Sipp management fees how can I reduce

arm44

I have invested my old company pension in to a managed sipp via ifa and investment company. 
The fees are sapping any growth in the sipp together with obviously the market fluctuations.
The fees for the last 12 months were 8k for ifa and 9k for investment company wiping out any gain.
Is there any advice on how I can reduce/minimise the fees ?

eskbanker

At the risk of stating the obvious, your options are basically to negotiate, or shop around for a better IFA and investment company, or look after it yourself.

If you share the size of your portfolio (or the percentages that those charges represent), posters will be able to see whether what you're being charged is within the sort of ball park that might be expected, i.e. if you have £100K then those charges would be outrageous, but if you have £1m then it would be a different story....

El_Torro

Another thing that matters is what you are invested in. If you are investing in managed funds then you would expect to pay higher fees than if you invest in trackers.

Most people on this forum (myself included) prefer to have most of their investments in trackers. There is a place for managed funds though, depending on your strategy. 

dunstonh

Is there any advice on how I can reduce/minimise the fees ?

Where you invest influences the fees.  The higher up the risk scale, the higher the charges can become.  So, one avenue is to reduce your investment risk.  Although that may reduce your investment returns.  

Another is to instruct your IFA that you only want to use passive investments.    That will reduce costs.  Although it may reduce your investment returns.

If a DFM is involved, then you can instruct the IFA that you dont want to use a DFM.  That will remove their charge but you wont get their investment strategy anymore.  You will be on a different one.

The fees for the last 12 months were 8k for ifa and 9k for investment company wiping out any gain.

At the typical IFA charge of 0.5%, that would see you have around £1.5million.  Many IFAs tier their charges so the percentage falls as the amount goes up.    So, if yours doesn't, then you may want to consider a different IFA.

tacpot12

To give you an idea of what DIY costs, I pay 0.62% pa to the fund managers and 0.08% pa to the SIPP platform (I'm in drawdown with my pension).

Albermarle

I have invested my old company pension in to a managed sipp

What was the reason to move from your old company pension ?

ColdIron

El_Torro said:

Most people on this forum (myself included) prefer to have most of their investments in trackers.

That's a matter of opinion and I think a bold claim. I use them where they meet my objectives but not where they don't

There is a place for managed funds though, depending on your strategy.

Indeed. There are several asset classes off the table for trackers, think private equity and wealth preservation etc, and they are of limited use for income

Exodi

As has been said, the devil is in the detail - if your pot is worth millions then the fee's are probably a good deal.

If you went self managed, the vanguard SIPP has an AMC of 0.15% + the investment OCF. The target retirement funds are 0.24% making the total annual fee 0.39% of your investment.

Annoyingly, Vanguard does not accomodate employer contributions in the way most other SIPP's do - transfers in would have to be done by debit card - which many employers may not be happy to do.

HL allows formal employer contributions, but charges a platform fee of 0.45% (reducing above £250k).

I believe II (interactive investor) is the cheapest SIPP platform for large sums.

Certainly food for thought.

El_Torro

ColdIron said:

El_Torro said:

Most people on this forum (myself included) prefer to have most of their investments in trackers.

That's a matter of opinion and I think a bold claim. I use them where they meet my objectives but not where they don't

There is a place for managed funds though, depending on your strategy.

Indeed. There are several asset classes off the table for trackers, think private equity and wealth preservation etc, and they are of limited use for income

A bold claim perhaps, but based on the comments from most of the regular posters on this forum over the years I'd say it's true. I did say "Most" not "All". Also note that I didn't say that trackers are inherently better than managed funds.

Anyway, the point I was trying to make was that high fund fees do not necessarily mean that the fund / investment is bad. My managed Global Smaller Companies fund has served me well over the years, despite a high fund fee. Admittedly it makes up a relatively small percentage of my total portfolio. 

My fear is that this thread, like many before it, will run out of steam soon enough if the original poster doesn't come back and clarify the details. 

TBC15

An ETF SIPP with Fidelity in drawdown would cost £63 pa.

Notepad_Phil

TBC15 said:

An ETF SIPP with Fidelity in drawdown would cost £63 pa.

I thought Fidelity charged a max of £45 service charge if you only hold ETFs + assuming you're on their new system a £10 charge per each normal online buy or sell of an ETF. So wouldn't it depend on the activity as to what the charge is?