SIPP - should I keep paying for ongoing advice?

MissBojangles

Thanks everyone - lots to think about.  The fund is not holding it's own at the moment but I suspect that's to do with the current climate - over the last few years (before drawdown) it increased steadily.  Hubby is invested (£250k) in the same fund and he's (until now) been drawing £16k with the outstanding capital holding steady.  Taken a dip in recent weeks though.

I'll look into other options and educate myself a bit more!  Not content with paying this amount in charges though.  Between us we'll pay the equivalent of £7k (adviser only) for a joint one hour phone call where I suspect we'll change nothing...

dunstonh

I'll look into other options and educate myself a bit more!

You will need to educate yourself a bit more.   When someone asks what you are invested in, the reply is not the name of the SIPP provider.

 Between us we'll pay the equivalent of £7k (adviser only) for a joint one hour phone call where I suspect we'll change nothing...

£620k really ought to be in the 0.50% pa. ballpark not 1.0%.  If you find DIY is not an option for you, in the end, you should look for an adviser at 0.5% as that is more typical for that sort of figure.

If your husband is in drawdown, it should be more than just an hour phone call.   There should be sustainability checks and modelling, periodic annuity comparisons, portfolio rebalancing etc.  Much of this will be carried out by the adviser after the call in preparation for their written report and recommendations.

Audaxer

MissBojangles said:

Thanks everyone - lots to think about.  The fund is not holding it's own at the moment but I suspect that's to do with the current climate - over the last few years (before drawdown) it increased steadily.  Hubby is invested (£250k) in the same fund 

If it is just the one fund in your SIPP, it does seem excessive to be paying IFA and DFM charges as well. Do you know the name of the fund in which you and your husband are invested?

dunstonh

Audaxer said:

MissBojangles said:

Thanks everyone - lots to think about.  The fund is not holding it's own at the moment but I suspect that's to do with the current climate - over the last few years (before drawdown) it increased steadily.  Hubby is invested (£250k) in the same fund 

If it is just the one fund in your SIPP, it does seem excessive to be paying IFA and DFM charges as well. Do you know the name of the fund in which you and your husband are invested?

It won't be one fund with a DFM.  However, some DFMs have a structure that makes it look like that if the platform only shows the top-level name.  Some also run their portfolio under a fund structure

Thrugelmir

westv said:

BritishInvestor said:

Joey_Soap said:

On a £400000 pot the natural yield should generate £12000 to £16000 per year income without touching the capital. Seriously, does this justify an advisor taking nearly half or a third of that income in fees? It's not even difficult to achieve that kind of yield and not unnecessarily risky.

Have you stress tested your approach?

https://finalytiq.co.uk/natural-yield-totally-bonkers-retirement-income-strategy/

"Take for instance, our Class 1900 who started their retirement with a natural income of £4,550. By the second year, their inflation adjusted income fell to £3,897 and by the 5th year it was £3,005. But their troubles were only just beginning; by their 20th year in retirement, their real income yield had fallen to £1,024!"

Does he mean the yield or does he mean the dividend in cash terms? Obviously the yield % will fluctuate with she share price but that doesn't automatically mean the actual dividend per share will.

Dividends fluctuate with the underlying financial performance of the companies held. Deepwater Horizon and the GFC were timely reminders that no strategy is without it's downsides. 

MissBojangles

I apologise for my ignorance.  It's a portfolio of funds:

Fidelity Index Japan P Acc 3.42% 
HSBC American Index C Acc 7.07% 
L&G Global Emerging Markets Index C Acc 4.57% 
Royal London Short Duration Gilts Z Inc 6.94%
Fidelity Index UK P 11.31%
HSBC European Index C Acc 8.76% 
L&G Cash Trust I Acc 1.88% 
L&G UK Index Trust C Acc 11.25%
Fidelity Index US P 7.43% 
L&G All Stocks Gilt Index Trust C Acc 3.73%
L&G Short Dated Sterling Corporate Bond Index C Acc 4.41%
Royal London Short Term Money Market Y Inc 1.88% 
Cash 2.30% -4.80% -1.86% 1.08% Fidelity Cash W Acc GBP 1.88%
HSBC FTSE All Share Index C Acc 11.25% 
L&G Pacific Index Trust C Acc 4.64%
L&G US Index Trust C Acc 7.28%

JohnWinder

I think one can easily argue that four funds are better than one, but sixteen better than nine?

dunstonh

JohnWinder said:

I think one can easily argue that four funds are better than one, but sixteen better than nine?

Seems like a reasonable spread.

cash funds split between multiple fund houses to ensure maximum FSCS protection spread and liquidity risk.
You could argue why there are multiple funds in the UK & US exist but you need to remember liquidity risk and the size of assets that the DFM would be dealing with.

Malthusian

The proliferation of multiple funds doing the same thing is pointless. The three cash funds will all be holding very similar short term money market instruments from largely the same banks, and the three funds will all do the same thing (i.e. return slightly less than zero after charges). A single cash fund would be just as well diversified.

The "Cash" line is slightly different as that sounds like the DFM's client account rather than a money market fund (i.e. it is all held with whatever bank the DFM uses).

It won't make the OP worse off to have more than one fund doing the same thing, but it's sloppy and makes it harder to understand how the portfolio is invested.

You could argue why there are multiple funds in the UK & US exist but you need to remember liquidity risk and the size of assets that the DFM would be dealing with.

Both L&G US Index and HSBC American Index are huge funds with billions under management. Even if the DFM decides to reduce their clients' US holdings en masse, is it really going to cause them any issues?

If there's illiquidity in the US markets as a whole, it will affect both funds equally.