IFA and pension

churchill23

hello everyone,this being my first post although i`ve used mse for a long time its this year to make the most of my money.So its time for a pension.40yr old self employed who as about £100 per month????to tuck away.i`ve been reading this section for about a week and have booked an appointment with an IFA ,but want to be ready for him and ask the right questions .could someone also answer a couple of questions for me please as not used there services before

1-should i go to more than one ifa or will they all give me the same results
2-is commission important as well as giving the right product
3-do personal persions get eaten away with costs
4-is a stakeholder never any good because of small fund choice
5-my nearest ifa as a flat fee £395 + the first 6 months payments regardless of amount(seemed alot but is that average??)
6-how can i get it right basically


many thanks

churchill:money: :question:

dunstonh

1-should i go to more than one ifa or will they all give me the same results

Different advisers will have different views on what is best. I wont touch Scottish Equitable for example and have no problems with Norwich Union. Whilst I know advisers that love Scot Eq and hate NU. This is often due to different service standards as we get different servicing individuals/departments. Even IFAs based in the same town and same road!

Plus, its how we interpret your attitude to risk and decide how we want to invest you money. If you give one the impression you want adventurous portfolio and the other a more conservative one you will get different portfolio recommendations as well as different providers.

Investing is about opinion most of the time so there are always going to be differences.

2-is commission important as well as giving the right product

Commission is irrelevent. You dont pay the commission. The provider does. You pay charges and its charges that are important.

3-do personal persions get eaten away with costs

Not modern pensions no. They will have an annual managment charge whcih is a percetange of the value so they can never reduce the value to zero. Modern charges are no different to savings accounts mostly nowadays. Your savings account at a bank charges around 1.2% implicitly (although credit crunch appears to be reducing the margin to around 0.9%). Pension charges are typically 1 to 1.5%.

4-is a stakeholder never any good because of small fund choice

An experienced investor wouldnt use a stakeholder. However, for an inexperienced investor you can still build a good portfolio. Just not as good as personal pensions. However, you can also do more damage with a personal pension if you choose funds which are not appropriate to your risk. That is why the IFA will do the recommendations on the funds.

5-my nearest ifa as a flat fee £395 + the first 6 months payments regardless of amount(seemed alot but is that average??)

That could be cheap or could be expensive. For example, if that is a fee you are talking about and the commission is fully rebated then with 26 years to go until your state retirement age you will find that quite cheap. If its a fee on top of commission then its expensive. If its a fee which is taken out of the pension then it gets tax relief on it which makes it cheaper.

6-how can i get it right basically

£100pm into a pension is not really something you can get wrong. It really doenst matter on provider as they all generally offer the same funds. Some more than others. Charges are much the muchness. Its the investments that matter the most.

All decent IFAs will be happy to show you their research. So, ask to see it.

churchill23

thank you so much dunstonh,if the ifa talks plain and simple(like yourself)then i`m comfortable,will return tuesday but want to get a pension started asap

many thanks

churchill 23

dunstonh

Best clue to cost is look at the illustration and near the back there will be a reduction in yield figure. Something along the lines of charges reducing the returns from 7% to 5.9%". 5.9% is your typical 1% annual management charge contract. 6.3% is around the mark of your good discounts. 5.3% is where unit trust funds tend to come in. Anything lower than 5.3% and you are looking expensive.

External funds (on a personal pension) cost more. Typically around 1.5% so you would expect to see the reduction in yield around the 5.3-5.5% mark and if that is the case, then you are not been fleeced.

churchill23

That`s the sort of info i like,i don`t really need a pension but it seems a good tax free way to get rid of some cash,but i still don`t wont to make a mistake

many thanks

churchill

churchill23

ok had first visit from ifa today (first time i`d done this kind of thing)and all went ok,looking at starting a p/pension with scot/wid and a mix of 2 managed funds(balanced??)one from sw-newton the other from sw-invesco perpetual??thought about doing 80% and 20% mix only going to start at £100 pcm so i just get used to paying this out ,this is all new to me so was hopeing you money blokes could help and tell me if this was a resonable choice to get me going,must say the ifa never pushed his business but sat down and explained how he went about his findings after takeing in account my view of risk,it was all explained in basic english which made me more comfortable,must say i wish that this kind of service could be fee based without the ongoing commission thing,lets say sw pays ifa £200 for setting up the deal and thats the end of it so the customer see`s more of the fund,but maybe thats just how it is,any views would be very welcome

churchill

dunstonh

must say i wish that this kind of service could be fee based without the ongoing commission thing

It is. IFAs have to offer a fee based option.

lets say sw pays ifa £200 for setting up the deal and thats the end of it so the customer see`s more of the fund,but maybe thats just how it is,any views would be very welcome

£200 isnt enough for the transaction. It would be closer to £500-£600 for a very simple recommendation. Your £100pm contribution is almost certainly better off on commission for about the next 15 years.

EdInvestor

Things haven't changed much have they? 20% Invesco Perpetual High Income (OK, good) and 80% SW Balanced Managed.

Pathetic.


And he has to pay commission for 15 years for this?

churchill23

80% sw newton,20% sw invesco perpetual,both seem to have done well and had an 4/5 star performance rating,some others had done a lot worse,this is were i need guidence on how to select and get it right,after all it will be my choice and money,please help

churchill

churchill23

From monday i will be starting a personal pension from sw investing in invesco perpetual fund,the costs are about £495(payable by commission from sw to adviser not me !!)after that it is an annual charge of about 1.4%???i think this is the management fee per year,i found it all easy to do and at least i`ve started one , and if need to can move the fund around if one is doing better than the one i`ve got,remember its my first time doing this so had to start somewere ,cheers for advice as i now feel i have a little more understanding about these things than i did a couple of weeks ago ,thank you all

churchill:beer:

EdInvestor

Hello churchill

It's not a good idea to invest in just one fund. Which IP fund have you chosen?
.How much are you investing per month?