bonds, active management, derivatives and a 100% global equity bias? No thank you 👍

    I suspect many investors wouldn't want some of those.  However, just because something is available, does not mean you have to invest in it.

    That said, VLS are passive to a fault and even own European and Japanese 0% or negative yielding bonds.
    The underlying investments are passive but there are management decisions.  i.e. the weightings they use for each sector and which sectors they do or do not include.
    I don't personally use blended funds but for the average retail investor who doesn't know/isn't interested and just wants a set and forget option, a blended fund in principle is probably a generally good idea.
    Lazy investors are certainly better in multi-asset funds.   However, the option for a lazy investor is to either use a multi-asset fund or use an IFA.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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