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What's your drawdown percentage and how much of that do you spend on financial fees?

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  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper

    Financial fees ~0.1% (no IFA , no platform fees, just fund fees)

    The SWR rules don't make any allowance for fund costs, including fund trading or advice or internal tax costs. Somehow you need to allow for that cost when working out the appropriate portion of the raw SWR to draw. And when doing that, remember also that it's only a third of total costs that gets deducted to get the pre-tax spendable SWR.
  • jamesd said:

    Financial fees ~0.1% (no IFA , no platform fees, just fund fees)

    The SWR rules don't make any allowance for fund costs, including fund trading or advice or internal tax costs. Somehow you need to allow for that cost when working out the appropriate portion of the raw SWR to draw. And when doing that, remember also that it's only a third of total costs that gets deducted to get the pre-tax spendable SWR.
    Yes you can spread the costs out to get your lifetime SWR and it might reduce it by 0.5% if you have annual starting fees of 1.5%, but when you start 100% of those fees come out of your SWR. I'm interested in what a retiree actually spends in financial fees in the first few years as a percentage of their withdrawal rate ie the practicalities of living when you start retirement. Do they bump up the withdrawal? or seek to reduce fees? or live with a quite low net spendable amount?
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • 53.
    3 days
    <£200 income (partner has just over PA at the moment)
    Nothing from pension (will have to wait two years). Planned withdrawal rate between 1.6% and 2.2% depending on how much travel we can do and what hobbies we do.  This is based on all investments (i.e. not just SIPP).
    Fees c0.12% (cash, premium bonds, SIPP - of which platform fees are roughly 0.02%) 
  • Alexland
    Alexland Posts: 10,187 Forumite
    Eighth Anniversary 10,000 Posts Photogenic Name Dropper
    edited 3 September 2021 at 9:22AM
    Prism said:
    I am not retired quite yet but will be in a few years. Platform fees are 0.02% and fund fees around 0.75%/
    Similar not retired yet and across all our accounts are spending a weighted average of 0.03% on platform/trade fees and 0.20% on fund managers.
    The platform fees on our main accounts are mostly capped, fixed or zero and the 0.03% is higher than it will be as we are maintaining LISAs which would get transferred into the existing ISAs at 60 and I hope the assets will be more valuable by then so around 0.02% platform/trade fees in retirement if the current pricing models hold even if they increase with inflation.
    On the 0.20% fund manager charges it's my naughty active investment trust that's causing them to be around 0.05% higher than necessary.
    it will still be interesting for UK retirees to share their withdrawal rates and the amount that they spent on financial fees
    So overall it should be possible for us to retire with average charges of 0.02% and 0.15% so 0.17% total compared to our 1/35th long term drawdown rate (2.86%, very conservative but my partner will still be mid 40s) for the money that gets spread evenly so we would be spending around 6% on investment management charges unless they get cheaper by then. Obviously a lower percentage in the early years as we will be drawing an extra amount from a separate allocation to cover the long delay in getting state pension.
  • SouthCoastBoy
    SouthCoastBoy Posts: 1,117 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    edited 3 September 2021 at 9:28AM
    I don't have the inclination to work out my exact fee percentage,

    I do have a relatively small SIPP (around 225k) with H&L and platform fees are 0.45% + fund fees so expensive, also have stock ISAs (around 200k) with them on same fee structure.

    I'm not sure what my company DC pension costs are, but have no way of changing it so irrelevant. Once I retire I need to move the DC pension as they don't provide drawdown, so will need to research where to put it, fees will be one of the considerations, may move my H&L pots at the same time. Some of the quotes above are for very low platform fees.

    I should also add I have around 600k in cash and premium bonds, so no fees but the opportunity cost over the last 18mths has been very large!
    It's just my opinion and not advice.
  • Alexland
    Alexland Posts: 10,187 Forumite
    Eighth Anniversary 10,000 Posts Photogenic Name Dropper
    I'm not sure what my company DC pension costs are, but have no way of changing it so irrelevant.
    It might be worth looking as the various fund choices might have different charges and if they are expensive you might have the option to partially transfer lump sums into a SIPP etc for potentially lower charges.
    Some of the quotes above are for very low platform fees.
    To get down to the 0.0x% platform and trade fees you need to have a large investment in a fixed, capped or zero ongoing cost account and trade very infrequently. We find it's worth having some 'car park' accounts where we never contribute or rebalance so the charges are super low. For example if holding a £510k of VEVE Vanguard Developed World on Fidelity you would pay the £45 pa capped account fee and £1.50 per quarterly divi reinvestment so £51 pa total which is 0.01% platform/trade fee and for the 0.12% fund manager. At that valuation Fidelity even then give you and your family the Wealth level of customer service. The problem is not all accounts can be that big, static or simple to get a good overall asset allocation and make regular contributions so the weighted average tends to be a bit higher but still nowhere near as expensive as the 0.45% you are paying HL.
  • pip895
    pip895 Posts: 1,178 Forumite
    Tenth Anniversary 1,000 Posts Combo Breaker
    edited 3 September 2021 at 9:41AM
    I don't have the inclination to work out my exact fee percentage,

    I do have a relatively small SIPP (around 225k) with H&L and platform fees are 0.45% + fund fees so expensive, also have stock ISAs (around 200k) with them on same fee structure.

    I'm not sure what my company DC pension costs are, but have no way of changing it so irrelevant. Once I retire I need to move the DC pension as they don't provide drawdown, so will need to research where to put it, fees will be one of the considerations, may move my H&L pots at the same time. Some of the quotes above are for very low platform fees.
    I am with HL for my SIPP - I am gradually moving over to ITs and etfs.  When/if I complete that process the platform fee could come down to just over 0.02%.  However I am struggling to justify sacrificing some of my active funds on the alter of lower fees. 
    TB Amati UK Smaller Companies is a fund I have held for over 5 years - it is among - if not my most expensive funds at a cost of nearly 0.9%.  Despite these costs it has returned over 150% over the 5 years.  I also hold VMID a UK midcap tracker etf with one of my lowest charges of 0.1% and attracting effectively no platform fee.  It has returned around 50% over the same 5 years.  Swapping from TB Amati to VMID might have saved platform charges of a few percent but at what cost!  It is not all about the charges!

    p.s. HL also make no charges for moving funds into drawdown adjustments or one off lump sums etc- I think they are pretty good value for me.
  • pip895 said:
    I don't have the inclination to work out my exact fee percentage,

    I do have a relatively small SIPP (around 225k) with H&L and platform fees are 0.45% + fund fees so expensive, also have stock ISAs (around 200k) with them on same fee structure.

    I'm not sure what my company DC pension costs are, but have no way of changing it so irrelevant. Once I retire I need to move the DC pension as they don't provide drawdown, so will need to research where to put it, fees will be one of the considerations, may move my H&L pots at the same time. Some of the quotes above are for very low platform fees.
    I am with HL for my SIPP - I am gradually moving over to ITs and etfs.  When/if I complete that process the platform fee could come down to just over 0.02%.  However I am struggling to justify sacrificing some of my active funds on the alter of lower fees. 
    TB Amati UK Smaller Companies is a fund I have held for over 5 years - it is among - if not my most expensive funds at a cost of nearly 0.9%.  Despite these costs it has returned over 150% over the 5 years.  I also hold VMID a UK midcap tracker etf with one of my lowest charges of 0.1% and attracting effectively no platform fee.  It has returned around 50% over the same 5 years.  Swapping from TB Amati to VMID might have saved platform charges of a few percent but at what cost!  It is not all about the charges!

    p.s. HL also make no charges for moving funds into drawdown adjustments or one off lump sums etc- I think they are pretty good value for me.
    Don't etfs held in a H&L SIPP still have a 0.45% charge?
    It's just my opinion and not advice.
  • Albermarle
    Albermarle Posts: 28,907 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    pip895 said:
    I don't have the inclination to work out my exact fee percentage,

    I do have a relatively small SIPP (around 225k) with H&L and platform fees are 0.45% + fund fees so expensive, also have stock ISAs (around 200k) with them on same fee structure.

    I'm not sure what my company DC pension costs are, but have no way of changing it so irrelevant. Once I retire I need to move the DC pension as they don't provide drawdown, so will need to research where to put it, fees will be one of the considerations, may move my H&L pots at the same time. Some of the quotes above are for very low platform fees.
    I am with HL for my SIPP - I am gradually moving over to ITs and etfs.  When/if I complete that process the platform fee could come down to just over 0.02%.  However I am struggling to justify sacrificing some of my active funds on the alter of lower fees. 
    TB Amati UK Smaller Companies is a fund I have held for over 5 years - it is among - if not my most expensive funds at a cost of nearly 0.9%.  Despite these costs it has returned over 150% over the 5 years.  I also hold VMID a UK midcap tracker etf with one of my lowest charges of 0.1% and attracting effectively no platform fee.  It has returned around 50% over the same 5 years.  Swapping from TB Amati to VMID might have saved platform charges of a few percent but at what cost!  It is not all about the charges!

    p.s. HL also make no charges for moving funds into drawdown adjustments or one off lump sums etc- I think they are pretty good value for me.
    If you like the flexibility of HL and the fact that there are almost no hidden or extra charges , you could have a look at Fidelity.
    Their charging structure is very similar to HL except they are cheaper.
    0.35% standard but if you have over £250K ( in total on the platform) then 0.2% on all of it, not just the amount over £250K ( discounts with HL only apply above the £250K ) 
    Shares /ETF's/IT's cost capped at £45 , again over the whole platform , not each individual account.
    As Alexland details above , it is possible to have a SIPP ( and in drawdown ) for £51 pa 
  • Good to know regarding fidelity, what is their UI and customer service like?
    It's just my opinion and not advice.
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