Pension transfer to True potential

eric4395

Looking for opinions regarding transferring a previous  works pension  (drawdown) and a substantial amount which is currently in Royal London portfolio1  to True Potential Cautious portfolio. My IFA has suggested doing this as an option  as I am nearing  to retiring   or to drop down into portfolio 3 with Royal London. The reason being the market is too volatile for me to be losing amounts of my pension with quite a high equity % content in RL 1 portfolio. The current fees are in total 0.9% with RL and if I transfered over to TP it would be almost double at 1.7% 
I have had a 36% increase to my pension funds while I have been in RL portfolio 1 for the past 5 years. Looking at how RL porfolio 3 and TP cautious has performed over the last 2 years shows RL port 3 having a +1.3% gain over 12 months and +8.0% over 24months
TP cautious has had a+ 3.69 gain over 12 months and 14.0% over 2 . years. So looking at these figures despite higher fees  the tp option looks more favourable to me. Can anyone give me reasons as to why they would stay with RL. The reason I ask is I have seen the previous posts regarding transferring over to TP and  they seemed to be mostly against anyone transferring into TP as they were recruiting IFA who were nearing retiral although I am not sure how that would effect me whether my IFA was or wasn't. I am perfectly happy with my IFA and his advice as to my 2 options just a bit unsure of the right decision.  Thanks for any views on this.

dunstonh

My IFA has suggested doing this as an option  as I am nearing  to retiring 

Is the IFA close to retiring as well?

 Can anyone give me reasons as to why they would stay with RL. 

I would be more interested in finding reasons to move to TP.

The reason I ask is I have seen the previous posts regarding transferring over to TP and  they seemed to be mostly against anyone transferring into TP as they were recruiting IFA who were nearing retiral although I am not sure how that would effect me whether my IFA was or wasn't.

It calls into question whether the IFA is being biased.  Something an IFA should never be.   If the IFA is calling it a day and is being paid to move clients to a restricted offering then you are no longer seeing an IFA and is it in your interests or the adviser's interests?

Personally, I am not a fan of any restricted option.   With whole of market options, if a fund goes off the boil, you can change it to any other.  If you go with a restricted option you are limited on alternatives and if its a wealth management strategy you have no alternative but to move provider.

Albermarle

 Looking at how RL porfolio 3 and TP cautious has performed over the last 2 years shows RL port 3 having a +1.3% gain over 12 months and +8.0% over 24months
TP cautious has had a+ 3.69 gain over 12 months and 14.0% over 2 . years. 

It is difficult to make these sort of comparisons without knowing all the details of what is in each fund.

It could be argued that the TP cautious is maybe more aggressively invested than RL3 ( I don't know) . If so it would probably drop more in a falling market.

As this is a MSE forum, I think you will find hands thrown up in horror at the thought of paying fees of 1.7% + advisor fees 

eric4395

Albermarle said:

 Looking at how RL porfolio 3 and TP cautious has performed over the last 2 years shows RL port 3 having a +1.3% gain over 12 months and +8.0% over 24months
TP cautious has had a+ 3.69 gain over 12 months and 14.0% over 2 . years. 

It is difficult to make these sort of comparisons without knowing all the details of what is in each fund.

It could be argued that the TP cautious is maybe more aggressively invested than RL3 ( I don't know) . If so it would probably drop more in a falling market.

As this is a MSE forum, I think you will find hands thrown up in horror at the thought of paying fees of 1.7% + advisor fees 

Albermarle said:

 Looking at how RL porfolio 3 and TP cautious has performed over the last 2 years shows RL port 3 having a +1.3% gain over 12 months and +8.0% over 24months
TP cautious has had a+ 3.69 gain over 12 months and 14.0% over 2 . years. 

It is difficult to make these sort of comparisons without knowing all the details of what is in each fund.

It could be argued that the TP cautious is maybe more aggressively invested than RL3 ( I don't know) . If so it would probably drop more in a falling market.

As this is a MSE forum, I think you will find hands thrown up in horror at the thought of paying fees of 1.7% + advisor fees 

The fees are 1.7 % altogether  0.4 platform fee   0.8,%   for cautious  portfolio and 0.5 % to advisor.. The reason he is also suggesting RL portfolio 3 is its less aggressive than RL 1 and more similar to TP cautious.

eric4395

dunstonh said:

My IFA has suggested doing this as an option  as I am nearing  to retiring 

Is the IFA close to retiring as well?

 Can anyone give me reasons as to why they would stay with RL. 

I would be more interested in finding reasons to move to TP.

The reason I ask is I have seen the previous posts regarding transferring over to TP and  they seemed to be mostly against anyone transferring into TP as they were recruiting IFA who were nearing retiral although I am not sure how that would effect me whether my IFA was or wasn't.

It calls into question whether the IFA is being biased.  Something an IFA should never be.   If the IFA is calling it a day and is being paid to move clients to a restricted offering then you are no longer seeing an IFA and is it in your interests or the adviser's interests?

Personally, I am not a fan of any restricted option.   With whole of market options, if a fund goes off the boil, you can change it to any other.  If you go with a restricted option you are limited on alternatives and if its a wealth management strategy you have no alternative but to move provider.

What about the figures i have quoted regarding performance its still looks in TP favour despite the higher charges. Looking at any reviews i come across most seem to be happy enough in TP and any advisory money website doesnt have anything bad to say about it.. My advisor isnt forcing me into TP its one of two options he has put to me.

dunstonh

and TP cautious has performed over the last 2 years shows RL port 3 having a +1.3% gain over 12 months and +8.0% over 24months

Which TP number are you referring to?    TP have multiple versions.  For example, TP cautious 7 has virtually the same performance as RL GP 3.   I suspect it may be cautious 3 as that is showing 7.98% over 24 months which appears to be closest to your 8%.

RL GP3 is far lower risk than TP cautious 3. So, not a fair comparison when looking at returns.

RL GP2 is comparable in risk to TP cautious 3.   That returned 9.82% over 24 months.

I compared those to a cheap multi-asset fund and several bespoke IFA portfolios of similar risk and they had all done double digits over 24 months (16.5%, 25.35%,29.85%).

Wealth management portfolios and Royal London GPs make the IFAs life easier.   They pass the investment decisions to the provider/WM company.  And in many cases, you end up paying more because of that as you pay the WM costs for the IFA to do less.

Some IFAs reduce their costs if you use a WM because its less work.

So, what reason why I have for using a WM portfolio that returns less than simple cheap multi-asset funds or options that involve more cost to the adviser to operate? - this is why I struggle to see the benefit. - and for reference, those bespoke IFA portfolios and low cost multi-asset fund all came under 1%, including the 0.5% adviser charge. platform 0.25% and fund charges between 0.20% and 0.22%.  0.4% for a platform charge is expensive nowadays.

zagfles

There seem to be loads of IFAs suggesting TP, search this board, maybe this is a reason?

https://citywire.co.uk/new-model-adviser/news/true-potential-offers-8-aum-cash-deal-to-retiring-advisers/a1376828

Maybe find a new IFA. Worth doing a quick check on the ombudsman site https://www.financial-ombudsman.org.uk/decisions-case-studies/ombudsman-decisions

TVAS

Why can't you switch to a lower risk fund with RL cash, bonds deposits. 1.7% is huge. The IFA is asking you to transfer because he gets a percentage of the transfer value and will he also be charging an ongoing advice charge (OAC)? On top of 1.7%. Why haven't you considered Vanguard transfer and funds without an adviser and said charges? Also if you can ask the provider to remove an OAC on your plan if you are not happy with your adviser. This does not seem to be good advice the transfer to True Potential which is their own fund and the drive is to have a high amount of funds under management so they can sell it to another company and get a bonus on the sale. Good Luck.

eric4395

dunstonh said:

and TP cautious has performed over the last 2 years shows RL port 3 having a +1.3% gain over 12 months and +8.0% over 24months

Which TP number are you referring to?    TP have multiple versions.  For example, TP cautious 7 has virtually the same performance as RL GP 3.   I suspect it may be cautious 3 as that is showing 7.98% over 24 months which appears to be closest to your 8%.

RL GP3 is far lower risk than TP cautious 3. So, not a fair comparison when looking at returns.

RL GP2 is comparable in risk to TP cautious 3.   That returned 9.82% over 24 months.

I compared those to a cheap multi-asset fund and several bespoke IFA portfolios of similar risk and they had all done double digits over 24 months (16.5%, 25.35%,29.85%).

Wealth management portfolios and Royal London GPs make the IFAs life easier.   They pass the investment decisions to the provider/WM company.  And in many cases, you end up paying more because of that as you pay the WM costs for the IFA to do less.

Some IFAs reduce their costs if you use a WM because its less work.

So, what reason why I have for using a WM portfolio that returns less than simple cheap multi-asset funds or options that involve more cost to the adviser to operate? - this is why I struggle to see the benefit. - and for reference, those bespoke IFA portfolios and low cost multi-asset fund all came under 1%, including the 0.5% adviser charge. platform 0.25% and fund charges between 0.20% and 0.22%.  0.4% for a platform charge is expensive nowadays.

I don't see any numbers that you quoted ie TP 7, all I see is a choice of defensive, cautious or cautious +, balanced or balanced +, growth and aggressive. So basically 5 different groups. I was personally looking at cautious or cautious + as my choice with TP or as I said stay with Royal London and switch from governed portfolio 1 to 3 with less risk as I approach retirement. 

eric4395

TVAS said:

Why can't you switch to a lower risk fund with RL cash, bonds deposits. 1.7% is huge. The IFA is asking you to transfer because he gets a percentage of the transfer value and will he also be charging an ongoing advice charge (OAC)? On top of 1.7%. Why haven't you considered Vanguard transfer and funds without an adviser and said charges? Also if you can ask the provider to remove an OAC on your plan if you are not happy with your adviser. This does not seem to be good advice the transfer to True Potential which is their own fund and the drive is to have a high amount of funds under management so they can sell it to another company and get a bonus on the sale. Good Luck.

Moving RL portfolio 1 to RL3 is a lower risk fund. I pay the same fees if I switch over  ie 0.4 platform to RL and 0.5 to the IFA so 0.9% in total. I don't think there is any OAC on top of the 1.7 % with TP as I said its 0.4% platform 0.8% and 0.5 to my IFA. 

MallyGirl

dunstonh said:

and TP cautious has performed over the last 2 years shows RL port 3 having a +1.3% gain over 12 months and +8.0% over 24months

Which TP number are you referring to?    TP have multiple versions.  For example, TP cautious 7 has virtually the same performance as RL GP 3.   I suspect it may be cautious 3 as that is showing 7.98% over 24 months which appears to be closest to your 8%.

RL GP3 is far lower risk than TP cautious 3. So, not a fair comparison when looking at returns.

RL GP2 is comparable in risk to TP cautious 3.   That returned 9.82% over 24 months.

I compared those to a cheap multi-asset fund and several bespoke IFA portfolios of similar risk and they had all done double digits over 24 months (16.5%, 25.35%,29.85%).

It was kind of you to go to this effort Dunstonh. Thank you for the contribution