Please Help My G'Friend With Pension - She's 28 And Has None

EdInvestor

mr_fishbulb wrote: »

If we did some research, would it be possible to go it alone using this route:
http://www.moneysavingexpert.com/savings/discount-pensions

I'm not adverse to looking this stuff up - been doing it for my own pension and ISA research. But want to do whatever's best for my girlfriend - after all it is her money.

Sure if you have time do get a grip on investment choices you can save a lot by doing DIY.

dunstonh

mr_fishbulb wrote: »

If we did some research, would it be possible to go it alone using this route:
http://www.moneysavingexpert.com/savings/discount-pensions

I'm not adverse to looking this stuff up - been doing it for my own pension and ISA research. But want to do whatever's best for my girlfriend - after all it is her money.

It is worth noting that the article is pretty out of date in some areas and the "recommendations" for providers in there are not very good (obsolete).
i.e. this bit:

When choosing a provider fund choice, charges and institutional safety are the keys. MoneySaving's not investing, so to help with some pension ideas I've asked two top IFA's to pick their top providers, though as always the case with products where there's no right or wrong, they're just opinions not answers, it always depends on your circumstances.

• <LI style="MARGIN: 0cm 0cm 0pt; COLOR: black; tab-stops: list 36.0pt; mso-list: l2 level1 lfo3" class=MsoNormal>[FONT=Arial, Helvetica, sans-serif]Anna Bowes, [FONT=Arial, Helvetica, sans-serif]Chase de Vere[/FONT][FONT=Arial, Helvetica, sans-serif]: picks Standard Life and Legal and General, for both fund choice and the strength of the internal fund management. [/FONT]
• [FONT=Arial, Helvetica, sans-serif]Tom McPhail, [/FONT][FONT=Arial, Helvetica, sans-serif]Hargreaves Lansdown[/FONT][FONT=Arial, Helvetica, sans-serif] picks Scottish Widows as it offers other companies fund managers within its stakeholder pension. [/FONT]

[/FONT]

Standard Life isnt bad but offers nothing you cannot get elsewhere better and cheaper. L&G's current version of the pension needs £10k balance to get lowest charges. If you have less than 10k it is expensive. Scottish Widows Stakeholder is pretty pointless as the SW PPP does everything the stakeholder does but offers a greater fund range.

There have also been a number of changes in providers and their offerings since the article was written.

The table showing the size of the saving is also inaccurate as well. I just did a quick and dirty £200pm on FULL COMMISSION basis on the same terms as that table and it came out with best provider at £147,000 which is just below Cavendish who are reportedly not taking commission. The IFA would have been paid £1620 commission on that case yet there is only £1000 difference in the 30 year projection. If you agreed 35% commission with the IFA you get £149,000 projection which beats Cavendish and you get the benefit of advice and FOS protection. I'm not even sure that the company used for this example is the cheapest either as there are three others that have a similar charging structure which could match or even improve upon it.

Even at full commission, that beats Hargreaves Lansdown and Moneyworld and is only just below Cavendish.

Final thing to remember is that charges are secondary to investment choice. Do not compromise the investments by trying to save 0.1% a year.

mr_fishbulb

Thanks again dunstonh

So if she goes through an IFA with commission, the commission is not an up-front fee paid by my girlfriend?

dunstonh

So if she goes through an IFA with commission, the commission is not an up-front fee paid by my girlfriend?

Commission is not a fee. Fee is when you write a cheque out and pay for it and the product is set up on nil commission terms. Commission is when you dont pay for the advice up front and the provider pays the adviser. The annual management charges then reflect the cost of advice over the term of the policy.

However, as you can see, commission options can beat nil commission options.

bigbloke45

I think that all views expressed here are very laudable. I also think that over the longer term, whichever route she decides upon will probably be roughly the same. (on the basis that nil commission reduces the Annual Management charge, but she forgoes the chance to invest the fees she has paid on a similar basis)

On a shorter term basis, if she changes providers and types of plan (and let's face it, given this government's meddling with pensions provision, this is highly likely) I think she would be better to go with the commission option.

In the end, the most important thing is that she takes action NOW to secure her future.

Nobody knows what will turn out to have been the best choice, but doing nothing will have definitely been the worst.

My best wishes to you both.