Who manages my SIPP?

handiyman

Hi,
In May 2006 I was persuaded to put my 5 pensions into a SIPP.
The IFA recommended WinterThur and in due course I had a portfolio with 24 funds. 25% in property 25% UK equity 16% US equity and the rest in various funds. Initially the funds went down then gradually worked their way back up, but now after almost two years I am exactly back where we started.
Non of the funds have changed over these two years. I would have thought that my property funds would have been reduced last year.
Now, I always assumed that my IFA would manage my SIPP, but when I just called the office they told me they review once a year. Is this normal. Surely one cannot 'catch' any underperforming funds like that?
Should I try to do it myself? Not that I know much about it...

Thanks for any suggestions

dunstonh

Now, I always assumed that my IFA would manage my SIPP

Did you agree a servicing contract?

but when I just called the office they told me they review once a year. Is this normal. Surely one cannot 'catch' any underperforming funds like that?

How do you know when a fund goes off the boil? Today, tomorrow, 1 year 2 years? Yearly is a typical review for a small to medium fund. The larger the fund, the more frequent the reviews.

You have to be careful not to over review it and micro manage it. That can actually do more damage than good. Annual is the typical norm. It doesnt mean that someone only looks at your file once a year. Often we get notifications and warnings (fund manager changes etc) where we act on those for anyone that holds that fund and that will be done at that point and not on your review date.

Should I try to do it myself? Not that I know much about it...

You can do it yourself. There is no cost advantage and you admit you dont know much about it and 24 funds sounds like some strategy has been used. Do you think you can do better?

Footsie_2

I'm sure the IFAs on the board will disagree with some of this but a lot of IFAs do not look at the performance of your funds unless you have a servicing contract (and sometimes not even then) or unless you show an active interest in your fund performance.

It is difficult to tell when a fund is performing badly and you have to view fund choices as economic gambling. You could stay in a fund for too long or sell up just before it surges. It is a very difficult line to tread and as such a lot of IFAs won't want to make those decisions unless it is very very obvious that your funds are under performing and, more importantly, another fund is over performing.

First port of all, speak to your IFA and see what they do for you for your money. Do you have a servicing contract and if so what does that entail?

dunstonh

I'm sure the IFAs on the board will disagree with some of this

Nope. Seems spot on here.

There are transactional IFAs and servicing IFAs. Tied agents are nearly always transactional. Some transactional IFAs will give the impression they are servicing but often put the emphasis on you to contract them.

You can often tell the quality of an investment adviser on who they spread the investments. 24 funds is a lot. Lazy advisers tend to do as few as possible.

handiyman

Sorry for any ignorance here.
I assume(d) that my IFA would be managing the funds as they charge 0.5% 'to help offset our annual investment management costs'.
(The fund is about 200k)
But maybe that is not enough to expect them to keep an eye on the funds?

handiyman

I didn't mention that I was 60 when the portfolio was set up. Do you think that the spread of property (25%) and US equity (16%) is reasonable for a short term investment?

dunstonh

I assume(d) that my IFA would be managing the funds as they charge 0.5% 'to help offset our annual investment management costs'.

That 0.5% is natural trail commission. Even companies with no advice get to keep that (i.e. HL's SIPP).

(The fund is about 200k)
But maybe that is not enough to expect them to keep an eye on the funds?

Good for a yearly or twice yearly review.

I didn't mention that I was 60 when the portfolio was set up. Do you think that the spread of property (25%) and US equity (16%) is reasonable for a short term investment?

What do you call short term? That is 3-5 years whereas medium is 5-10.

Do you intend to do income drawdown or annuity purchase when you crystallise your benefits (commence retirement)?

handiyman

Thanks Dunstonh for your helpful comments.
I suppose the term would be medium 5-10 yrs. I would take income drawdown.
By chance today my portfolio has the same value as when it started 20 months ago!
I had just assumed that the portfolio would grow by at least the equivalent of having it in a savings account. How simple..

dunstonh

By chance today my portfolio has the same value as when it started 20 months ago!

Thats about right. We are back to around April-June 06 with the recent drops.

I had just assumed that the portfolio would grow by at least the equivalent of having it in a savings account. How simple..

It zig zags and over the long term you aim to beat the savings accounts. If you are lucky you will get the 3-5 years of good growth first. If you are unlucky you get the bad years first.

handiyman

Thanks again dunstonh.
"If you are unlucky you get the bad years first."
That positions me then. Looking forward to 'the good years'.

EdInvestor

Footsie wrote: »

It is difficult to tell when a fund is performing badly

Perhaps some people find it more difficult than others...

Compare fund performance here:

www.citywire.co.uk/Funds/Home.aspx

If seeking to reduce risk it can be useful to compare fund performance over 1,5 and 10 years, to seek consistent performance at top level in each category of fund.That will eliminate about 95% of the funds out there for a start, considerably easing selection of the few remaining good ones.