Opinions please: Are these pension charges typical, or am I being ripped off?

Silver66

Hello,

I'm 41 and self employed.  Five years ago I started both a personal pension and a stocks and shares ISA through a financial planning company that was recommended to me by a friend.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018.  I had paid a huge amount in charges:  the charges had eaten up all of the HMRC tax relief that I had received on my pension, and eaten into my savings on top of that.  

I am thinking of switching my pension and ISA to somewhere else, and I'm doing some research to see if the charges I'm paying are typical.

When I started my pension and ISA, I paid 3% initial advisor charge on most of the money that I paid in.  Recently this has decreased to 2%.  When I told my advisor I was thinking of moving, he said he would waive the paying in charge altogether if I stayed.

My ongoing charges have been around 1.81%.  This includes 0.75% ongoing advisor charge + 0.31% platform charge + 0.75% typical ongoing funds charge.  Some of my investments are in actively managed funds, and others in passively managed funds.  My advisor says that he can reduce the overall figure to around 1.25% if I agree to moving my investments into more passively managed funds.  The 0.75% ongoing advisor charge includes free financial advice whenever I need it, which has been really helpful.

I just wanted to know if these charges are typical.  Does anyone know where I can find this out?  I spoke to someone on the MoneyHelper website and they said that they can't advise me because they have to be impartial.  I imagine I'll need to pay for advice but I don't know which advisor to approach.  If anyone could help I'd be grateful.

DavidT67

St James Place ?  Yep, those fee are extortionate.

Silver66

No, it wasn't them, it was a different financial planning company but I'd rather not name them here.

Silver66

I was thinking that if my advisor is offering to waive the paying in charge, I could move some of my money elsewhere and then move it back there without a penalty if it performs worse.  But I don't know when is the best time to move investments: when my portfolio is down or when it is performing well?

jaypers

Charges seem high, and I’m paying less but my main reason to comment was to say that now is not a good time to pull money from equity based investments. Yes, things could get worse before they get better but markets have taken a real hammering recently. Treasury yields may have peaked and as they start to drop equities should start to rise. My advice would be to talk to your advisor about charges but let the markets settle down a bit before moving anything as the fund may recover some of its losses. 

Albermarle

Silver66 said:

Hello,

I'm 41 and self employed.  Five years ago I started both a personal pension and a stocks and shares ISA through a financial planning company that was recommended to me by a friend.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018.  I had paid a huge amount in charges:  the charges had eaten up all of the HMRC tax relief that I had received on my pension, and eaten into my savings on top of that.  This does not sound right. Are you saying that the all the 25% tax relief you get has disappeared in charges? How can that have happened when the charges are 1.8% ?

I am thinking of switching my pension and ISA to somewhere else, and I'm doing some research to see if the charges I'm paying are typical.

When I started my pension and ISA, I paid 3% initial advisor charge on most of the money that I paid in. Normally you pay 2 or 3 % of the funds you already have. I suppose if you had no funds to begin with, then charging on contributions was another way of paying. Recently this has decreased to 2%.  When I told my advisor I was thinking of moving, he said he would waive the paying in charge altogether if I stayed. Good

My ongoing charges have been around 1.81%.  This includes 0.75% ongoing advisor charge + 0.31% platform charge + 0.75% typical ongoing funds charge.  Some of my investments are in actively managed funds, and others in passively managed funds.  My advisor says that he can reduce the overall figure to around 1.25% if I agree to moving my investments into more passively managed funds.  The 0.75% ongoing advisor charge includes free financial advice whenever I need it, which has been really helpful. These charges are not abnormal, but obviously 1.25% is better than 1.8%

I just wanted to know if these charges are typical.  Does anyone know where I can find this out?  I spoke to someone on the MoneyHelper website and they said that they can't advise me because they have to be impartial.  I imagine I'll need to pay for advice but I don't know which advisor to approach.  If anyone could help I'd be grateful.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018
For me the apparent poor performance is more of a concern than the charges. The last couple of years have been a bit flat/down, but I would have expected to see some growth since 1998, despite the high fees.
What are you actually invested in?

LHW99

Albermarle said:

Silver66 said:

Hello,

I'm 41 and self employed.  Five years ago I started both a personal pension and a stocks and shares ISA through a financial planning company that was recommended to me by a friend.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018.  I had paid a huge amount in charges:  the charges had eaten up all of the HMRC tax relief that I had received on my pension, and eaten into my savings on top of that.  This does not sound right. Are you saying that the all the 25% tax relief you get has disappeared in charges? How can that have happened when the charges are 1.8% ?

I am thinking of switching my pension and ISA to somewhere else, and I'm doing some research to see if the charges I'm paying are typical.

When I started my pension and ISA, I paid 3% initial advisor charge on most of the money that I paid in. Normally you pay 2 or 3 % of the funds you already have. I suppose if you had no funds to begin with, then charging on contributions was another way of paying. Recently this has decreased to 2%.  When I told my advisor I was thinking of moving, he said he would waive the paying in charge altogether if I stayed. Good

My ongoing charges have been around 1.81%.  This includes 0.75% ongoing advisor charge + 0.31% platform charge + 0.75% typical ongoing funds charge.  Some of my investments are in actively managed funds, and others in passively managed funds.  My advisor says that he can reduce the overall figure to around 1.25% if I agree to moving my investments into more passively managed funds.  The 0.75% ongoing advisor charge includes free financial advice whenever I need it, which has been really helpful. These charges are not abnormal, but obviously 1.25% is better than 1.8%

I just wanted to know if these charges are typical.  Does anyone know where I can find this out?  I spoke to someone on the MoneyHelper website and they said that they can't advise me because they have to be impartial.  I imagine I'll need to pay for advice but I don't know which advisor to approach.  If anyone could help I'd be grateful.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018
For me the apparent poor performance is more of a concern than the charges. The last couple of years have been a bit flat/down, but I would have expected to see some growth since 1998, despite the high fees.
What are you actually invested in?

Surely not as long ago as 1998?

Might it make a difference when in 2018 they were started? 2018 was a negative year I think (was for me anyway), and the last couple of years have been up / down depending on exactly what you were invested in.

MEM62

Silver66 said:

No, it wasn't them, it was a different financial planning company but I'd rather not name them here.

You will never get the best advice and you will always pay high charges when using such companies.  Call them what you like - financial planning, wealth management - they all similar.  What you want is proper advice from an IFA.  

jimjames

jaypers said:

Charges seem high, and I’m paying less but my main reason to comment was to say that now is not a good time to pull money from equity based investments. 

I read it as the OP moving from one provider to another so they won't be cashing in, they'll be selling one product and buying another so not really being out of the market for any significant time. As such it shouldn't really be of any relevance what the level of markets is at the moment.

AlanP_2

LHW99 said:

Albermarle said:

Silver66 said:

Hello,

I'm 41 and self employed.  Five years ago I started both a personal pension and a stocks and shares ISA through a financial planning company that was recommended to me by a friend.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018.  I had paid a huge amount in charges:  the charges had eaten up all of the HMRC tax relief that I had received on my pension, and eaten into my savings on top of that.  This does not sound right. Are you saying that the all the 25% tax relief you get has disappeared in charges? How can that have happened when the charges are 1.8% ?

I am thinking of switching my pension and ISA to somewhere else, and I'm doing some research to see if the charges I'm paying are typical.

When I started my pension and ISA, I paid 3% initial advisor charge on most of the money that I paid in. Normally you pay 2 or 3 % of the funds you already have. I suppose if you had no funds to begin with, then charging on contributions was another way of paying. Recently this has decreased to 2%.  When I told my advisor I was thinking of moving, he said he would waive the paying in charge altogether if I stayed. Good

My ongoing charges have been around 1.81%.  This includes 0.75% ongoing advisor charge + 0.31% platform charge + 0.75% typical ongoing funds charge.  Some of my investments are in actively managed funds, and others in passively managed funds.  My advisor says that he can reduce the overall figure to around 1.25% if I agree to moving my investments into more passively managed funds.  The 0.75% ongoing advisor charge includes free financial advice whenever I need it, which has been really helpful. These charges are not abnormal, but obviously 1.25% is better than 1.8%

I just wanted to know if these charges are typical.  Does anyone know where I can find this out?  I spoke to someone on the MoneyHelper website and they said that they can't advise me because they have to be impartial.  I imagine I'll need to pay for advice but I don't know which advisor to approach.  If anyone could help I'd be grateful.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018
For me the apparent poor performance is more of a concern than the charges. The last couple of years have been a bit flat/down, but I would have expected to see some growth since 1998, despite the high fees.
What are you actually invested in?

Surely not as long ago as 1998?

Might it make a difference when in 2018 they were started? 2018 was a negative year I think (was for me anyway), and the last couple of years have been up / down depending on exactly what you were invested in.

2018 was for me as well, -8%, but was up 18% in 2019

AlanP_2

Albermarle said:

Silver66 said:

Hello,

I'm 41 and self employed.  Five years ago I started both a personal pension and a stocks and shares ISA through a financial planning company that was recommended to me by a friend.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018.  I had paid a huge amount in charges:  the charges had eaten up all of the HMRC tax relief that I had received on my pension, and eaten into my savings on top of that.  This does not sound right. Are you saying that the all the 25% tax relief you get has disappeared in charges? How can that have happened when the charges are 1.8% ?

I am thinking of switching my pension and ISA to somewhere else, and I'm doing some research to see if the charges I'm paying are typical.

When I started my pension and ISA, I paid 3% initial advisor charge on most of the money that I paid in. Normally you pay 2 or 3 % of the funds you already have. I suppose if you had no funds to begin with, then charging on contributions was another way of paying. Recently this has decreased to 2%.  When I told my advisor I was thinking of moving, he said he would waive the paying in charge altogether if I stayed. Good

My ongoing charges have been around 1.81%.  This includes 0.75% ongoing advisor charge + 0.31% platform charge + 0.75% typical ongoing funds charge.  Some of my investments are in actively managed funds, and others in passively managed funds.  My advisor says that he can reduce the overall figure to around 1.25% if I agree to moving my investments into more passively managed funds.  The 0.75% ongoing advisor charge includes free financial advice whenever I need it, which has been really helpful. These charges are not abnormal, but obviously 1.25% is better than 1.8%

I just wanted to know if these charges are typical.  Does anyone know where I can find this out?  I spoke to someone on the MoneyHelper website and they said that they can't advise me because they have to be impartial.  I imagine I'll need to pay for advice but I don't know which advisor to approach.  If anyone could help I'd be grateful.

Granted that the last five years have been rocky for many investors, but I'm worried about the performance of my pension and ISA.  When I checked last week, both were down 2% since inception in 2018
For me the apparent poor performance is more of a concern than the charges. The last couple of years have been a bit flat/down, but I would have expected to see some growth since 1998, despite the high fees.
What are you actually invested in?

Substituting 1998 for 2018  and accepting that exact comparisons are difficult and unlikely to be absolutely accurate but as an indicator of last 5 years I am running at 4% annualised for 5 years to end October.

Don't have an IFA but cannot see that 1.8% a year charges on top of 3% upfront can cause an overall loss over 5 years unless OP was very unlucky on timings of contributions.

Couple of points to note:

If contributions are regular e.g. monthly / quarterly / annual then a significant proportion of the total pot has been invested for a lot less than 5 years.

If investments are bond heavy then they have been hammered the last 18 months or so.