Wife's Pension - Changes and Charges

jobbywobbler

Hey,

Looking at my wife's current DC pension, new employer scheme (which I I have altered to a Global Equity fund - only 6k, the default was losing money).   So will see how that goes...  

Older SIPP with Aegon - 171k, it is going ok but I think it could better.  The charges I think are high - £55 per month from Aegon and £70 a month from the Advisor.

I think this older SIPP (where new money isnt being added to, she is putting into new scheme, this gives life cover, etc).  Doesn't perform especially well, there is a massive spread of funds - a lot I am unsure about.

Are these charges a little high?   What else is out there, I could switch advisor (my cousin) and go with a new SIPP - but there would a charge to move maybe?

Other option is stay safe and keep as is.

I would note my DC is going very well, with extra % going in,   We both have DB pensions - mine is quite good indeed.

Ta

incus432

What service do you get from the advisor for that? Do you get value? In total you are paying £1500 pa in charges. Clearly if you moved the SIPP and did without the advisor you could pay considerably less. You dont need an advisor if you self select your funds.

Your cousin being advisor could be awkward, but you are paying him.

You'd have to ask Aegon if they charge for transfer out - less usual nowadays, and transfers in are almost universally FoC (in fact they often will pay you cashback)

dunstonh

Older SIPP with Aegon - 171k, it is going ok but I think it could better.  The charges I think are high - £55 per month from Aegon and £70 a month from the Advisor.

The Aegon charge of £55pm equates to a crude 0.386%. 
The adviser's charge of £70pm is equivalent to a crude of 0.49%.   So, it's probably the 0.50% typical.

The adviser charge seems good for £171k.  So, no issue there.

Aegon seems high at circa 0.39%.  That is higher than their published charges. I just typed £171k into the platform fee calculator and both Aegon platforms came in at 0.278%.      However, you haven't mentioned fund charges and I wonder if the Aegon charge includes fund charges.  Or if a DFM is involved, then that could be included although I don't know if Aegon have a DFM arm.  If they do, its not made my radar.

jobbywobbler

The adviser doesn't do very much, if anything at all.   This is my wife's company advising firm - so a new year resolution, light a fire under him.

Options would be to move into Vanguard, Fidelity, etc I suppose?    Put pressure on the Advisor, or move to my cousins place - he is a Wealth & Fin Advisor - runs quite a large firm.

What's a DFM?

Albermarle

If the Aegon charges include both the platform AND the Investment fund charges, the <0.4% is a good deal. You need to check the details. 

A large firm of Wealth advisors will almost certainly charge you more than your current advisor.

A DFM is a discretionary fund manager. Some financial advisors delegate the investment strategy to them.

dunstonh

Options would be to move into Vanguard, Fidelity, etc I suppose?    Put pressure on the Advisor, or move to my cousins place - he is a Wealth & Fin Advisor - runs quite a large firm.

So, the adviser is not an IFA but an FA?

Before you do anything, you need to clarify the charges as what you have given us doesn't match either of Aegon's platforms and you haven't mentioned fund charges.

What's a DFM?

discretionary fund manager.    Its one of the methods used for investment management.  It is a layer of charges but may result in lower charges in other areas.

For example, you mention Vanguard.    If you used the VLS range yourself, you would only have access to the OEIC version of VLS.   However, an IFA has access to the OEIC version and the DFM version.   The cost of the two is the same except the DFM version splits the charge explicitly whereas the OEIC version is less transparent.   Both of them total 0.22% though.  The DFM version has been outperforming the OEIC version (by more than the adviser fee in this case).  

If the adviser is "agent as client" for the portfolio, then you would have to exit that portfolio if end the adviser servicing.  The advise has ongoing liability for changes on the portfolio.     I am not going to go any further into that as its better we find out what you have in place before giving explanations on all the possible variations.

So, its important to look at all aspects of the charges and investments and understand where you are and what you propose as an alternative.  Otherwise you could end up paying less and getting less rather than getting more.

jobbywobbler

This I am not sure - kinda thinking its a DFM, was used by the small firm but the small firm was purchased, they have their own pension scheme (which is still within Aegon) but it looks very separate.   The key thing is she has to meet with then discuss options.

It might well be staying where it is, so could well be DFM as fees are split and as you say the DFM is out-performing anything else.    Another plus is this all within the same portal - retiready, which is handy.

I have altered the pension to a new S&P fund with Fidelity, maybe a better return and will keep an eye on.

Thank you so much for your help and I now understand a bit more.  Pensions really are a minefield especially in big firms, they seem to plan it safe - I know my DC is with WWT.