M&G Wealth / Openworks Pension Advisor charges

marky9074

Been a while but thought I would follow up on this. From the latest paperwork I have learned that:

• Since inception, the average year on year return has been 5.59% (lower than what I calculated it as)
• Investments are in the Openworks Graphene C1 Adventurous Model Portfolio
• Projected amounts account future inflation rate of 2.0% every year
• Charges reduce assumed annual growth, after inflation, by 2.2%
• Estimated mid-growth rate of 2.94%

Reading further into the document illustrates predicted growth of 2.9%, product and investment charges of 1.7%, then further charges of 0.7% (but 1.7% + 0.7% doesn't equal 2.2%)....

Anyway, my take on this is that after all charges I am getting a return of between 0.5% and 0.7% which seems pretty poor, but guess the historic return shows a slightly more favourable outcome.

Still unsure that this is the best place for my money to be for the next 15 years?

barnstar2077

There are quite a few threads about people DIYing, like this recent one:

https://forums.moneysavingexpert.com/discussion/6551475/simple-dc-pension-options/p1

I would think you can reduce your charges a lot on your older pension, but don't rush into it.  Do some homework first, there are pages on mse about pensions, and the pensioncraft channel on youtube has a lot of well explained videos on pensions and investing that you may find useful.

dunstonh

• Since inception, the average year on year return has been 5.59% (lower than what I calculated it as)

• Investments are in the Openworks Graphene C1 Adventurous Model Portfolio

• Projected amounts account future inflation rate of 2.0% every year

• Charges reduce assumed annual growth, after inflation, by 2.2%

• Estimated mid-growth rate of 2.94%

It only launched in 2014 and has been rather poor but that is down to its extremely high UK equity ratio (40% UK equities).

Reading further into the document illustrates predicted growth of 2.9%, product and investment charges of 1.7%, then further charges of 0.7% (but 1.7% + 0.7% doesn't equal 2.2%)....

I'm surprised your document uses language like predicted growth of 2.9%.  That is very risky language to use in a regulated environment as investment returns don't work like that.

The difference in charges is probably down to transaction costs (TC) which are a load of BS and no-one takes any notice off but have to be declared in some scenarios.   Different documents may refer to them ex-post and others ex-ante.  And the different disclosure methods result in different outcomes.

Anyway, my take on this is that after all charges I am getting a return of between 0.5% and 0.7% which seems pretty poor, but guess the historic return shows a slightly more favourable outcome.

Are you perhaps looking at the synthetic projections and referring to them as predictions by mistake?

Still unsure that this is the best place for my money to be for the next 15 years?

There won't be a single DIY investor here or IFA that would want to be in that.
According to the May factsheet, it had made 94.76% since launch.  


For the level of risk taken, and not using hindsight but things you would have used in 2014, then you would be looking at between 225% and 250% against that 94.76% return. 

For the benefit of others, who may wish to add comment, the op's investments are 95% equities, 3.5% gilts and 1.5% bonds.  Home bias is 40% equities.  I used 100% equities as comparison as 5% other is irrelevant and used a range of trackers and portfolios over the same period to get range.  So, no hindsight picking of the best. (as the figure would have been higher still if I did that)

marky9074

My bad, the terminology used is neither prediction or projection, it is merely stating 'assuming mid-growth rate of 2.94%'. For context, low is 0% and high is 5.88%. Later in the document is says 'This assumes your plan grows at 2.9% year'.

marky9074

I just signed up with Profile Pensions just to see what the platform was like. After answering some questions it has created an investor profile and suggests that I invest in the following funds, with an annual fee of 0.85%.

• Fidelity Index World Fund 88%
• L&G Global Emerging Markets Index Fund 12% 

dunstonh

marky9074 said:

I just signed up with Profile Pensions just to see what the platform was like. After answering some questions it has created an investor profile and suggests that I invest in the following funds, with an annual fee of 0.85%.

• Fidelity Index World Fund 88%
• L&G Global Emerging Markets Index Fund 12% 

That is expensive for those options. It's in the same price ballpark as a typical larger-value IFA, platform, and fund(s) solution(e.g., platform 0.15%, funds 0.18%, and adviser 0.50% = 0.83%), but without any adviser involved.

If you want to DIY, then you can do a lot better.

marky9074

So cheapest cost per platform is Interactive Investor at £12.99/month (less per year than what is currently going to my IFA per month....) and the Fidelity Index World Fund is available on that platform. 

dunstonh

marky9074 said:

So cheapest cost per platform is Interactive Investor at £12.99/month (less per year than what is currently going to my IFA per month....) and the Fidelity Index World Fund is available on that platform. 

You don't have an IFA at the moment.  However, that would be cheaper than your current and the first alternative.

marky9074

Bearing in mind I obviously have little idea what I am doing, but am reasonably confident that I couldn't pick worse funds than I am already in, have looked at the below based on my adventurous attitude. If I were to pull everything out of the M&G and split evenly over the following I don't think I would be in bad shape.

	Charge	TC	5 Years
Fidelity Global Technology Fund	1.04	0.47	19.61%
Fidelity European Fund W Acc	0.92	0.07	9.36%
Fidelity Index World P	0.12	0.00	11.00%
Scottish Mortgage Investment Trust plc	0.35	0.04	9.65%
Vanguard FTSE All-World UCITS ETF	0.22	0.02	9.86%
Vanguard LifeStrategy 100% Equity Fund	0.22	0.02	8.90%

marky9074

dunstonh said:

marky9074 said:

So cheapest cost per platform is Interactive Investor at £12.99/month (less per year than what is currently going to my IFA per month....) and the Fidelity Index World Fund is available on that platform. 

You don't have an IFA at the moment.  However, that would be cheaper than your current and the first alternative.

Ahh, I meant my 'current' financial advisor, that I thought was independent...