Ongoing drawdown pension advice and value for money with Hargreaves Lansdown

worlestone

I retired at 58, now 63 and have investments with Hargreaves Lansdown through their Portfolio Management Service (PMS). This was initially as a SIPP, but last year changed to income drawdown. 

Over the last 5 years we've been able to use the money we had invested, £400k, to access our tax free allowance which helped with house renovations and living costs, We now use the drawdown income, £1,100 per month, plus a similar amount from a DB public sector pension to live on.

We have @ £282k currently and payed the following fees in there last year:
HL Advisor charges @ 0.365%  = £1,208
Account Charges = £656
Investment charges = £3,197
Total of £5,056 in charges
Total charges are 1.79% as % of total value

We receive a quarterly glossy from HL showing the funds performance with commentary and an annual telephone call with our HL financial advisor, we've not met face to face since 2019, there was Covid, then we moved house.

I don't think we're likely to need ongoing advice from the advisor now we're in drawdown.  My understanding is that if we wanted to access some additional money we could just call HL customer service and as if we stay with the PMS the funds will be invested as they (HL fund manager not the FA) think is best.

It does seem a lot of money each year to me, however I know I don't have the knowledge or understanding to manage the buying/selling. I think what I'm asking is are these reasonable charges or could we have have the same monthly income through but reducing the annual £5,000+ in fees? 

Thanks in advance

Dazed_and_C0nfused

worlestone said:

I retired at 58, now 63 and have investments with Hargreaves Lansdown through their Portfolio Management Service (PMS). This was initially as a SIPP, but last year changed to income drawdown. 

Over the last 5 years we've been able to use the money we had invested, £400k, to access our tax free allowance which helped with house renovations and living costs, We now use the drawdown income, £1,100 per month, plus a similar amount from a DB public sector pension to live on.

We have @ £282k currently and payed the following fees in there last year:
HL Advisor charges @ 0.365%  = £1,208
Account Charges = £656
Investment charges = £3,197
Total of £5,056 in charges
Total charges are 1.79% as % of total value

We receive a quarterly glossy from HL showing the funds performance with commentary and an annual telephone call with our HL financial advisor, we've not met face to face since 2019, there was Covid, then we moved house.

I don't think we're likely to need ongoing advice from the advisor now we're in drawdown.  My understanding is that if we wanted to access some additional money we could just call HL customer service and as if we stay with the PMS the funds will be invested as they (HL fund manager not the FA) think is best.

It does seem a lot of money each year to me, however I know I don't have the knowledge or understanding to manage the buying/selling. I think what I'm asking is are these reasonable charges or could we have have the same monthly income through but reducing the annual £5,000+ in fees? 

Thanks in advance

If your comfortable making your own investment choices I would have thought arranging the buying and selling would be a doddle 🤔

Or maybe you meant something else?

valueman1

People pay these huge charges because they are not confident enough to manage their portfolios. C. 2% per annum doesn’t seem like much but when you break it down into £s, it adds up.  My SIPP is with Halifax share dealing but I make my own investment decisions.  This is easier nowadays with index funds which are very low cost less than 0.25% pa. The platform is only £180 pa. I invest in a global equity fund with HSBC.

tacpot12

valueman1 said:

People pay these huge charges because they are not confident enough to manage their portfolios. C. 2% per annum doesn’t seem like much but when you break it down into £s, it adds up.  My SIPP is with Halifax share dealing but I make my own investment decisions.  This is easier nowadays with index funds which are very low cost less than 0.25% pa. The platform is only £180 pa. I invest in a global equity fund with HSBC.

Given typical returns ar 6-7%, paying 2% in fees, means you are losing about 30% of your return in fees. 

Linton

A portfolio suitable for income drawdown may be significantly different to one you would use while accumulating your pot and is often assumed to be well diversified 60% equity and 40% bonds.  If your current portfolio is very different  I suggest you talk to a IFA.

The equity part will be volatile and perhaps once a decade could be expected to crash by say 40%. So what would you do in those circumstances? If you would panic and sell out completely then I suggest again you retain contact with an IFA.

You say you now have a pot of £282k and are drawing down £1100X12=£13200 per year.  That is 4.7% of the initial pot size.  If you are planning to continue this amount increasing with inflation you could well run out of money before you die. That % would be considered very ambitious on this forum.

The danger is that when there is a crash you will be drawing down core money that is needed to generate your future income.

HL customer support are not authorised to give advice on such matters. You again would need an IFA, not an FA.

Billxx

Have a look at Royal London.  They are a mutual and have various managed portfolios based on your attitude to risk.  Their charges are low.

wjr4

The investment charges are high. If you don’t feel you’re getting value for money, stop the ongoing advice service. Check what the adviser has actually done over the last year first. 

Albermarle

worlestone said:

I retired at 58, now 63 and have investments with Hargreaves Lansdown through their Portfolio Management Service (PMS). This was initially as a SIPP, but last year changed to income drawdown. 

Over the last 5 years we've been able to use the money we had invested, £400k, to access our tax free allowance which helped with house renovations and living costs, We now use the drawdown income, £1,100 per month, plus a similar amount from a DB public sector pension to live on.

We have @ £282k currently and payed the following fees in there last year:
HL Advisor charges @ 0.365%  = £1,208
Account Charges = £656
Investment charges = £3,197
Total of £5,056 in charges
Total charges are 1.79% as % of total value

We receive a quarterly glossy from HL showing the funds performance with commentary and an annual telephone call with our HL financial advisor, we've not met face to face since 2019, there was Covid, then we moved house.

I don't think we're likely to need ongoing advice from the advisor now we're in drawdown.  My understanding is that if we wanted to access some additional money we could just call HL customer service and as if we stay with the PMS the funds will be invested as they (HL fund manager not the FA) think is best.

It does seem a lot of money each year to me, however I know I don't have the knowledge or understanding to manage the buying/selling. I think what I'm asking is are these reasonable charges or could we have have the same monthly income through but reducing the annual £5,000+ in fees? 

Thanks in advance

The advisor charge of 0.365% is lower than you would pay with an IFA ( circa 0.75%) but it sounds like you are getting just a basic stripped down service just looking at the investments. An IFA will take a wider view looking at family situation/arrangements, tax, inheritance etc. Plus they will not be tied to any investment provider, as yours is.
The investment charges seem high, and presumably means they are actively managed funds, maybe HL's own brand managed funds.

Very generally you could say that a competitive IFA, using mainly passive funds, would have an overall charge of say 1.25%
A DIY investor who has focused on low cost, could be as low as 0.3%, (although you can pay a lot more). More typically could be 0.6% ?
2% is more in region of wealth managers, such as the infamous St James Place. 

squirrelpie

HL charges 0.45% for "funds" but limits charges at £200 pa for "shares" in a SIPP. Which results in a big disparity for charges. It seems like the HL adviser has been putting you in funds when the best advice would probably have put you in roughly equivalent shares.

So get an IFA instead of HL's own advisors, and consider seeking compensation, IMHO.

wjr4

squirrelpie said:

HL charges 0.45% for "funds" but limits charges at £200 pa for "shares" in a SIPP. Which results in a big disparity for charges. It seems like the HL adviser has been putting you in funds when the best advice would probably have put you in roughly equivalent shares.

So get an IFA instead of HL's own advisors, and consider seeking compensation, IMHO.

Compensation for what exactly? It’s unlikely they are recommending shares as they aren’t a stock broker. 

worlestone

Dazed_and_C0nfused said:

worlestone said:

I retired at 58, now 63 and have investments with Hargreaves Lansdown through their Portfolio Management Service (PMS). This was initially as a SIPP, but last year changed to income drawdown. 

Over the last 5 years we've been able to use the money we had invested, £400k, to access our tax free allowance which helped with house renovations and living costs, We now use the drawdown income, £1,100 per month, plus a similar amount from a DB public sector pension to live on.

We have @ £282k currently and payed the following fees in there last year:
HL Advisor charges @ 0.365%  = £1,208
Account Charges = £656
Investment charges = £3,197
Total of £5,056 in charges
Total charges are 1.79% as % of total value

We receive a quarterly glossy from HL showing the funds performance with commentary and an annual telephone call with our HL financial advisor, we've not met face to face since 2019, there was Covid, then we moved house.

I don't think we're likely to need ongoing advice from the advisor now we're in drawdown.  My understanding is that if we wanted to access some additional money we could just call HL customer service and as if we stay with the PMS the funds will be invested as they (HL fund manager not the FA) think is best.

It does seem a lot of money each year to me, however I know I don't have the knowledge or understanding to manage the buying/selling. I think what I'm asking is are these reasonable charges or could we have have the same monthly income through but reducing the annual £5,000+ in fees? 

Thanks in advance

If your comfortable making your own investment choices I would have thought arranging the buying and selling would be a doddle 🤔

Or maybe you meant something else?

Thanks - poor choice of words by me, I can manage transactions I'm sure, but I wouldn't know which investment choices to make, hence why I went with their portfolio management service