Financial adviser

Albermarle

Since you ask - Skipton Building Society.

So definitely not independent .

From the Q&A on their website 

Is Skipton Building Society an independent financial adviser? When it comes to financial advice, you have a choice between independent or restricted advice. Skipton Building Society is a restricted advice provider rather than an independent adviser.

loveprada

dunstonh said:

loveprada said:

Thank you for all your comments. I dont understand enough about the markets to be able to manage it by myself so that narrows it down to either doing nothing with the pensions or enlisting another IFA.  

Perhaps make sure it is an IFA this time and not an FA as your earlier posts suggest it was.

Thanks, maybe it was a lucky escape after all!!

dunstonh

You are not alone.  There was some research done many years back that found over half the people seeing FAs thought they were seeing an IFA.

One of my workplace pensions has a breakdown. This is the one with Fidelity - it is:
84.76% Fidelity BNY Mellon MA Global Balanced Fund - Class 6
15.24% Fidelity BNY Mellon Real Return Fund Class 6
The other one just states UK Fixed Interest 60:40 Fund (5,707 units) 
Deposit and Treasury Fund (4,970 units)
The other one is with Aviva and doesnt give much away.

The Fidelity pension you have is using insured funds.  So, not to be mistaken with the Fidelity platform.    Aviva have hundreds, if not thousands of pension schemes.  Their modern offering to individuals via advisers meets modern disclosure requirements and is whole of market.  However, legacy schemes were built in a different era.  So, information may not be as strong as more modern plans.  A bit like having a black and white box tv and comparing it to a modern flat ultra HD widescreen.

If the Aviva plan is using unit linked funds, then you would expect unit count, unit price and value to appear.  If it's a with profits fund then it probably wouldn't unless it is s unitised with profit fund.

loveprada

dunstonh said:

The Fidelity pension you have is using insured funds.  So, not to be mistaken with the Fidelity platform.    Aviva have hundreds, if not thousands of pension schemes.  Their modern offering to individuals via advisers meets modern disclosure requirements and is whole of market.  However, legacy schemes were built in a different era.  So, information may not be as strong as more modern plans.  A bit like having a black and white box tv and comparing it to a modern flat ultra HD widescreen.

If the Aviva plan is using unit linked funds, then you would expect unit count, unit price and value to appear.  If it's a with profits fund then it probably wouldn't unless it is s unitised with profit fund.

So what do you think? Is there potential to earn more from my pensions say over the next 10 years if I enlist an IFA? I really should have done this 10 years ago but I didn't realise there was any flexibility allowed.

JohnWinder

First of all, if these are to provide retirement income for you, then perhaps you should be looking at 20 years, not 10 if you expect a normal life span.

I think the answer to your question would have to depend on what financial products, ok, funds, annuities, whatever it was, that the FA or IFA had to offer. We don’t know which products will finish up with the better returns in 10 years, so I don’t think we can know the answer to: ’to ‘I’ or not to ‘I’ that is the question?’.

What are the determinants of fund returns for diversified, mixed funds like you already have, or one-asset class funds added to a pension pot for you? Overwhelmingly the most important is the relative amounts allocated to different asset classes eg equities, bonds, real estate, cash etc. If stocks do well for 10 years, you’d better have plenty of stocks; if it’s to be bonds, you’d better have lots of bonds. I can’t see that FA or IFA is relevant, it's the asset allocation that matters. The source is below.

Your fund(s)’ returns can vary quite a bit year to year, and if you think you need to access most of that money in 10 years rather than drawing out a little of it each year over the 15-20 years of your retirement spending, then as before almost all of the variability in annual returns will be due to relative proportions of the different asset classes in your fund(s). More equities means more variability, and with lots of stocks you could have a big down year just before you want to withdraw a lot of it.

So that’s ‘all funds in general’ in a sense. What about comparing 2 funds and wondering what might determine the returns of one compared with another?  'For example, among mutual funds, if one fund's return is 13 percent and another fund's return is 8 percent, then on average, about 2 percent of the difference is explained by the difference in asset mix policy; the remaining 3 percent difference is explained by other factors, such as timing, security selection, and fee differences between the funds.' https://www.tandfonline.com/doi/abs/10.2469/faj.v56.n1.2327?src=recsys&

Lastly, costs matter; the longer the period, the more they matter. Are you investing for the 10 years you mentioned, or 25 possible years? Add 0.5%/year to your costs (fund management costs; advisor cost etc) for one year and you’re down 0.5%. Add 0.5%/year to costs for 25 years and you’re down 11% on what might have been.

One of your balanced funds has a fee of 0.8%/year, and a similar fund elsewhere could perhaps be had for a third of that cost. Yes, I know the 0.8% will be discounted, but doesn’t that require you pay something somewhere else or to someone else?

loveprada

John Winder, thank you for your comments. That is a lot to think about and I wonder how much transparency there is. I was in touch with Fidelity this week, in comparison to the other proposition, Fidelity take a 1% fee and 0.5 annual maintenance fee. The other place were asking for 3% and 1%.  I'm not under any illusion that they would give me returns of say 30-100% each year so the difference  between 3% and 1% is a fair bit if the performance of the fund is not that good anyway.  That's why I do wonder like you said would it require me to pay somewhere else (perhaps the inbuilt fees).

Albermarle

loveprada said:

John Winder, thank you for your comments. That is a lot to think about and I wonder how much transparency there is. I was in touch with Fidelity this week, in comparison to the other proposition, Fidelity take a 1% fee and 0.5 annual maintenance fee. The other place were asking for 3% and 1%.  I'm not under any illusion that they would give me returns of say 30-100% each year so the difference  between 3% and 1% is a fair bit if the performance of the fund is not that good anyway.  That's why I do wonder like you said would it require me to pay somewhere else (perhaps the inbuilt fees).

A Fidelity advisor is tied to the platform and can only recommend funds available on the platform . Some of which are also Fidelity funds, but a very wide range of other investments are available. I would suspect though they will lean towards Fidelity funds as well.
So one reason they they are cheaper is that they are also getting business for the Fidelity platform and funds .
Also I assume they are mainly offering investment advice , whereas a good IFA will be able to also help with more complex family finance issues , like trusts, divorce, more complicated tax issues etc. ( if you need anything like that )

loveprada

Albemarle, you can't imagine what a disappointment it has turned out to be so far. To cut a long story short he has offered me an investment with a fund that is performing actually worse than I have already, although it might be ok for fresh money, better than the banks' interest rate.  He has not even bothered to look at my current pensions, just a straightforward recommendation based on my responses to the attitude to risk questionnaire.

Albermarle

loveprada said:

Albemarle, you can't imagine what a disappointment it has turned out to be so far. To cut a long story short he has offered me an investment with a fund that is performing actually worse than I have already, although it might be ok for fresh money, better than the banks' interest rate.  He has not even bothered to look at my current pensions, just a straightforward recommendation based on my responses to the attitude to risk questionnaire.

How much did it cost ? Hopefully for such a weak effort is was only a smallish sum and not the couple of grand most IFA's would charge ( for a hopefully better service )

dunstonh

loveprada said:

Albemarle, you can't imagine what a disappointment it has turned out to be so far. To cut a long story short he has offered me an investment with a fund that is performing actually worse than I have already, although it might be ok for fresh money, better than the banks' interest rate.  He has not even bothered to look at my current pensions, just a straightforward recommendation based on my responses to the attitude to risk questionnaire.

I just checked and it's a restricted service and is "limited to Fidelity products and services and/or investment solutions from a defined range of Fidelity investment options".  They also have the Fidelity DFM