took advice on here and spoke to a Financial Advisor

jimboger1

posted a couple of times before and now had an initial meeting with an FA to discuss my pension - summary below and would appreciate comments, thoughts etc.

I had a teams call with a company in Glasgow to offer some pension advice initially

Very nice guys who for this first call, concentrated on my current pension compared to what they could offer They seem to work with AJ Bell, where they seem to have a range of 6 options tailored for their own company with risk levels 1 to 6

they assessed my risk level as a 3, meaning - 

Route 3 has a balanced approach between defensive assets such as cash and bonds, and higher-risk assets such as shares and potentially alternative assets

performance vs my SW pension was - (AJ Bell figures quotes first) 

after 1 year - 13.74% vs 11.45%

after 3 years - 33.2% vs 33%

after 5 years - 47% vs 27% 

portfolio spread I think seemed to be roughly the same at 50% equity, 48% bonds & 2% cash 

so looks like a good possible improvement over what I currently have 

however, I did think the fees seemed a bit high

Based on my £500k portfolio, the yearly cost was 1%, but the set up cost seemed quite high at just under £14k

would appreciate peoples thoughts

many thanks

Jim

Vitor

A £14k initial charge plus 1% ongoing on £500k is expensive for what appears to be a fairly standard 50/50 model portfolio on AJ Bell. The performance comparison isn’t very meaningful, especially over a favourable five-year period. You could access similar risk-rated portfolios much more cheaply via a SIPP.

Before proceeding, it’s worth reading Ramin's PensionCraft site, YouTube and forum, which goes into adviser charging, portfolio construction and when advice genuinely adds value.

jimboger1

I though to too

flaneurs_lobster

(Quote removed by Forum Team)

Steady on mate, if those financial advisors are suggesting the use of AJ Bell (who do not have advisors) then isn't it reasonable to assume that the FAs are indeed I?

dunstonh

Very nice guys who for this first call, concentrated on my current pension compared to what they could offer They seem to work with AJ Bell, where they seem to have a range of 6 options tailored for their own company with risk levels 1 to 6

IFAs work for you. However, they have access to everyone who offers their product to the wholemarket. FAs work either for their employer (if tied to a provider) or are restricted to one platform, investments, or panel.

Based on my £500k portfolio, the yearly cost was 1%, but the set up cost seemed quite high at just under £14k

On £500k, 1% p.a. all in (platform, funds and advice charge) is in the ballpark. You could get better (e.g.around 0.8x% on that value) but you are in the ballpark.

If it's solely the advice charge, then on £500k it's very expensive. Many IFAs taper their charge down with higher values, and at £500k you would expect to see closer to 0.5%.

The set-up cost is greedy as hell. It's more sales agent/FA territory or an employee of a larger firm (who has to share fee income with the employer) rather than IFA territory. Something around £4k-£5k should be more typical.

jimboger1

https://forums.moneysavingexpert.com/discussion/comment/81875618#Comment_81875618

thank you for your comments and experience, much appreciated - the c£14k figure was basically the transfer etc of my plan to the AJ bell one - as follows -

Our charge is subject to the number of investment funds used within a product:

1 Fund Used
Our charge is 2.5% of any funds invested or transferred and is capped at £25,000.
2+ Funds or Model Portfolio Used
We use a tiered charging structure based on the percentage of any funds invested or
transferred, and is capped at £25,000:
i. 3% of first £150,000
ii. 2.75% of next £150,001 - £300,000
iii. 2.5% of next £300,001 - £500,000

iv. 2% of next £500,001 - £1,000,000
v. 1.5% of remaining balance

Full Pension Transfer Advice
In addition to the above, our charge is subject to a minimum fee of £3,000.
Platform-to-Platform Transfer Advice
Our charge is 1% of any funds moved between platforms/platform products and is
capped at £25,000.

Dazed_and_C0nfused

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Although the charging structure now provided seems remarkably similar to a well known FA.

Not quite seeing how AJ Bell fit into things though if it is SJP?

DRS1

At the risk of rehashing ground already covered in some other thread why are you thinking of moving your pension? Is the performance of the funds you have in the SW pension all that bad? It doesn't sound like it to me but you may be able to switch funds at SW to something riskier without incurring all these costs.

Or if you really want to go to AJBell you can do that yourself. Just open a SIPP with AJBell and ask them to apply to SW for the transfer of your pension. They won't charge any percentage of the portfolio value for doing that transfer.

Are you worried about picking the investments after the transfer? There are plenty of threads on here about nice simple investment selections like global trackers or multi asset funds.

jimboger1

https://forums.moneysavingexpert.com/discussion/comment/81875692#Comment_81875692

thanks DRS1, as I say, im new to this, but I just didn't think the return I was getting with SW was that great.?

When I try to engage with them they are really useless, and in the past, the people I have spoken to were pretty clueless about their own products - so maybe I just look at what else they can provide!

possible the AJ Bell may be worth looking into further once I have seen what else SW can offer

in regards to investments, I would have no clue, so in all honesty, would probably just go with a ready made fund

thanks for the constructive comments, I wish everyone was like this

Jim

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81875716#Comment_81875716

Well I am not a person to judge performance. I opened a Scottish Widows pension in the mid 1980s and picked two funds at the outset and never changed them until I came to draw an annuity last year. To this day I could not tell you how good the performance of either fund was. I never looked. So you are doing better than I ever did.

But looking and comparing is not always a good thing. If you picked something medium risk then comparing that with buying a global tracker might not be a good idea. For example VWRL has performance figures of 55.55% over 5 years 41.1% over 3 years and 9.09% over 1 year. So has your selection done any worse? Over 5 years maybe but over the last year it is better and who knows what the future may hold. It is incredibly tempting to pick something which has done well in the past only to find you have bought it at its most expensive. Not saying that is the case with VWRL but lots of noise out there about an imminent crash correction pull back etc.

When I bought the annuity I did look at the available funds (and for my old pension it was a short list). I had to ask SW what the other funds were that my pension could invest in and you may have to do the same. Be warned they have a lot of funds which all have very similar names or are only distinguished by letters at the end such as S8 or S9. For me they also had a quaint process for switching investments which involved me filling in a form with percentages and posting it to them. Maybe (hopefully) yours will be all online and a bit more precise.

jimboger1

https://forums.moneysavingexpert.com/discussion/comment/81875765#Comment_81875765

thanks, my fund over 5 years, without checking, was around 25%, (11% over 1 years) and maybe that is ok, but when compared to others it just looked low!!