Another (but different) DB Transfer Topic

[Deleted User]

Marcon said:

Yet another poster who thinks strangers with next to no knowledge of their situation, attitude to risk, etc are somehow going to come up with better-informed responses than an adviser who has (at least one would hope) got all relevant facts at their fingertips...

Well, sure, and a very healthy trend because, even if the most persistent and pervasive of posters are working in or apologists for the financial services industry, it is still good to canvas opinions from others who may have some experience in the matter but speak without a vested interest. 
I would cite the thread neighbouring this one concerning an IFA's recommendation of True Potential.

JohnTbye

This is exactly my goal, to gain a better understanding so that I can have a meaningful discussion with my adviser, not to override him. He has not given me the specific fund name but given me results that show an average net gain of around 2.5% annually over the last 5 years with an 8% drop in 2020.

This doesn’t look too great to me but I am sure others will give a more qualified opinion.

dunstonh

JohnTbye said:

This is exactly my goal, to gain a better understanding so that I can have a meaningful discussion with my adviser, not to override him. He has not given me the specific fund name but given me results that show an average net gain of around 2.5% annually over the last 5 years with an 8% drop in 2020.

This doesn’t look too great to me but I am sure others will give a more qualified opinion.

Prudential's pension plan offering is nothing special. It is easily improved upon with other offerings if both where using conventional unit linked funds.   However, Pru only make the prufund available on their offering.    And that is were a disproportionate amount of DB pension transfers end up.     The smoothed effect can mask a lot of the volatility which can be important with some people who have never invested before and could not handle seeing their value go down £100k-£200k as routine volatility.
There are different versions of the Pru fund.   So, you really need to find out which one is being recommended.   And as I said earlier, it is not designed to be a big return option.  More a steady eddie with smoothed edges.

[Deleted User]

dunstonh said:

Pru is not the only traditional provider available. Worth asking your advisor if there are any other cheaper traditional advisor managed options - like for example Royal London. 

Appreciate if you could expand on the comments regarding the Pru funds to help me understand.

   

If you feel the prufund is inappropriate then your adviser needs to know this and why you think it.  

“ Half of Fund growth over the last five years has been eaten away by charges and you propose to take .5% from the remainder leaving me with 2%. That’s £20k annual drawdown, leaving the original £1m - the value of both sums to be steadily eroded over time. I’m struggling with the poverty of your ambition when presented with a million pounds, but then your job is not to maximise performance but to manage my expectations.
 Meanwhile your remuneration - aside from £12k upfront - is £100 per week, and the Pru fee is £500 per week; for the rest of my life. I don’t know about your world but in mine, those are not negligible outgoings.” 
To kick off..

AnotherJoe

JohnTbye said:

This is exactly my goal, to gain a better understanding so that I can have a meaningful discussion with my adviser, not to override him. He has not given me the specific fund name but given me results that show an average net gain of around 2.5% annually over the last 5 years with an 8% drop in 2020.

This doesn’t look too great to me but I am sure others will give a more qualified opinion.

You have to look at that in the context of a client (you) who apparently is prepared to move to cash at the drop of a hat.

So he's picked an ultra cautious fund. Which, almost by definition has low returns. Except in unusual circumstances you arent going to get a really cautious fund have high growth.

If you want higher growth then you will have to accept higher risk and higher volatility.  Are you up for that?

As I said before, you seemingly are trying to have your cake and eat it.

I would not pick your fund in a month of sundays, but i can live with volatility. You've hinted you cant.

This to me is the crux, you have to really understand that for higher growth you will have to learn to live with higher volatility. No free lunches.

JohnTbye

Thanks everyone, great feedback and learning for me. I should add that my adviser worked almost 25 years with Prudential and his own pension is with them. One of the reasons that I want to dig deeper.
Your comments are also making me question my goals, which is good.
Any other “questions” for my adviser ?

[Deleted User]

Ask him whether he would still make a positive recommendation to transfer if you don't move your pension to Prudential and you don't keep him on.

garmeg

ZingPowZing said:

Ask him whether he would still make a positive recommendation to transfer if you don't move your pension to Prudential and you don't keep him on.

Ooh you cynic.

JohnTbye

After getting good advice from you all I have updated my thoughts.
I now plan to get agreement with adviser on the best option and then let it run. What are the thoughts on Pru and others like them versus lower cost SIPP options with lower charges. I am aware that net returns are the real goal. I have also read in multiple places that only 45% of managed funded return more than a tracker.
Also what should I expect from my adviser if I am paying him 0.5% for remaining in the same fund all year. 

Appreciate the continued great feedback and advice.

[Deleted User]

How did you become acquainted with your IFA?