IFA cost for managing pension

Options
MarcoRolo
MarcoRolo Posts: 16 Forumite
First Anniversary Name Dropper First Post
in Pensions, annuities & retirement planning
I’m lucky enough to have built up a pension pot of over £1m and have this invested with Old Mutual through an IFA. The IFA charges me 0.8% of the fund value to manage which funds I’m investing in and every quarter makes a few changes to the funds. The 0.8% equates to nearly £10k a year and I don’t feel like they are doing much to earn this. Is anyone else in a similar position? Am I being ripped off???
«13

Comments

  • BLB53
    BLB53 Posts: 1,583 Forumite
    Options
    Have you considered managing the pension pot yourself to save on the IFA fees?
  • dunstonh
    dunstonh Posts: 116,530 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    The IFA charges me 0.8% of the fund value to manage which funds I’m investing in and every quarter makes a few changes to the funds.

    Is that 0.8% adviser charge or is that 0.8% adviser and investment fund charge? I suspect the latter as the dominant IFA charge is 0.50% and a portfolio would be around 0.3%-0.4%.
    I don’t feel like they are doing much to earn this.

    rebalancing and portfolio adjustments are exactly what you would expect the adviser to do. What other things are you looking for them to do? If they were not doing it, would you do it?
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MarcoRolo
    MarcoRolo Posts: 16 Forumite
    First Anniversary Name Dropper First Post
    Options
    It’s 0.8% plus the fund charge! Just seems a lot. £800 pa for a £100k pot might be ok, but why should it be £8k pa for £1m? Surely not 10 times the amount of work!
  • nrsql
    nrsql Posts: 1,919 Forumite
    First Anniversary First Post Combo Breaker
    Options
    You could ask about reducing the charges.
    Or maybe look at splitting and diy part, try to mirror what he is doing and see if you can do it more cheaply and grow more (that's two different things, you might get either, both or neither).

    If it's you only pot I would consider splitting it anyway but that's just me.
    You might find he earns his money when you come to take the pension.
  • dunstonh
    dunstonh Posts: 116,530 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    It’s 0.8% plus the fund charge! Just seems a lot.

    That is a lot for your fund value. As I mentioned, 0.5% is the dominant IFA figure for ongoing.
    £800 pa for a £100k pot might be ok, but why should it be £8k pa for £1m?

    The work on a £1m portfolio is greater than £100k. Plus the liability is much greater too.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Clive_Woody
    Clive_Woody Posts: 5,855 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Options
    MarcoRolo wrote: »
    I’m lucky enough to have built up a pension pot of over £1m and have this invested with Old Mutual through an IFA. The IFA charges me 0.8% of the fund value to manage which funds I’m investing in and every quarter makes a few changes to the funds. The 0.8% equates to nearly £10k a year and I don’t feel like they are doing much to earn this. Is anyone else in a similar position? Am I being ripped off???
    Have a read of the links below and see whether you fancy having a go at investing yourself (or maybe a portion of your pot). Passive investing will save you a big chunk on fees but may not match the returns an IFA can achieve (but might well do).

    https://monevator.com/category/investing/passive-investing-investing/

    https://monevator.com/vanguard-lifestrategy/

    Vanguard are supposed to be launching their own SIPP some time this year and I would imagine costs will be pretty low.

    A lot depends on your knowledge and confidence to go it alone plus your long term plans. As mentioned it might be worth talking with your IFA to see if they will reduce their fee to keep you as a customer.
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • dunstonh
    dunstonh Posts: 116,530 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    Vanguard are supposed to be launching their own SIPP some time this year and I would imagine costs will be pretty low.

    It's been put back another year. The OP is unlikely to be cheapest with Vanguard (if their ISA fees are anything to go by). Indeed, there is a chance the op is already on the best contract. OMW charge basis one is about £90 year. There isnt many left on that charge but its possible. If not, there are alternative platforms which can come in cheaper than OMW. Although OMW is cheaper than the likes of HL.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    First Anniversary Name Dropper First Post
    Options
    MarcoRollo, I'm in the US, but otherwise I'm in a similar situation to you with a seven figure retirement pot. I DIY and have things set up so I pay no platform fees...obviously I have no IFA fees...and just pay my fund fees which average out to 0.05% across my simple 3 fund portfolio. I use index trackers so I won't be winning any absolute return competitions, but I'm not paying lots to have my money invested and I'm pretty sure I'll do ok.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Clive_Woody
    Clive_Woody Posts: 5,855 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Options
    dunstonh wrote: »
    It's been put back another year. The OP is unlikely to be cheapest with Vanguard (if their ISA fees are anything to go by). Indeed, there is a chance the op is already on the best contract. OMW charge basis one is about £90 year. There isnt many left on that charge but its possible. If not, there are alternative platforms which can come in cheaper than OMW. Although OMW is cheaper than the likes of HL.
    I heard the VG SIPP had been pushed back until after the end of the current tax year, is this still the latest or are they now saying next calendar year?
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
  • dunstonh
    dunstonh Posts: 116,530 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    Clive_Woody wrote: »
    I heard the VG SIPP had been pushed back until after the end of the current tax year, is this still the latest or are they now saying next calendar year?

    Someone mentioned it the other day. However, having just read the link they used, the Vanguard Personal Pension (as its now being called) is being delayed to the next tax year, not calendar year.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.5K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 449.9K Spending & Discounts
  • 235.6K Work, Benefits & Business
  • 608.6K Mortgages, Homes & Bills
  • 173.2K Life & Family
  • 248.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards