SIPP - am I paying far too much?

MissBojangles

I transferred out of a company pension a few years ago into a SIPP on the advice of an IFA.
The SIPP is fully managed and fund is around £385k.
My charges are (approximately):

• Annual charge - £70 monthly
• Ongoing adviser charge - £230 monthly
• Disc. Management charge - £111 monthly

The SIPP is performing well but the charges seem astronomical.  I don't have the knowledge to manage my own portfolio so understand that I would need the Disc. Manager but I'm not convinced I need to pay over £2k a year ongoing adviser charges for a one hour Zoom meeting yearly.  I am 54 and plan to take my 25% ad a small amount each year from 2022.
Does this raise red flags with any of you who are more knowledgeable than I am? TIA

kuratowski

I would think at your age, about to go into drawdown, now is the time you get maximum value from the advice - to avoid paying unnecessary amounts of tax and to avoid exhausting your funds before you die.

Personally I don't use a DFM, and I would avoid that cost, my IFA is happy to work without one, but yours may differ.  However, the actual rates quoted sound like they are in the typical range, i.e. Platform 0.20%, Advice 0.70%, DFM 0.35%.  How much are the fund charges?

Of course some people have a strong objection to paying for any advice ever, but if you're not confident to DIY, then you are getting a service you need from the advice.

Stubod

..around 1.3% them?....does not seem too bad?

Albermarle

The Annual charge actually seems a bit too low , if it includes the platform charge and the funds charges ?
The IFA charge is a bit high considering they have delegated some of the work to the DFM
DFM charge seems about right .
Overall 1.3% seems quite OK for an advised investor 

JohnWinder

Assuming a DFM makes the decisions about how your money is invested, I suppose it's reasonable that a financial advisor doesn't know enough about suitable, commonly available, 'every-day' financial products for the average, 'everyday' clients (I'm assuming that's you). But in view of the fact that a decent cohort of people manage to do both of those jobs with a DIY approach, and achieve a reasonable outcome, you'd wonder what the problem was for the advisor. I suppose the advisor reduces an otherwise higher fee if they make no investing decisions, but it does seem like a case of another snout in the trough when it comes to the financial services industry.  'My investments put two children through university, my advisor's...'; and now we can say '....my DFM's as well'.

Truly ruly, I think we can say that unless your circumstances or requirements are something way out of the ordinary, that a simple portfolio of investments that doesn't need monthly or even yearly changing or even monitoring would likely serve you as well as one that needs the sort of close attention you seem to be paying for. And worse, the management charges you haven't yet listed would likely be less. Time for a closer look.

MallyGirl

with that sort of value you should consider the platforms with a fixed fee - Interactive investor for example is £19.99 pcm for me which covers SIPP, S&S ISA and a general trading account. This gives me £7.99 a month trading credit and has free regular investing trades.

dunstonh

I am 54 and plan to take my 25% ad a small amount each year from 2022.

Have you discussed that with your IFA or is that your plan before you have discussed it?

At age 55, taking the 25% up front and a small income isn't likely to be the best option for most people.  

redpete

MallyGirl said:

with that sort of value you should consider the platforms with a fixed fee - Interactive investor for example is £19.99 pcm for me which covers SIPP, S&S ISA and a general trading account. This gives me £7.99 a month trading credit and has free regular investing trades.

Which is a lot cheaper but you get no advice or help in making trades.  The OP has said they are not confident in making investing decisions themselves so they should expect to pay someone else to make the decisions and carry out any trades as a result of these decisions (and indeed help with deciding when and how to start drawing money from the pension investments).

dunstonh

IFAs will have access to fixed fee platforms as well.  You generally find they have the worst software and least functionality.    If we have someone that is cost focused we will mention them but generally put the person off warning them not to expect the best of service from the platform.  Some people will still go for it whilst others look for a balance in quality and cost.

[Deleted User]

STINKLER said:

..understand that I would need the Disc. Manager but I'm not convinced I need to pay over £2k a year ongoing adviser charges for a one hour Zoom meeting yearly. 

Yes, seems a fair line of enquiry, particularly when viewing the long perspective. Do the arithmetic and may you be blessed with a long life.

MissBojangles

dunstonh said:

I am 54 and plan to take my 25% ad a small amount each year from 2022.

Have you discussed that with your IFA or is that your plan before you have discussed it?

At age 55, taking the 25% up front and a small income isn't likely to be the best option for most people.  

It''s been discussed with my IFA.  I am about to add another £90k and we've worked it all out - adequate for my needs.  Or should I be asking other questions?  Why wouldn't it be the best option?

Thanks :-)