How much to invest my small pensions?

MRDEdwards

Hi
I have rolled several small pensions in to 1 using and advisor who has invested them in a safe/medium risk portfolio with Advance by Embark  and have recieved a layout of the costs. The original amount is 82k and ater an initial 4% charge they will then charge around 2k a year to run the investment which means I need over 2% growth per year just to stand still. I have never done anything like this before and have no idea as to wether this is normal as to me it seems like a lot, I would belooking to start claiming on the pot in about 10 years at 66

Thanks

Albermarle

Presumably you knew what the charges would be before going ahead with the advisor?

Anyway £82K is a relatively modest sum in advisor terms , so charging 4% for the initial work looks about OK .
For the ongoing charges , you can expect 1 % for the advisor + platform and fund charges of between 0.5% and 1 % .

I need over 2% growth per year just to stand still. 
You need 2% + inflation to stand still. Even if you ignore the current bout of high inflation , then probably that means you need 5% on average growth just to stand still. Over the last decade a medium risk ( I will ignore the 'safe' bit as it does not exist) portfolio produced around 8% pa on average but over the next decade it will most likely be less.

If you had done it all yourself , you would have saved money , now and ongoing. However you would need some basic knowledge to do that .

dunstonh

4% can be high or low depending on the amount involved.  4% of £82k is high.     
2% will be the total costs.   You are not going to find advice cheap with just £82k.  Most adviser firms will charge around 1% p.a. plus the platform charge and fund charges on top.   And regulated companies must include the TC and IC/Other charges in their disclosure which most DIY investors ignore (they are there but they ignore those columns).

So, 2% including TC&IC is at the upper end but it really depends on the size of the TC.  Some funds have TCs running at around  0.3% and that can distort figures. Especially if posters here who DIY ignore the TC figure altogether.  For an advised case with ongoing servicing you can improve on that but it's not going to be by much.

Smaller investors often don't need ongoing servicing on an annual basis.  So, it may be worth dropping that.   

QrizB

Albermarle said:

If you had done it all yourself , you would have saved money , now and ongoing. However you would need some basic knowledge to do that .

Note that it's not too late; you can quit your advisor and switch to DIY at any time.

Roger175

Do consider doing it yourself - I used to use an IFA but he never actually inspired much confidence. The trigger point came when I was looking at doing some consolidation of my pensions (I can't even recall the details now), but the IFA wrote to me setting out the proposal and recommending 4 funds to invest in. 2 days later I received a similar letter also recommending 4 funds, but only one of the initial 4 was the same, the others all different - when I questioned what was going on, he admitted that he had forgotten that he had dictated the first letter and then did it again. When challenged about the funds and what had changed in 2 days to lead him to make a completely different set of recommendations, he more or less admitted it was all a bit of a guess and as long I was broadly in the right sort of fund it wouldn't make much difference. I now make my own decisions and like to think I've not made too many mistakes, I'm absolutely convinced that if I have, they've not cost me any more that the fees I've saved. 

MRDEdwards

I think switching to "DIY" is a little out of my comfort zone at the moment but I am looking at how it all works and it might be something I do in the future as I have some other savings not doing a lot also.

Thrugelmir

2% is a big cut of the pie. Particularly if there's a period of low to negative investment returns. Going DIY doesn't require knowledge. Plenty of reputable investment managers offering multi asset portfolios at a reasonable cost. 

Albermarle

MRDEdwards said:

I think switching to "DIY" is a little out of my comfort zone at the moment but I am looking at how it all works and it might be something I do in the future as I have some other savings not doing a lot also.

DIY in this context does not mean sitting in front of a screen all day, trading in shares. 
It means probably having a handful of long term investments , or often only one .

There are plenty of relatively simple investment books , you tube videos etc . This book is often recommended.
DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing eBook : Edwards, John: Amazon.co.uk: Books