Charges

MeteredOut

I always find the "I've retired" term a bit outdated now. To some it means stopping work from their main job, to others it means reaching state pension age, to others it might mean starting claiming their works pension (but may still work part-time elsewhere), to others its a state of mind (decided not to work any more). It has no legal definition.

It's a term from a time when people had one or two employments during their lifetime, reached 65, got their watch or clock as a retirement present, and started gardening.

I suspect the OP means stopped working from their main job.

johnnyren

MetaPhysical said:

johnnyren said:

MetaPhysical said:

I recently moved out £70000 out of a passive zombie fund when it was charging me 1.2%.  I then closed it.  That was with Utmost and I moved it to Aviva where I am charged 0.3% all-in at my employer discounted rates.

Depending on how old you are charges that high could make a huge difference to your eventual pension pot size.  I suggest you investigate this as a matter of some urgency and if need be move out.

Thanks for all replies ,     Yes this was what was concerning me slightly ,   I’m coming up for 60 ,   I’ve retired and went part time ,    I’m taking a drawdown of 17 000 a year.      I’ll get full state pension at 67.     But that’s a fair amount going out each year till then and beyond 

I don't follow - "I’ve retired and went part time" ???? Are you retired or work part time?????  If the latter then your work will consume all of your personal allowance if you are paid over £12570.

I retired from my full time job , due to stress and took on a small part time job to supplement my drawdown 

johnnyren

dunstonh said:

johnnyren said:

My fees are going on as follows 
service fee £865
ongoing charges to figures £3.329
ongoing transaction costs £878
advisor ongoing fees £2.164

The transaction costs can be ignored.   
Ongoing charges are around 0.77% which indicates managed funds.   Managed funds are always more expensive than passive funds. (passive is around 0.1x% from a spread)
Adviser charge of 0.50% is where you would expect it to be.
platform charge of 0.20% is not bad.   Others are now coming in cheaper but its in the expected ballpark.

Overall, exactly what you would expected when managed funds are used.   You could ask the adviser to limit the portfolio to passive funds and that will reduce charges.  It may or may not reduce returns but if you are "cost focused" rather than "returns focused" then passive is the way to go.

My funds are allocated as follows 
cg absolute return gbp class m shares 141 000

trojan fund x acc 149 000

ws ruffer diversified return fund j accumulation 
141 000

It’s invested through fidelity 

dunstonh

johnnyren said:

dunstonh said:

johnnyren said:

My fees are going on as follows 
service fee £865
ongoing charges to figures £3.329
ongoing transaction costs £878
advisor ongoing fees £2.164

The transaction costs can be ignored.   
Ongoing charges are around 0.77% which indicates managed funds.   Managed funds are always more expensive than passive funds. (passive is around 0.1x% from a spread)
Adviser charge of 0.50% is where you would expect it to be.
platform charge of 0.20% is not bad.   Others are now coming in cheaper but its in the expected ballpark.

Overall, exactly what you would expected when managed funds are used.   You could ask the adviser to limit the portfolio to passive funds and that will reduce charges.  It may or may not reduce returns but if you are "cost focused" rather than "returns focused" then passive is the way to go.

My funds are allocated as follows 
cg absolute return gbp class m shares 141 000

trojan fund x acc 149 000

ws ruffer diversified return fund j accumulation 
141 000

It’s invested through fidelity 

That explains their charges.   It also suggests you are very defensive (possibly too defensive for drawdown)

Scallypud

What is passive funds?

johnnyren

dunstonh said:

johnnyren said:

dunstonh said:

johnnyren said:

My fees are going on as follows 
service fee £865
ongoing charges to figures £3.329
ongoing transaction costs £878
advisor ongoing fees £2.164

The transaction costs can be ignored.   
Ongoing charges are around 0.77% which indicates managed funds.   Managed funds are always more expensive than passive funds. (passive is around 0.1x% from a spread)
Adviser charge of 0.50% is where you would expect it to be.
platform charge of 0.20% is not bad.   Others are now coming in cheaper but its in the expected ballpark.

Overall, exactly what you would expected when managed funds are used.   You could ask the adviser to limit the portfolio to passive funds and that will reduce charges.  It may or may not reduce returns but if you are "cost focused" rather than "returns focused" then passive is the way to go.

My funds are allocated as follows 
cg absolute return gbp class m shares 141 000

trojan fund x acc 149 000

ws ruffer diversified return fund j accumulation 
141 000

It’s invested through fidelity 

That explains their charges.   It also suggests you are very defensive (possibly too defensive for drawdown)

My annual meeting with my ifa is approaching , I’ll discuss this with him ,   Thank you 

Bostonerimus1

[Deleted User] said:

johnnyren said:

... it’s currently sitting at around 430 000 and is invested through fidelity and is 3 cautious funds .
... the charges, all in I was just over 7000 for the year,  

johnnyren said:

Thanks for all replies ,     Yes this was what was concerning me slightly ,   I’m coming up for 60 ,   I’ve retired and went part time ,    I’m taking a drawdown of 17 000 a year.      I’ll get full state pension at 67.     But that’s a fair amount going out each year till then and beyond 

Wow! So you basically take £24,000 out of the pension each year and you only keep 70% of that!!!!!!!! And tthat's before tax. I just did a quick google for an online calculator and came with this as one of the first: https://moneyed.co.uk/calculators/fees It's not the best one in the world but chuck in £430,000, no monthly contributions and your 1.6% and compare that to an alternative fee of, say, 0.3% (e.g. a low cost platform with low-cost index funds). You can find better calculators that show graphs with different fee levels. This one does it a bit but is less personalisable: https://www.pensionworks.co.uk/pension-calculator/

Yep, if someone draws down 4% of their portfolio at the beginning of retirement and they are paying 1% in total fees then that's one quarter of their annual budget. That could easily be their largest single expense, but that's not the worst of it as they will probably have been paying at that level for the previous 30 years.

Mr.Generous

Surely a big consideration is the return the FA gets from the managed funds. My funds made a huge return in year 1 - covid bounce back - can't really compare to any normal market condition, then an 8% gain the next year, and then dropping to 7% and maintaining that. Fee's are about 1.6% - a lot of cash, but then I wouldn't know how to manage the fund or where to invest. I draw down 2% so my fund is growing.

AlanP_2

Scallypud said:

What is passive funds?

An index tracker or multi-asset fund e.g. Vanguard FTSE Global All Cap fund or their VLS range.

They have a rigid rule and stick to it as opposed to an active fund where the management team choose specific investments, chopping and changing them as they see fit.

Passive have lower fees as computer not human does 99% of the work.

AlanP_2

Mr.Generous said:

Surely a big consideration is the return the FA gets from the managed funds. My funds made a huge return in year 1 - covid bounce back - can't really compare to any normal market condition, then an 8% gain the next year, and then dropping to 7% and maintaining that. Fee's are about 1.6% - a lot of cash, but then I wouldn't know how to manage the fund or where to invest. I draw down 2% so my fund is growing.

The FA doesn't get the return, the investments do.

Fair enough you want their help choosing your investments but once chosen the FA can't influence the outcome.

Whether your returns are better than someone going the DIY route I have no idea as I don't know what you are invested in. I have seen quoted returns much higher (and much lower) than yours but so what?

As long as your returns are enabling you to meet your objectives then all is well.