Stay put, switch funds or transfer out?

dizzie

Hi, I am trying to make my mind up on this one but have some questions - I would be grateful for any feedback on these. Okay, here goes.

I set up a personal pension in 1996 with Lincoln. However, 8 years later I saw an IFA again and she told me that the pension was pretty rubbish (bottom quartile). She advised that I made the fund "paid up" and start a new one (which I did).

At the time, she didn't think it was worth transferring the fund (it is only little) because of early transfer penalties and new set up charges.

I am 36 and don't intend to retire for another 30 years. I still feel that this fund is a bit like a loose appendage. As I said, it is only small (fund value approx £8k/transfer value £7k) and as it stands, it is unlikely to make any significant difference to my retirement income anyway (I can now afford to pay in about £6k a year to my new pension fund)...so I'm happy to take some speculative risks with the Lincoln one.

I would be grateful if anyone could help me with the following questions:

1. I have found out that I can make one free fund switch per year (my fund is currently split 50:50 into balanced managed 3 and aggressive managed 4). But is there is a good website that will allow me to compare the other 20 funds Lincoln will allow me to switch to, with other providers funds (e.g. like a league table)? What I am looking for is something that will give me some idea of comparative performance/quartile ratings. This is so I can make up my mind as to whether there may be a better performing fund with Lincoln (or whether they are all duds).

2. If my option to switch funds would only allow me to switch to other poorly performing funds, then I would be happy to lose £1K and transfer out, on the speculation that I might be able to find gains in the long term. Am I right in thinking that if I go through a fund supermarket (like H&L Vantage for a SIPP), I should be able to get a good discount on my initial set up costs?

3. Are there any other pitfalls/things I need to watch out for when considering switching funds or transferring out?

Thanks for any answers to these questions

dunstonh

2. If my option to switch funds would only allow me to switch to other poorly performing funds, then I would be happy to lose £1K and transfer out, on the speculation that I might be able to find gains in the long term. Am I right in thinking that if I go through a fund supermarket (like H&L Vantage for a SIPP), I should be able to get a good discount on my initial set up costs?

I wouldnt call it a good discount. Its a little cheaper but not a lot.

A medium high or higher risk investor can certainly do better with a fund supermarket or SIPP but a medium risk or lower investor could do better with a personal pension or stakeholder.

An inexperienced investor could also make a right pigs ear out of it.

Lincoln do offer a range of funds but the internal range is generally poor. Was it really an IFA you saw before? I would expect an IFA to have transferred that to the new one. Making it paid up and starting a new one is the sort of thing a tied agent would have to do.

dizzie

Thanks for your reply Dunstonh. If this was a big pot of money then I certainly wouldn't even consider dabbling, but since the fund has only been making about 4% per year (from what I can see), it will probably not be visible under a microscope when I retire, so I'm not too worried about taking a risk.

The lady said she was an IFA with Skipton Building Society. We reviewed a lot of plans/policies and she advised changes to a number of different companies. Mind, you, I am really confused about the definition of an IFA - the guy we saw back in 1996 claimed he was one too - but all we got stuck with was a load of Lincoln policies e.g. pension, endowment which have turned out to be awful.
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Edited: It wasn't Skipton Building Society - it was Skipton Financial Services - oops sorry

dunstonh

The lady said she was an IFA with Skipton Building Society.

They are not IFAs. They are a whole of market salesforce. They dont meet the criteria to be called an IFA. Bank/building socieities have dabbled in IFA (or whole of market) at various times but what happens is the advisers are the same ones that were tied before and they still have the mindset of a tied rep. That would explain why they didnt transfer the Lincoln pension.

the guy we saw back in 1996 claimed he was one too - but all we got stuck with was a load of Lincoln policies e.g. pension, endowment which have turned out to be awful.

Lincoln do offer some products through the IFA distribution channel but also operated their own tied salesforce.

A lot of tied agents try to pass themselves off as IFAs. Research (from consumers association amongst others) has shown between half and two thirds of those seeing tied agents believe they are actually seeing an IFA.

You need to note that investment performance is such that cautious to medium risk portfolios are more or less back to April 2006 prices at the moment. So, dont equate 4% with bad performance. If you do go higher risk then do expect greater volatility with +/- 60% returns a year within that sort of potential.

dizzie

Thanks again - I obviously need to do a bit more research about what an IFA is, since I have just taken the fact that people who use this title are what they say they are.

Also, it's not so much just that the percentage returns are shouting out "poor performance". Browsing some articles on the web, I have also found my funds listed in "The worst performing funds" or "funds to avoid" list, which is a bit of a downer and makes me feel like I'm making a mistake if I do nothing.

Retired_I.F.A.

When you first meet an adviser it is by law he/she must disclose their status by giving you their terms of business. Even if you strike up a conversation with one in a pub an advisor should at least show a business card that shows their status otherwise they could like so many on this board be breaking the law in giving advise when not authorised to do so. In fact 99% of posters questions should imo be answered with a statement saying go seek out an authorised advisor or learn about the industry and do it yourself.

With regard to fund values and transfer values the truth is the transfer value is the real fund value and the fund value is a con.

dizzie

Thanks Retired IFA,

I am very happy with the pensions/policies that the last lady we saw set up. She explained that she had to make her recommendations on good fund performance (consistently first quartile), rather than whether the company got good commision or not (and looked at whole of market options). Looking at Martin's article on Stakeholder's, it looks like she made us good recommendations.

My husbands Lincoln pension is definitely worth transferring and having read around on the site a bit more today, I am going to look at doing something with Cavendish online. Is it correct that Stakeholder pensions don't have initial charges - they just have annual management charges (or have I got the wrong end of the stick?)

Thanks

jamesd

dizzie, Skipton Financial Services is not an IFA: "Skipton Financial Services (SFS) is a whole of market financial advisory organisation. We do not charge a consultancy fee". Whole of market as the description instead of IFA and the lack of a fee option each mean that they aren't IFAs.

"Skipton Financial Services Limited is a wholly owned subsidiary of Skipton Building Society" so you writing that it was the building society is understandable.

Retired_I.F.A.

have a read of this thread Dizzie as it answers your last question and a bit more methinks.
http://forums.moneysavingexpert.com/showthread.html?t=743599