Another (but different) DB Transfer Topic

JohnTbye

Hi, I am 60 years, just been made redundant after 45 years with the same company on a DB pension. My CETV is over £1M. For unfortunate personal and family reasons my preference is to transfer.  As required I have already held discussions with IFA and they agree with my proposal, also discussed partial pension options (I may have overstated the "unfortunate" above but it is best option). One doubt I have is that he is suggesting a standard Pru drawdown pension, I have chercked its performance and it is not great and there are high charges. I have spent a long time looking at options and would prefer a lower cost platform like Vanguard. I do not need to gamble to cover my average spend requirements but would like to protect the capital for the family.

Appreciate comments on older traditional companies like Pru, versus Vanguard and the other low cost newer web based options.

Secondary related question, I would like some flexibillity to diversify and make very, very occasional changes if results are not good or need to move to cash for protection before anticipated crashes. Is this possible with both options. 

Albermarle

First problem you have is that Vanguard do not offer drawdown ( yet) 
Its not necessarily the case that the Pru will be that expensive . IFA's can get a better deal that you can direct and probably comparable to a low cost platform by the time you add up platform and fund costs . Also I would presume you/IFA can select whatever funds you want from what the Pru offers .

Secondary related question, I would like some flexibility to diversify and make very, very occasional changes if results are not good or need to move to cash for protection before anticipated crashes. Is this possible with both options. 

Moving into cash is normally an option but please tell us how you would know when a crash was coming, as we would all like to know that ! Normally trying to time the market is best left to the City professionals and the best investment method for Joe public is to do as little as possible. 

BritishInvestor

JohnTbye said:

Hi, I am 60 years, just been made redundant after 45 years with the same company on a DB pension. My CETV is over £1M. For unfortunate personal and family reasons my preference is to transfer.  As required I have already held discussions with IFA and they agree with my proposal, also discussed partial pension options (I may have overstated the "unfortunate" above but it is best option). One doubt I have is that he is suggesting a standard Pru drawdown pension, I have chercked its performance and it is not great and there are high charges. I have spent a long time looking at options and would prefer a lower cost platform like Vanguard. I do not need to gamble to cover my average spend requirements but would like to protect the capital for the family.

Appreciate comments on older traditional companies like Pru, versus Vanguard and the other low cost newer web based options.

Secondary related question, I would like some flexibillity to diversify and make very, very occasional changes if results are not good or need to move to cash for protection before anticipated crashes. Is this possible with both options. 

Why not piggyback on this?
https://forums.moneysavingexpert.com/discussion/6201875/pension-cashflow-retirement-planner-key-info
What are the charges if you don't mind me asking?

JohnTbye

I understand the crystal ball question, unfortunately I can't answer it . I do believe you do get some kind of warning - like the Covid raging through China at the end of last year. I do take the point.

On charges my IFA has agreed on 1.2% of transfer value plus 0.5% ongoing for management

BritishInvestor

JohnTbye said:

I understand the crystal ball question, unfortunately I can't answer it . I do believe you do get some kind of warning - like the Covid raging through China at the end of last year. I do take the point.

On charges my IFA has agreed on 1.2% of transfer value plus 0.5% ongoing for management

What about total costs: adviser + funds + platform? I'm assuming the last two are wrapped up in the Pru offering?

BritishInvestor

Albermarle said:

First problem you have is that Vanguard do not offer drawdown ( yet) 
Its not necessarily the case that the Pru will be that expensive . IFA's can get a better deal that you can direct and probably comparable to a low cost platform by the time you add up platform and fund costs . Also I would presume you/IFA can select whatever funds you want from what the Pru offers .

Secondary related question, I would like some flexibility to diversify and make very, very occasional changes if results are not good or need to move to cash for protection before anticipated crashes. Is this possible with both options. 

Moving into cash is normally an option but please tell us how you would know when a crash was coming, as we would all like to know that ! Normally trying to time the market is best left to the City professionals and the best investment method for Joe public is to do as little as possible. 

I can assure you even the best city professionals can't time the market. 

Albermarle

BritishInvestor said:

Albermarle said:

First problem you have is that Vanguard do not offer drawdown ( yet) 
Its not necessarily the case that the Pru will be that expensive . IFA's can get a better deal that you can direct and probably comparable to a low cost platform by the time you add up platform and fund costs . Also I would presume you/IFA can select whatever funds you want from what the Pru offers .

Secondary related question, I would like some flexibility to diversify and make very, very occasional changes if results are not good or need to move to cash for protection before anticipated crashes. Is this possible with both options. 

Moving into cash is normally an option but please tell us how you would know when a crash was coming, as we would all like to know that ! Normally trying to time the market is best left to the City professionals and the best investment method for Joe public is to do as little as possible. 

I can assure you even the best city professionals can't time the market. 

No of course not but they can react a lot faster to events though , which is what I meant really.

JohnTbye

These costs are the adviser costs only, the Pru costs will be depending on fund chosen but around 2 - 3%.

BritishInvestor

Albermarle said:

BritishInvestor said:

Albermarle said:

First problem you have is that Vanguard do not offer drawdown ( yet) 
Its not necessarily the case that the Pru will be that expensive . IFA's can get a better deal that you can direct and probably comparable to a low cost platform by the time you add up platform and fund costs . Also I would presume you/IFA can select whatever funds you want from what the Pru offers .

Secondary related question, I would like some flexibility to diversify and make very, very occasional changes if results are not good or need to move to cash for protection before anticipated crashes. Is this possible with both options. 

Moving into cash is normally an option but please tell us how you would know when a crash was coming, as we would all like to know that ! Normally trying to time the market is best left to the City professionals and the best investment method for Joe public is to do as little as possible. 

I can assure you even the best city professionals can't time the market. 

No of course not but they can react a lot faster to events though , which is what I meant really.

Agreed, and even the vast majority of them can't react quickly enough to exploit a fleeting inefficiency. It's a tough, tough environment, and your point about doing as little as possible is very hard to argue with!

dunstonh

One doubt I have is that he is suggesting a standard Pru drawdown pension,

What a surprise.  

 I have chercked its performance and it is not great 

That is not the purpose of the Prufund.

and there are high charges.

Yep.  The limited capital protections come at cost.

 I have spent a long time looking at options and would prefer a lower cost platform like Vanguard

IFA platforms can match or even beat that without restricting you to Vanguard.   So, no issue there.   And Vanguard doesn't do drawdown either.

Secondary related question, I would like some flexibillity to diversify and make very, very occasional changes if results are not good or need to move to cash for protection before anticipated crashes. Is this possible with both options. 

That throws up some warning bells.  You may be able to explain yourself better and remove the concerns but it is also the sort of thing a newbie investor would say without really knowing what they are doing.

Bottom line is that your adviser seems to think you are cautious and low knowledge and possibly at risk of making poor investment decisions and has gone with [what should be] a niche option.   So, at this moment in time, you and your adviser seem to have different views of your risk profile, investment knowledge and understanding, capacity for loss and investment behaviour.  This should form the basis of further discussion.

What is your past investment experience?    With £1mil you will likely suffer periods of £200,000 losses with a typical risk profile.    How do you feel about that?

JohnTbye

Thanks for the comments, you sum up the situation pretty well. I am not experienced although my advisor and I are fully aligned that I am looking for low risk. My proposal was to focus on low risk and lower cost options .
Appreciate if you could expand on the comments regarding the Pru funds to help me understand.
I have no plans to change investments every month but would like to keep options open to avoid continued investment in poorly performing funds.
 Again, I agree my experience is limited but I have also carried out enough investigations to understand that there are many dogs out there.