Pension Investments

Spivo46

What an absolute minefield! I am not stupid but have they made this so variable just to keep IFA's in a job? I used an IFA 5 years ago to consolidate 4 DC pension pots. Transferred 3 of these to Royal London GP1. I decided not to pay the ongoing fees for the IFA and find myself on the doorstep of retirement now scratching my head as to where i put my RL and workplace Lifesight pensions to maximise future drawdown? Its only around 350k in total so need to get the best deal. Do i need another IFA? Having seen what they did last time for £3k it doesn't seem worth it. Any thoughts please?

NedS

Given the lack of knowledge and understanding displayed in your post, you may well benefit from the services of an IFA.

Royal London GP1 fund lost 8.5% in 2022 but has recovered 2.5% of that since the start of the year. This type of performance was typical for 2022.

Spivo46

NedS said:

Given the lack of knowledge and understanding displayed in your post, you may well benefit from the services of an IFA.

Royal London GP1 fund lost 8.5% in 2022 but has recovered 2.5% of that since the start of the year. This type of performance was typical for 2022.

Not sure how to take that observation? and the further comment is as much use as a plastic frying pan. I know what the current performance is? but hey ho, thanks

Albermarle

and find myself on the doorstep of retirement now scratching my head as to where i put my RL and workplace Lifesight pensions to maximise future drawdown? 

It is quite possible ( and quite common) to maintain a similar investment portfolio for drawdown as you have before drawdown. You still need to keep largely invested to have a good chance of beating inflation/ not running out.

Probably just as important/more important is the rate at which you take income/how that may vary each year ( or not)+ minimising tax paid. Also how the drawdown pot links in with your other savings/investments/income etc

On balance an IFA is probably more useful in drawdown than during the accumulation phase, although you can manage it yourself with a bit of research.

Scrudgy

You could put all of your money into a single low cost fund on a low cost drawdown platform and pay total fees of about 0.4 %, or you could pay an IFA who employs a DFM who favours managed funds on a low cost platform and pay 2.5 % fees. The funny thing is you might get exactly the same performance from both, but have a significant difference in fees.

In theory an IFA who uses a DFM should give you the best overall return, as the IFA will look after your financial planning and taxes and the DFM sole purpose is to get you the best return. The fees will be higher, but so could be the potential growth.

The reality is that you might make a poor choice of IFA, and the DFM could do a Neil Woodford to your money. Leaving you much worse off that sticking all you money in a multi asset passive fund.

There is no correct answer, but if you cannot begin to know what to do, then go and get another IFA, and pay the fees, even if it’s for a few years until you are comfortable with taking it over yourself. If you get a good one and you pot behaves well, then you might stick them.

If you feel you can do it yourself, you could save a lot in fees, but may end up with lacklustre  performance. To get you looking at the diy route, start with vanguard lifestrategy funds, HSBC balanced or dynamic funds or the BlackRock mymapp funds.

Linton

The problem with wanting to maximising your pension pot is that the higher the return you aim for the higher the risk that you wont make it. All investment involves some level of risk.  So you need to balance the return against the risk.  The right balance depends on your circumstances and your ability to accept a large fall in pot value in a single year without panicking and selling out.

Getting that balance right and buying appropriate investments to provide that balance is where an IFA can help.  By definition that wont provide the maximum possible return.  No-one knows in advance what investments will.

gm0

A few things can be cautiously inferred from the few facts you stated. 

You have 2 DC pots (3 prior consolidated) and one that did not get merged. So there was a reason why not doing that one made sense to the IFA professionally 5 years ago. That indicates caution on messing with it now - without full understanding of why that is - and how it relates to your future retirement plan once the shape of that is known.

5 years ago there was advice paperwork done. Fact finding about your goals and risk appetite to produce the RL setup  for the fee. Documented as suitable for you. Find it for a re-read.  Think about what has changed in your life and your views on the future, work plans, retirement age and time to state pension, housing and costs, goals for retirement, any partner situation and what all that may mean around income.

"Maximising drawdown" is not something which is independent of "risk taken" during your retirement.  You can run out.  So you will need to become clearer on what "maximising" really means for *your* plan.

Try to develop a first pass spending view on how much you need £/pa (as a minimum) and how much you would like for the lifestyle you want - but can vary - these are very useful numbers

If you haven't go and get your (and partner) State Pension entitlement forecasts for your new state pensions. Online. Easy. Lots of threads on understanding the report here.  How much. When does it cut in.

With that in hand - you will have most of the basics for a productive discussion with an IFA for drawdown planning if that's what you do next

You will also have started the DIY planning journey.  What do i need.  What do I want.  What pot do I have. How is it invested.  What does that cost.  When and how much SP do I get.  How long must the plan last.

If you develop the appetite to learn about it to work towards actually implementing DIY drawdown yourself. 
Buy the investing books. Watch the videos. Read the pension and FIRE blogs and forums.  Fact sheets. Learn enough. 
Iterate plan. Ask questions. Iterate plan. Ask more questions.  When confident move forward.
If you don't fancy that work - for that is what it is - then off to an IFA you go.

Nothing I have said above is advice. A few tips on collecting useful basic starting facts.
Won't be a waste of time either way you ultimately choose to go.

NedS

Spivo46 said:

What an absolute minefield! I am not stupid but have they made this so variable just to keep IFA's in a job? I used an IFA 5 years ago to consolidate 4 DC pension pots. Transferred 3 of these to Royal London GP1. I decided not to pay the ongoing fees for the IFA and find myself on the doorstep of retirement now scratching my head as to where i put my RL and workplace Lifesight pensions to maximise future drawdown? Its only around 350k in total so need to get the best deal. Do i need another IFA? Having seen what they did last time for £3k it doesn't seem worth it. Any thoughts please?

and

Spivo46 said:

NedS said:

Given the lack of knowledge and understanding displayed in your post, you may well benefit from the services of an IFA.

Royal London GP1 fund lost 8.5% in 2022 but has recovered 2.5% of that since the start of the year. This type of performance was typical for 2022.

Not sure how to take that observation? and the further comment is as much use as a plastic frying pan. I know what the current performance is? but hey ho, thanks

You stated you had an IFA 5 years ago but got rid of them as you didn't fancy paying their ongoing fees. So you've managed your own investments for the last 5 years? How pleased are you with your performance?

Maybe I misunderstood, but from the opening of your post, I assumed you were not overly satisfied? If so, what do you think you could have done better? What choices did you make that with hindsight you would not make again? Did you fail to outperform the market or just fail to meet your own goals?

As mentioned above, managing a portfolio in accumulation phase is probably a lot easier and with far fewer choices than managing a portfolio in retirement where there are far more options and choices.

A free appointment with Pensionwise will run through the different options with you, although will not offer advice on them. Once you know what options are available to you, you can then consider if you would like to use an IFA to advise you on those options or if you would prefer to go the DIY route.

bostonerimus

You shouldn't be trying to "maximize drawdown", you should be looking to make sustainable withdrawals that give you a high probability of not running out of money before you die.

So I would do a budget to see exactly how much you spend, cut out wasted spending, add up your income sources like SP etc and then do some reading about investing, asset allocation and drawdown strategies before you implement a plan. In your situation I'd get your pension into a SIPP with one of the large low cost providers like Vanguard, H&L etc and just use a single multi-asset fund like the Vanguard VLS series or a Target Retirement fund. This stuff is not complicated, but it is not necessarily easy to be disciplined enough to manage your drawdown for, maybe, 30 years. Don't ignore buying an annuity either.

Albermarle

You could put all of your money into a single low cost fund on a low cost drawdown platform and pay total fees of about 0.4 %, or you could pay an IFA who employs a DFM who favours managed funds on a low cost platform and pay 2.5 % fees

Or you could have an IFA who does not delegate the investing, and designs a portfolio of mainly passive funds. In this case the total cost would be about half way between the two% figures mentioned above.

Spivo46

Some great feedback. I don't think i made my question clear, my mistake. i used the term maximise and by that i mean getting the best from what i have. I know exactly what i need each year and it can be achieved. I am aware of most of the basics in peoples response. Thereason i did not move the other pension is that it was tied up in my current employment. I am going to look at Vanguard in detail, and go for one of the ready made portfolios. i get the feeling thats all the IFA would do anyway (or one of the providers very similar). My risk profile is currently cautious but i will be slightly braver during drawdown at the right times.