Pension Review - Reeves IFA

sabsharpe

TVAS said:

You seem like a bright chap. 1.34% AMC is still expensive for an employer sponsored scheme however you have omitted to inform us of the fund selection and if it is active or passive. Reeves would put you into a more expensive arrangement and an ongoing adviser fee of 1% p.a. are high. 

Some employers allow you to transfer to another arrangement and remain within the scheme for future contributions if so you could get a TOTAL cost cheaper than 1.34%. This cold call via linked in enquiry should prompt you in doing further research rather than considering going with them.

The fund is : https://www.trustnet.com/factsheets/p/gsm3/scot-eq-adventurous-select-portfolio-pn and has delivered a 60% growth over the last 5 years.
I have left that employer now and have a new 6 month old pension with my new employer and am indeed speaking to some other companies regarding what they can offer.
I liked the idea of what Reeves were offering but there were some warning signs that made me uneasy plus no way I'd move my life savings without getting a great understanding.
Thank you for your comment.

dunstonh

Reeves are only offering what every other IFA in the country are offering. So, if you like the idea of the service you could find a local firm of your choosing that does similar.   

sabsharpe

dunstonh said:

Reeves are only offering what every other IFA in the country are offering. So, if you like the idea of the service you could find a local firm of your choosing that does similar.   

Yes, I didn't mean that they were unique.
Initially they made it sound like I'd get a fund that had historically performed a bit better than my existing one and 6 monthly reviews with more input into guided fund choices and for a 1% yearly charge.
As I expected when I wrote my question the thread has confirmed what I thought and also added a few more things to think about.
Thank you all for taking the time to reply.

jamesd

If you want lower charges it's likely that the existing pension has other fund choices available at a lower cost.

sabsharpe

jamesd said:

If you want lower charges it's likely that the existing pension has other fund choices available at a lower cost.

Thanks James
I'm looking for "reasonable" charges rather than the lowest possible. I'm 47 years old so still in the growth phase and towards the more adventurous side.
The current fund has an FE Risk Index of 90 over 3 years and 79 over 3 months
I'd like to lower that (if possible) whilst keeping the more adventurous growth and reasonable fees.
From my current research I think 1.25 -> 1.5% transfer fee for the fund
Plus total yearly charges for fun, platform and IFA of around 1.5 - 2%
Not completed my research yet and more advice/comments welcome

dunstonh

The current fund has an FE Risk Index of 90 over 3 years and 79 over 3 months

When you say "fund", are you saying it's invested in just one fund? (or is it a portfolio of funds)

FE risk scores are not consistent.  They float around as only one end of the scale is static. i.e. 0 = cash.   The rest of the scale is based on 100 = FTSE100.  That gives it some elastic movement over time.  So, when checking FE scores over long periods, that elasticity needs to be considered.

From my current research I think 1.25 -> 1.5% transfer fee for the fund
Plus total yearly charges for fun, platform and IFA of around 1.5 - 2%

Initial is ballpark but expect a cap and collar with decent firms to stop it getting too large.

Ongoing typically around 0.8% to 1.5% all in would be the typical range for passive/hybrid.   

Albermarle

The fund is : https://www.trustnet.com/factsheets/p/gsm3/scot-eq-adventurous-select-portfolio-pn and has delivered a 60% growth over the last 5 years.

The growth is good but nothing unusual for a fund with a high equity content ,as markets have been kind to investors in recent years .

For example HSBC Global Strategy dynamic is a popular 'adventurous ' type low cost multi asset fund . It holds approx 80% equities and has grown 76% in the last 5 years. Its annual charge is 0.25% . 

sabsharpe

Thanks everyone for your comments. I have contacted some other companies and it seems to be consensus that:
a) Having all of the £240k in one Aegon managed fund has worked well to deliver 60% but is risky and may not fair so well in the future
b) Transfer the pot to a SIPP (IFAs want £1500 - £3600) to do this
c) IFA's investment teams have delivered 68-70% over the past year and will charge 0.75% - 1.32% for  ongoing advice and access to the underlying investment teams
d) Total yearly fees 1.65-2% (platform + fund + IFA in total)
My first thought is why not transfer my very simple pension into my own SIPP (saving £1500-£3600) at that point either picking some funds of similar risk to the level I'm currently on OR seeking the yearly advice from an IFA?
I could devote time to checking fund performance say once a month but do have a full time job and family.
That initial £1500-£3000 seems a lot for basically organising a fund transfer from Aegon to SIPP - or is there a lot more to it than that?
Honest feedback welcome....
 

dunstonh

My first thought is why not transfer my very simple pension into my own SIPP (saving £1500-£3600) at that point either picking some funds of similar risk to the level I'm currently on OR seeking the yearly advice from an IFA?

The choice should be either to DIY or use an IFA (not an FA).     If you DIY well, you can save money.  If you DIY badly, it can be a costly mistake.     Also, doing it right doesn't mean you will end up with more.  I had someone recently tell me he wanted to end services and DIY.  He told me what he was going to invest in. The charges were lower as there was no adviser charge but barely any difference in the fund charges.  The fund he had chosen was one of the low cost multi-asset funds we see mentioned on here frequently.   However, the returns on that fund were lower than what we had him in net of charges since 2017 when he started.   So, yes, he would have saved money on charges but would have a lower value due to lower investment returns.    So, it's the package that is important.  Not just one bit of it.

Noboby can say that using an IFA or going DIY will give you the best result is both options result in unknowns.   Its a personal choice you need to make.

I could devote time to checking fund performance say once a month but do have a full time job and family.

Picking investments is not much to do about performance but where and how.

That initial £1500-£3000 seems a lot for basically organising a fund transfer from Aegon to SIPP - or is there a lot more to it than that?

On £240k, it's not a lot and is in the ballpark of what you would expect.  Pension switches/transfers are a higher risk area of business and a good chunk of the cost is regulatory and liability.

d) Total yearly fees 1.65-2% (platform + fund + IFA in total)

One thing to remember is that IFAs quote the charges as platform, adviser, OCF, TC & IC= total.    DIY investors tend to ignore TC & IC.  However, they are applied just the same.

For a hybrid portfolio (active and passive) you would still expect to come in under 1.65%.   Typically around 0.9-1.25%.    So, this indicates either a DFM is being used or the portfolios are fully active.

zagfles

sabsharpe said:

Thanks everyone for your comments. I have contacted some other companies and it seems to be consensus that:
a) Having all of the £240k in one Aegon managed fund has worked well to deliver 60% but is risky and may not fair so well in the future
b) Transfer the pot to a SIPP (IFAs want £1500 - £3600) to do this
c) IFA's investment teams have delivered 68-70% over the past year and will charge 0.75% - 1.32% for  ongoing advice and access to the underlying investment teams
d) Total yearly fees 1.65-2% (platform + fund + IFA in total)
My first thought is why not transfer my very simple pension into my own SIPP (saving £1500-£3600) at that point either picking some funds of similar risk to the level I'm currently on OR seeking the yearly advice from an IFA?
I could devote time to checking fund performance say once a month but do have a full time job and family.
That initial £1500-£3000 seems a lot for basically organising a fund transfer from Aegon to SIPP - or is there a lot more to it than that?
Honest feedback welcome....
 

Checking performance once a month won't tell you anything useful, even performance over a few years doesn't really unless you account for their investment strategy and take that into account. For instance some funds have a UK bias (there are good reasons for a home bias), those funds would have lagged more global funds over the last 5 years or so as the UK has lagged global equities.

Even if you use an IFA you need to understand the investment strategy yourself, as the IFA will tailor the investments to reflect your knowledge apparently, in case eg you see one fund skyrocket and another plummet and think, I know, I'll sell the one that plummted and invested in the one that skyrocketted! It does seem to partly defeat the benefit of using an IFA and over decades they'll take a significant chunk of your pension in charges. 

The monevator site is worth a read https://monevator.com/