Is Your SIPP Pension Making Any Money?

MK62

Hoenir said:

SteveBLFC64 said:

I guess it's definitely not for everyone, but I think with a little education I'm sure many people could reasonably confidently do better than many FA/IFAs out there,

"Investing" isn't a little topic........

It can be though.........it can be as simple (and little) as selecting a single multi-asset fund and......errr that's it!

barnstar2077

I think it is safe to say that almost anyone could gain some financial benefit from speaking to an independent financial advisor.

Even though I am very firmly in the DIY camp, if I should win the lottery I would be a fool not to at least listen to a few experts, even if just for some one off advice, as I would be way out of my comfort zone.

But as alluded to above, investing is very easy if you are not trying to guess individual companies or maximise returns.  It could be one fund, it could be three or five, depending.

Personally, I think it is riskier to just go with someone else's selection, without understanding anything about them yourself.

Audaxer

If you do want to consider DIY, have a look at low cost, globally diversified multi assets funds. One such multi asset fund is often considered diversified enough to represent a whole portfolio, rather than holding a number of separate equity and bond funds. One example discussed many times over the years on this forum is the Vanguard LifeStrategy range of funds which have different risk levels, so that you can choose a risk level suitable to you. There are many other multi asset funds available and you should of course do your research, but in my view if you plan to DIY, multi asset funds are a good option if you are not comfortable choosing and managing a range of different funds.

Bostonerimus1

barnstar2077 said:

I think it is safe to say that almost anyone could gain some financial benefit from speaking to an independent financial advisor.

Even though I am very firmly in the DIY camp, if I should win the lottery I would be a fool not to at least listen to a few experts, even if just for some one off advice, as I would be way out of my comfort zone.

But as alluded to above, investing is very easy if you are not trying to guess individual companies or maximise returns.  It could be one fund, it could be three or five, depending.

Personally, I think it is riskier to just go with someone else's selection, without understanding anything about them yourself.

Everyone is different, but I believe that most people are capable of DIY saving and investing in their pensions and ISAs using simple portfolios of multi-asset and index funds and be successful over the long therm. Drawdown is more difficult and some people will need advice for that. 

If you accumulate a large portfolio then tax and estate planning becomes more important and then professional advice becomes more necessary because of the complexities of tax codes. In my case I went to an estate lawyer to do my will, POA and trusts so that everything was "legal" and filed correctly. I live in the US and feel comfortable dealing with my own taxes and I'm now dealing with US inheritance and estate tax thresholds with an annual gifting plan to family and charities. However, if I return to the UK I know enough about the complexities of cross border taxation that I'll employ someone to do my annual taxes. It comes down to a cost benefit analysis, but I think far too many people are put off managing their own finances by a erroneous perception that it's difficult.

dunstonh

MK62 said:

Hoenir said:

SteveBLFC64 said:

I guess it's definitely not for everyone, but I think with a little education I'm sure many people could reasonably confidently do better than many FA/IFAs out there,

"Investing" isn't a little topic........

It can be though.........it can be as simple (and little) as selecting a single multi-asset fund and......errr that's it!

That can help.  But also worth noting that the UK's largest DIY platform is also one of the most expensive and that their own-brand multi-asset funds are some of the best sellers they have.    So, very many people are paying more for going DIY than they could be by using an adviser.

It all comes down to how well you DIY.

Also, if you are investing in unwrapped funds or an offshore bond is the most efficient wrapper, then you need a fair bit more knowledge than investing say £20k in an ISA.

Bostonerimus1

dunstonh said:

MK62 said:

Hoenir said:

SteveBLFC64 said:

I guess it's definitely not for everyone, but I think with a little education I'm sure many people could reasonably confidently do better than many FA/IFAs out there,

"Investing" isn't a little topic........

It can be though.........it can be as simple (and little) as selecting a single multi-asset fund and......errr that's it!

That can help.  But also worth noting that the UK's largest DIY platform is also one of the most expensive and that their own-brand multi-asset funds are some of the best sellers they have.    So, very many people are paying more for going DIY than they could be by using an adviser.

It all comes down to how well you DIY.

Also, if you are investing in unwrapped funds or an offshore bond is the most efficient wrapper, then you need a fair bit more knowledge than investing say £20k in an ISA.

Poor choice of a DIY platform is not a reason to use an IFA; just use a better DIY platform. 

The number of people who are maxing their tax wrapped account allowances and need to invest in GIA accounts must be quite small. Also an offshore bond might be more tax efficient than a GIA for certain levels of dividends and capital gains, but are they the most cost effective when fees are considered? For most people these things are not relevant and they can keep their finances simple and inexpensive and keep more of their gains.

MK62

dunstonh said:

MK62 said:

Hoenir said:

SteveBLFC64 said:

I guess it's definitely not for everyone, but I think with a little education I'm sure many people could reasonably confidently do better than many FA/IFAs out there,

"Investing" isn't a little topic........

It can be though.........it can be as simple (and little) as selecting a single multi-asset fund and......errr that's it!

That can help.  But also worth noting that the UK's largest DIY platform is also one of the most expensive and that their own-brand multi-asset funds are some of the best sellers they have.    So, very many people are paying more for going DIY than they could be by using an adviser.

It all comes down to how well you DIY.

Also, if you are investing in unwrapped funds or an offshore bond is the most efficient wrapper, then you need a fair bit more knowledge than investing say £20k in an ISA.

True enough......but then that's also true for IFAs.....some are more expensive than others, and they won't all recommend the same investment products to each investor.
I have no problem with anyone going down the IFA route if that suits their circumstances/ personality.....I was merely responding to the suggestion that investing in general can be very complex - it can be, but successful DIY pension investing can also be very simple too.

mad1_2

I'm wondering if anybody viewing this thread has a managed SIPP (not self invested) via an IFA and how that is performing? It would also be good to hear about charges for this type of pension.

dunstonh

mad1_2 said:

I'm wondering if anybody viewing this thread has a managed SIPP (not self invested) via an IFA and how that is performing? It would also be good to hear about charges for this type of pension.

Again, that comes down to risk more than anything else.  The table below gives an indication of calender year performance with 0% equities at the top and each line adding 10% equities until you get to 100% equities at the bottom.  Performance always needs to be in context with the same investment risk otherwise it is not like for like.



Adviser firms frequently tier their charges based on the amount invested.   i.e. 1% if below £xx, 0.75% if above £xx, 0.50% if above £yy etc.      So, the amount would need to be known for context (i.e. being charged 1% on £50k is reasonable but being charged 1% on £500k is expensive)

Albermarle

mad1_2 said:

I'm wondering if anybody viewing this thread has a managed SIPP (not self invested) via an IFA and how that is performing? It would also be good to hear about charges for this type of pension.

It all depends, as highlighted in the above thread. For example.

If the Sipp was for a 30 year old with a high risk threshold, it would be high in equities. So good growth when markets are on the up and inevitably at some point a nerve jangling plummet and then a recovery again.

If the Sipp was for a retired 65 year old with a low to medium risk threshold, then it would be < 50% in equities, maybe even as low as 25% and quite a large chunk in cash to cover withdrawals. This SIPP would be more stable, but with lower long term growth.

The problem with your question, and many similar ones asked on this forum , is that comparisons are not easy, as often you are trying to compare apples with pears, as there are so many variables.