SIPP/Financial Advisor

bgh914

I have a number of Personal Pensions with various companies that I'd like to consolidate into a SIPP (performance of some is poor, and with limited choice to change, and charges are also too high in some cases. I think the SIPP would address this and also give me some flexibility given my income/retirement plan). My regular IFA is recommending a Standard Life SIPP (I already have a few pensions with them) but there is an up front commision of approx £6k (approx 4% of transfer value) and an annual commision (to cover 'reviews, admin, etc) of approx £2k (1% of plan value). I assume this is being paid for from my fund value and, if so, then there is little point in taking out this plan (except to support my IFA's own early retirement objectives). I understand I can buy direct and possibly save the majority of this commission payment.

Can anyone give me some guidance :

1. Am I correct in assuming my fund value will reduce by the commission amount ?
2. Are Standard Life's charges significantly higher than anyone else ?
3. Should I deal direct or find a 'cheaper' IFA ?
4. Should I stick with a SIPP and should I get it from Standard Life.

Thanks

Gatser

bgh914 wrote: »

Can anyone give me some guidance :

1. Am I correct in assuming my fund value will reduce by the commission amount ?
2. Are Standard Life's charges significantly higher than anyone else ?
3. Should I deal direct or find a 'cheaper' IFA ?
4. Should I stick with a SIPP and should I get it from Standard Life.

Thanks

You are going through the same decision process as me!
I concluded that SL was a very expensive SIPP route and so the next
question was "Which is the best SIPP?"

Please take a peek at my thread here:
http://forums.moneysavingexpert.com/showthread.html?t=954195

Very interested to hear your views... I am getting close to making a decision on which SIPP to go for...

Retired_I.F.A.

Tell your IFA he's taking the pizz and to pizz off. The charges he's applying are double what I'd accept.

5% up front and 0% on renewal has historically been the normal maximum commission on such transfers but nowadays trail commission is far better for both client and IFA but the norm for such is 0.5% and acompanied with a lower initial amount. It's a sellers market so negotiate.

A SIPP is not necesarily the best option too as charges for such other than the commissions are generally higher as they are not aimed at solely fund investos but share investors which very few people want or need. A good Personal Pension with a large fund choice, drawdown without having to transfer again, reasonable fixed charges, and negotiable added ones for the advisor which you agee on will be better and theres none better in my opinion than Skandia Life who deal solely through IFA's.

dunstonh

I have a number of Personal Pensions with various companies that I'd like to consolidate into a SIPP

I can understand the reasons for wanting to consolidate.

(performance of some is poor, and with limited choice to change, and charges are also too high in some cases. I think the SIPP would address this and also give me some flexibility given my income/retirement plan).

A SIPP doesnt mean you will make more. Indeed, many over the last 2 years have found they have lost more by moving to a SIPP. Charges are not necessarily cheaper and in most cases are more expensive (your typical insurance company pension has amcs around 1% but SIPPs utilisting unit trusts are typically 1.5%).

My regular IFA is recommending a Standard Life SIPP (I already have a few pensions with them) but there is an up front commision of approx £6k (approx 4% of transfer value) and an annual commision (to cover 'reviews, admin, etc) of approx £2k (1% of plan value).

I am not a fan of the standard life SIPP. Its expensive and offers nothing that better SIPP providers can offer except that it allows use of some internal funds at cheaper annual management charges. I have seen this product used a few times in mis-sales where lower quality advisers have only used internal funds (i.e. those available on a stakeholder) but charged far more than that on a stakeholder. I have lodged complaints on these and had them upheld (breach of rule RU64). Now, that doesnt mean what you have been recommended is wrong but a) you are being ripped off with those charges and b) if it is using standard life funds then they are available on their stakeholder or personal pension with no initial charges. In which case you are being robbed of £6000.

I understand I can buy direct and possibly save the majority of this commission payment.

No not really. The only charges you save are the initial charge. None of the direct/excution only SIPP providers rebate any annual charges.

1. Am I correct in assuming my fund value will reduce by the commission amount ?

initial charge yes, annual charge no (unless he has factored in another charge on top but the figure of 1% p.a. doesnt suggest that is the case as that sounds more like internal funds).

2. Are Standard Life's charges significantly higher than anyone else ?

Not a straight answer. The adviser decides the charges on this pension mostly. A greedy adviser or dodgy adviser can use this product to make it expensive. A good adviser can make it come out quite cheap (potentially cheaper than HL or others on execution only if a sector allocated spread is used).

3. Should I deal direct or find a 'cheaper' IFA ?

You can certainly find cheaper IFAs. Fee based or NMA IFAs (where 1% initial is the typical norm) should come in cheaper.

4. Should I stick with a SIPP and should I get it from Standard Life.

SIPPs are experienced investor products. They are for those that want to use investments that you cannot typically get on personal pensions. Such as, shares, investment trusts etc. If you are using it for funds then personal pensions or even a stakeholder usually come in cheaper.

I understand I can buy direct and possibly save the majority of this commission payment.

Standard life do operate a small salesforce still but do not discount beyond standard terms. So, you would only be cheaper if the IFA is taking more than standard terms.

EdInvestor

There are two things here:

1)Consolidating your various pensions in a better wrapper (SIPP/ PP whatever) with lower charges and better fund choice, plus more flexibility in taking benefits, and perhaps also more user friendly (online) customer interface than a bog standard insurance company

2)Getting the money within the pension wrapper invested.

1)Can be done easily enough by you - asssuming you do not have complex pensions with guarantees and transfer penalties. You just choose the new provider (see gatser's thread), fill in the form and then instruct the old providers to transfer the money (more forms and probably some chasing, but doable). No charge - so that saves you the 6k for a start.

2) This is where you might need help.But is your IFA any good at investing? If you think he is, why not pay him a flat fee to draw up a portfolio?

The point about SIPPs is that they are "self invested" pensions - so it's made easy for you to do the investing, buying and selling shares and funds.There is no need to pay someone to do this for you.

You may of course find it quite easy to pick good funds simply by consulting a website such as https://www.citywire.co.uk/Funds/Home.aspx which rates and categorises funds and fund managers over 10 years, so you can easily fiund the consistent quality performance.

Equally providers like https://www.h-l.co.uk have loads of info on their sites about fancied and popular funds ( you soon find there are only around 20 or 30 funds which pop up over and over again - it's not nearly as complicated as it looks).

A bit of time and effort can repay itself in saved charges very quickly in this area IMHO.



wDs

dunstonh

Whilst Ed continues to promote HL's SIPP, it should be noted that SIPP may not at all be appropriate. Lower charges can be achieved on a personal pension. A fee based adviser can easily be cheaper than HL (such as rebates on trail commission which HL do not do).

whiteflag_3

Gatser wrote: »

You are going through the same decision process as me!
I concluded that SL was a very expensive SIPP route and so the next
question was "Which is the best SIPP?"

Please take a peek at my thread here:
http://forums.moneysavingexpert.com/showthread.html?t=954195

Very interested to hear your views... I am getting close to making a decision on which SIPP to go for...

So Gatser you are still going for the latest fashion item, the bucket with holes in it!


bgh914 - unfortunatley your IFA is one of a modern breed that use A SIPP as the latest way to "churn".

You could ask him why a low cost PP wont do? You could ask him what he's doing for his 1% per annum?

but what you should really be asking YOURSELF is - is my pension pot going to give me what I need to retire in the lifestlye I desire ? cause if it isnt then thats a much bigger issue than what wrapper your fund is in?

Isn't your financial security more important than being part of the next misselling / missbuying scandal?

EdInvestor

Readers may be wondering why the IFAs who post here seem to be so anti-SIPP.

I assume it is because a SIPP is meant for people who "self invest" - ie don't employ advisors to do this work for them.

Thus SIPPs represent a threat to their business.

dunstonh

Readers may be wondering why the IFAs who post here seem to be so anti-SIPP.

I assume it is because a SIPP is meant for people who "self invest" - ie don't employ advisors to do this work for them.

Oh !!!!!!. Can you not come up with better rubbish than that to support your continued misplaced promotion of this product?

The fact that the advisers here (and media coverage from advisers, firms and the FSA) have stated that cheaper and often better options exist for the majority of people just seems to go over your head.

This is a money saving site yet you often promote one of the most expensive ways of doing things to people who are not experienced or knowledgeable enough to do things themselves.

You are correct in one point though. SIPPs are mean for those who want direct investments. Yet over 90% of SIPPs taken out after 6th April 2006 have not included any direct investment but only used funds.

Perhaps the biggest irony of your comment though Ed is that one of the biggest IFAs in the country gains most from your continued advertising of them.

Gatser

EdInvestor wrote: »

Readers may be wondering why the IFAs who post here seem to be so anti-SIPP.

I assume it is because a SIPP is meant for people who "self invest" - ie don't employ advisors to do this work for them.

Thus SIPPs represent a threat to their business.

:T Well said!
I have seen lots of experts "views" that we should stick with Personal Pensions because their charges are lower... but very little actual comparisons and examples to illustrate and prove the point.
This is something I am intending to look at through my WHICH IS THE BEST SIPP thread.

BTW: I see someone has recommended the SKANDIA LIFE PP, so perhaps I should start by comparing this with HL / SIPPDEAL ?

whiteflag_3

EdInvestor wrote: »

Readers may be wondering why the IFAs who post here seem to be so anti-SIPP.

I assume it is because a SIPP is meant for people who "self invest" - ie don't employ advisors to do this work for them.

Thus SIPPs represent a threat to their business.

LOL!

I think you will find Ed that many advisors are using SIPPs to boost their business rather than see them as a threat!

I think you thanked me recently for pointing out that they (IFAs) may not be doing an awful lot for the extra 0.5% they are taking to administer SIPPs.

Why you want to encourage people to put their future financial security at risk is beyond me.