Ongoing drawdown pension advice and value for money with Hargreaves Lansdown

worlestone

tacpot12 said:

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. 

Yes, this is what I'm concerned about, 30% 'lost', but maybe it's normal in situation where the investment decisions are made for the investor?

worlestone

Linton said:

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.

I started with @£400k, with a plan to provide income between 58 and 67 when state pension kicks in, then significantly reducing drawdown from Hargreaves

ColdIron

wjr4 said:

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. 

Just idle speculation on a dull Sunday afternoon, but I wonder how often investment trusts are recommended by IFAs assuming they are suitable to satisfy the objectives. I accept that this would never have happened pre-RDR and unlikely with an FA
Or is it a case that they, and perhaps ETFs, would fail due to additional complexity?

dunstonh

Total charges are 1.79% as % of total value

Thats expensive but the expected ballpark for them. For reference, that is double our charge.   

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. 

There is a bit of fee manipulation in the disclosure as they are vertically integrated. i.e., they are taking some fees out of the platform charge and fund charge.    So, bottom line is imprtant.

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.

HL's service is restricted and not whole of market.   So, there is no compensation to seek as their restrictions are to use their own funds.

Just idle speculation on a dull Sunday afternoon, but I wonder how often investment trusts are recommended by IFAs assuming they are suitable to satisfy the objectives. I accept that this would never have happened pre-RDR and unlikely with an FA
Or is it a case that they, and perhaps ETFs, would fail due to additional complexity?

The FCA treat ITs and ETFs are higher risk than the equivalent OEIC/UT.  Since RDR, many OEICs are cheaper then ETFs (or in the same ball park).  So, the need to use ETFs to reduce cost has gone. 
ITs are harder as they are not classed as a packaged investment and again, most consumers are not suited to them.  So, you would not expect to see ITs in the mainstream advice market.

poseidon1

ColdIron said:

wjr4 said:

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. 

Just idle speculation on a dull Sunday afternoon, but I wonder how often investment trusts are recommended by IFAs assuming they are suitable to satisfy the objectives. I accept that this would never have happened pre-RDR and unlikely with an FA
Or is it a case that they, and perhaps ETFs, would fail due to additional complexity?

As dunstonh points out, for various reasons neither FAs or IFAs are likely to recommend Investment Trusts or ETFs given the markets they address  ( mass affluent).

I think it fair to say each of these categories of investments are sufficiently complex to give most retail investors pause for thought in any event

For example given a choice between a synthetic etf and one that physically replicates the market which would you choose? Or, given a particular investment sector would you be attracted to an Investment Trust trading at a deep discount to NAV or one trading at a premium?

I am sure you would be sufficiently clued up on both Investment structures to make an educated judgement of what would make sense to you, but I imagine the majority of IFAs/FAs would struggle to comprehensively convey to the average ' joe public' the pros and cons inherent in each as well as their risks and benefits. 

Accordingly you will likely only find stockbrokers like Rathbones and Killick & co  with wealth management arms,  prepared to incorporate Investment Trusts and ETFs in Sipp/isa/gia portfolios.

Qyburn

worlestone said:

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

Are those all actual out-of-pocket charges, transactions deducting those amounts from you account? Or are some the fund annual charges which you don't pay yourself but which reduce the value of the fund?

worlestone

Qyburn said:

worlestone said:

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

Are those all actual out-of-pocket charges, transactions deducting those amounts from you account? Or are some the fund annual charges which you don't pay yourself but which reduce the value of the fund?

Actual costs in operating the account over the last year, deducted at source on a daily/monthly basis