Advisors rates

JohnL1976

Hi Everyone.

I'm paying about 1.25% for advisor and pension pot costs. The advisor takes about 0.75%. This can work out to be quite a lot over my lifespan.

Are there any cheaper plans where the pension investments are managed effectively ?

Kr,
John

dunstonh

The most dominant ongoing adviser charge is 0.5%.  However, it really depends on your fund value as you are unlikely to get 0.50% if its under £100k.

Are there any cheaper plans where the pension investments are managed effectively ?

1.25% minus 0.75% = 0.50% for pension and funds.  You can get a bit cheaper (e.g. 0.3x% ballpark) but you are not far off.      e.g. 0.33% funds&platform plus 0.50% adviser = 0.83%

Advisers and platforms have to include transaction costs (TC) in their cost disclosures.    Most DIY investors (and any serious investors) totally ignore it.  So, you should strip out TC from your charges comparisons on both existing and any proposed to ensure like for like comparisons.

Linton

JohnL1976 said:

Hi Everyone.

I'm paying about 1.25% for advisor and pension pot costs. The advisor takes about 0.75%. This can work out to be quite a lot over my lifespan.

Are there any cheaper plans where the pension investments are managed effectively ?

Kr,
John

Overall 1.25% seems reasonable to me for a moderate sized portfolio chosen to be appropriate for you needs, wishes, and circumstances with ongoing monitoring and advice should you need it.  If the choice can be shown to be inappropriate you could be compensated. You could do a lot worse.  You can get much cheaper if you made and implemented your investment decisions yourself.

Albermarle

For a portfolio with a financial advisor, the cost does not seem too bad. We often see on here people paying more like 2%.
If you to ditch the advisor and DIY, it would obviously be cheaper.

A half way house is to use a robo advisor, or a managed SIPP ( not many around) . Here you could be paying 0.7% to 1 % but the service is very basic and just concerns the investments, and not anything of your personal/family situation or advice on tax efficiency, changes in legislation etc.

This is also an issue with DIY, you have to ( ideally anyway) have some knowledge about pension tax issues, legislation etc Plus withdrawal strategies when you get to that point.

JohnL1976

Thanks both. Maybe it's worthwhile to just stick as it is at the minute. I got a scare when I saw the forecasted fees over 35 years and wondering if I could shave some off those off.

Thanks,
John

Albermarle

JohnL1976 said:

Thanks both. Maybe it's worthwhile to just stick as it is at the minute. I got a scare when I saw the forecasted fees over 35 years and wondering if I could shave some off those off.

Thanks,
John

Always worth reviewing these things from time to time.

Bostonerimus1

JohnL1976 said:

Thanks both. Maybe it's worthwhile to just stick as it is at the minute. I got a scare when I saw the forecasted fees over 35 years and wondering if I could shave some off those off.

Thanks,
John

By actually thinking about the potential impact of fees you'd done more than most people. One way to look at it is that you might expect your pension investments to change each year anywhere from down 20% to maybe up 20%. Most years won't be anywhere near those extremes and historically most years have been positive and maybe the average annual return for a moderately aggressive portfolio has been 6%. Your IFA and pension administrators are taking their fees every year and cutting into your gains and that compounds over 30 years to be a lot of money. The hope is that they "manage" your money well and provide a useful service. They will for some people, but others will be inclined to DIY and save a bunch in fees. I think it's also instructive to realize that "managing" a pension fund portfolio can be very simple, but not necessarily easy, particularly when the markets and down. I've been DIYing for 30 years and most of my management of my portfolio has been to just sit on my hands.