When to diversify a pension?

Thrugelmir

WSB said:

Also, as my current fund seems to have been performing well, I'm a bit reluctant.

No one single sector will be a top performer indefinately. The art of diversification is to produce a continual positve return from a portfolio. Even if some elements of the portfolio contribute negatively. Over an investing lifetime not possible to make the right calls all the time. 

pip895

I would start by looking at just how much it would cost to transfer out from SJP and if moving funds will change that.  If it does then there is your reps motivation.  Having said that 100% equity is quite extreme - l have a high risk tolerance that would support that, but I prefer more diversity.  

Regarding the choice to stay with SJP or not, if you were to move it to a SIPP in HL (actually one of the more expensive platforms, but they will hold your hand whilst sorting out the transfer) and put your money in a world tracker etf such as HMWO your total charges would be 0.1% initial spread then a 0.15% annual charge + £12 transaction charge + £200 annual platform charge, and that would be it.  I think that would work out at at under 0.3% initial and 0.2% ongoing for your portfolio.  It would be then also be available to you to add to whenever you want to and would give you access the full market should you want it.  

WSB

Thanks pip895. I will look into that.

The SJP advisor did say that moving to the multi fund product, the fees were a bit higher (can't remember off hand) but there would be no dip in the transfer value.

I don't want to be hands on with this investment (although I probably should be).  Just want to set it up and leave it alone. I guess having the money in a number of funds would help with that.

Maybe I should get an IFA involved to help me out but I've never trusted them in the past.  Always get the impression they're trying to steer in in a direction where they make most commission.

Alexland

pip895 said:

if you were to move it to a SIPP in HL (actually one of the more expensive platforms, but they will hold your hand whilst sorting out the transfer) and put your money in a world tracker etf such as HMWO your total charges would be 0.1% initial spread then a 0.15% annual charge + £12 transaction charge + £200 annual platform charge, and that would be it.  I think that would work out at at under 0.3% initial and 0.2% ongoing for your portfolio.

Why pay HL £200 pa when Fidelity will do exactly the same job for £45 pa with cheaper trade charges too? We hold both HMWO and the cheaper VEVE but given recent unexpectedly high equity growth my mind is turning to banking 20% and splitting the proceeds between SGLN gold and cash to reduce downside exposure as it seems increasingly possible the market will overshoot on inflation expectations which could cause at least a correction.

Albermarle

Going back to performance though, if the fund was worth £288K in 31/12/18 (NB: I put in £12K per year) and now (just over 2.5 years later) it's worth £530K, is that not good?  Or am  I missing the point.

It is very good but it is a function of booking global stock markets in that period despite the Covid 'blip. 

The S&P 500 is up 65% during that period.

It is unlikely to last forever......

pip895

Alexland said:

pip895 said:

if you were to move it to a SIPP in HL (actually one of the more expensive platforms, but they will hold your hand whilst sorting out the transfer) and put your money in a world tracker etf such as HMWO your total charges would be 0.1% initial spread then a 0.15% annual charge + £12 transaction charge + £200 annual platform charge, and that would be it.  I think that would work out at at under 0.3% initial and 0.2% ongoing for your portfolio.

Why pay HL £200 pa when Fidelity will do exactly the same job for £45 pa with cheaper trade charges too? We hold both HMWO and the cheaper VEVE but given recent unexpectedly high equity growth my mind is turning to banking 20% and splitting the proceeds between SGLN gold and cash to reduce downside exposure as it seems increasingly possible the market will overshoot on inflation expectations which could cause at least a correction.

I did say HL weren’t necessarily the cheapest but various others do claw back monies on quarterly charges, going into drawdown or even opening the account.  £200 is only 0.04% of 500k so still pretty cheep😊 

I hold a bit of gold to + property + PNL among others and even a few bonds. 70% equity and 30% other.  Then I am starting drawdown next year, rather than still in the accumulation phase.

Alexland

pip895 said:

I did say HL weren’t necessarily the cheapest but various others do claw back monies on quarterly charges, going into drawdown or even opening the account.  £200 is only 0.04% of 500k so still pretty cheep😊

Some do but Fidelity include drawdown within their £45 cap on exchange traded assets and even better the OP's account valuation would qualify for the enhanced Wealth customer service level which extends to others at the same address including the free child accounts. If they are happy to hold ETF(s) in their SIPP it can be an awesome deal especially in periods when they offer transfer cashback which on large accounts can pay the capped fees for a decade or more.

I hold a bit of gold to + property + PNL among others and even a few bonds. 70% equity and 30% other.  Then I am starting drawdown next year, rather than still in the accumulation phase.

Yes with around a decade until they intend to start drawdown that's about 1 market cycle (plus or minus 5 years) so getting a bit tight to be so heavy in equities unless they have a good plan around the possible volatility. We are a bit further away but I believe there could be some merit to managing risk across the economic cycle and it certainly feels like we are maturing into the cycle that started with the financial crisis rather than at the beginning of a new cycle started by the covid crash.

cfw1994

WSB said:

Thanks pip895. I will look into that.

The SJP advisor did say that moving to the multi fund product, the fees were a bit higher (can't remember off hand) but there would be no dip in the transfer value.

I don't want to be hands on with this investment (although I probably should be).  Just want to set it up and leave it alone. I guess having the money in a number of funds would help with that.

Maybe I should get an IFA involved to help me out but I've never trusted them in the past.  Always get the impression they're trying to steer in in a direction where they make most commission.

Feels like the performance has been decent enough (%-wise, I think mine have been similar, but don't have the precise dates you used)

On the point in bold - you've been 'happily' using SJP - who are NOT independent, & only recommend things they offer, with what are generally held to be pretty steep fees in the industry - I'm curious why you have concerns over using an IFA?   
I would think they would be far better at having your interests at heart!

I would be inclined to ask "what happens if you leave it where it is?"   
Are there any SJP costs, if you wanted to move it; is there a cost to do that now, & if so, is there a cost after X years (1, 3, 6, for example 😉)
Given they typically have a 6-year "lock-in' after each payment, you should then be completely 'free' to move anywhere you like at minimal cost.

Start interviewing some IFAs if you really don't want to manage it yourself!

Albermarle

Maybe I should get an IFA involved to help me out but I've never trusted them in the past.  Always get the impression they're trying to steer in in a direction where they make most commission.

IFA's have not been able to earn any commission for some years .

They charge for their time , either on a one off basis , or an ongoing basis ( presumably like with SJP but probably cheaper)

As mentioned above SJP only offer their own investment products , whilst an IFA can recommend/use any.

dunstonh

I've heard in recent years about SJP being expensive etc and hearing bad things but I've always been reluctant to move as I'd get stung on the transfer. My thoughts being that it's better to leave it where it is rather than the lower transfer value.

I have done countless numbers of pension transfers over the years and the record for largest cost saving was moving an SJP pension.    Over the term, the effect of charges for that person was £300,000 lower by moving it

You are paying nearly double in charges compared to what a lower cost IFA would be.    Your breakeven point to recover that charge is probably only a year or two.

Maybe I should get an IFA involved to help me out but I've never trusted them in the past.  Always get the impression they're trying to steer in in a direction where they make most commission.

You are using a sales rep but you don't trust an IFA?  - you appear to have it the wrong way around.  IFAs dont receive a commission. They are fee based.  You pay their fee. Not the provider or the fund house.   

As I said, I'm 50 and plan to retire at 60.

But how?   What discussions with your sales rep have you had about whether you are on track to meet your objectives?   There are different methods and the level of investment risk and how you de-risk are linked to the methods you intend to use.   So, if the sales rep is trying to increase your charges from their already high level  to reduce your risk to a lower level, is this linked to discussions you have had on how you intend to take your retirement benefits and whether it is affordable or not?