General Pension waffle
billy2shots
Posts: 1,122 Forumite
36 year old male.
£115k pot that was bought by Reassure from HSBC.
Invested in a Stakeholder UK all company tracker.
Ongoing cost of 1% per year.
I should have been on top of this a couple of years ago but life was hectic so I'm just getting around to tidying things up a little and increasing my contributions.
Point 1
I would like to change my pension, platform and fund. 1% seems a little on the high side for a tracker but most importantly the fund isn't very diversified and it's gambling on the uk outperforming the rest of the world.
Point 2
My accountant has recommended an IFA (That he uses;))
Having never used an IFA for personal investment I am doing a bit of research. I know fees can vary from place to place.
The fee I have been quoted is
£1250 For a 'Transfer analysis'
3% of the first £75k to transfer followed by 1.5% of the rest of the pot.
1250+2250+600= £4100
That seems pretty high for advice and switch. I was thinking about paying the £1250 for the advice then doing a DIY switch using his advice or does that not make any sense (is it possible?)
The IFA also recommends ongoing annual reviews for which I will pay 0.5% (why wouldn't he) This of course will be in addition to the cost of the fund I decide upon (plenty of good funds for less than 1%)
Without jumping the gun, I'm presuming my thinking on Point 1, switch to a global fund with possibly a new provider, makes sense.
Point 2 has me questioning things.
Any help and advice?
£115k pot that was bought by Reassure from HSBC.
Invested in a Stakeholder UK all company tracker.
Ongoing cost of 1% per year.
I should have been on top of this a couple of years ago but life was hectic so I'm just getting around to tidying things up a little and increasing my contributions.
Point 1
I would like to change my pension, platform and fund. 1% seems a little on the high side for a tracker but most importantly the fund isn't very diversified and it's gambling on the uk outperforming the rest of the world.
Point 2
My accountant has recommended an IFA (That he uses;))
Having never used an IFA for personal investment I am doing a bit of research. I know fees can vary from place to place.
The fee I have been quoted is
£1250 For a 'Transfer analysis'
3% of the first £75k to transfer followed by 1.5% of the rest of the pot.
1250+2250+600= £4100
That seems pretty high for advice and switch. I was thinking about paying the £1250 for the advice then doing a DIY switch using his advice or does that not make any sense (is it possible?)
The IFA also recommends ongoing annual reviews for which I will pay 0.5% (why wouldn't he) This of course will be in addition to the cost of the fund I decide upon (plenty of good funds for less than 1%)
Without jumping the gun, I'm presuming my thinking on Point 1, switch to a global fund with possibly a new provider, makes sense.
Point 2 has me questioning things.
Any help and advice?
0
Comments
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EDIT - this is not a DC pension
Dont you mean that it is a DC pension?0 -
Yes, Sorry0
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I would like to change my pension, platform and fund. 1% seems a little on the high side for a tracker but most importantly the fund isn't very diversified and it's gambling on the uk outperforming the rest of the world.
Stakeholder pensions were great in 2001. However, they were already going out of date by around 2005 with personal pensions being better for medium to larger funds. Had you used an IFA back then, instead of a bank sales rep, you could have had half the cost of the same thing.My accountant has recommended an IFA (That he uses)
Having never used an IFA for personal investment I am doing a bit of research. I know fees can vary from place to place.
The fee I have been quoted is
£1250 For a 'Transfer analysis'
3% of the first £75k to transfer followed by 1.5% of the rest of the pot.
1250+2250+600= £4100
That seems pretty high for advice and switch. I was thinking about paying the £1250 for the advice then doing a DIY switch using his advice or does that not make any sense (is it possible?)
If your criteria to the IFA is that you want a simple cheap option with no ongoing servicing then the can get around 0.3% p.a. with just the initial advice charge.
If you want a more advanced investment option with the potential for greater returns, then it costs more.
£4100 is a bit high but not excessively high given your relatively low fund value (for an IFA)The IFA also recommends ongoing annual reviews for which I will pay 0.5% (why wouldn't he) This of course will be in addition to the cost of the fund I decide upon (plenty of good funds for less than 1%)
Why wouldnt he? Well, if the IFA is recommending a portfolio that needs ongoing servicing then it is a regulatory requirement to offer it. If you refuse ongoing servicing, its likely the invesmtent recommendation would be different.EDIT - this is not a DC pension
Stakeholder pensions are DC.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.0 -
I know opinion is split in s&s ISAs as to whether passive tracker funds or actively managed funds are best (there is no 'best' but you get my meaning). With that in mind I have no problem leaning towards a passive pension fund as I do with s&s.
For that reason talking to an IFA and seeking their advice on a global tracker seems like it might be the option for me.
This would then enable me to go DIY wouldn't it?
Stakeholder shouldn't incur a transfer fee from what I've been reading.
No recommendations here I know but a sipp would provide the flexibility I currently have and open up more fund choices and still come out less than the current ongoing 1% fee. Or am I beating up the wrong bush?0 -
Invested in a Stakeholder UK all company tracker.
As you say in Point 1, this is NOT diversified.
To me, for just over 100K, 4100 is too expensive.
If you are just going for a tracker (a more diversifed one) you could transer to a PP or sipp that has low cost trackers available to use. Basicaly go DIY over paid advice.
A Global tracker if you want to stay all equities would be more diversifed. If you want to go multi asset so not all equities, look at the Vanguard (or equivalent) multi asset funds. Again low cost, but even more diversified.0 -
billy2shots wrote: »Point 1
I would like to change my pension, platform and fund. 1% seems a little on the high side for a tracker but most importantly the fund isn't very diversified and it's gambling on the uk outperforming the rest of the world.
Being overweight in the UK is probably because the fund is giving you home bias. The idea is that your fund becomes less vulnerable to currency fluctuations and in theory should be less volatile. The downside (as you've already mentioned) is that if the UK market underperforms then your fund underperforms too.billy2shots wrote: »No recommendations here I know but a sipp would provide the flexibility I currently have and open up more fund choices and still come out less than the current ongoing 1% fee. Or am I beating up the wrong bush?
Looks like you're thinking along the right lines. H&L for example has a platform fee of 0.45%, and they're expensive compared to other options. Then a tracker fund should cost you less than 0.30% on top of that.0 -
As you say in Point 1, this is NOT diversified.
To me, for just over 100K, 4100 is too expensive.
If you are just going for a tracker (a more diversifed one) you could transer to a PP or sipp that has low cost trackers available to use. Basicaly go DIY over paid advice.
A Global tracker if you want to stay all equities would be more diversifed. If you want to go multi asset so not all equities, look at the Vanguard (or equivalent) multi asset funds. Again low cost, but even more diversified.
I will spend a few days looking at the merits of different platforms before making any arrangements with an ifa. I like to have at least some basic knowledge of the subject before hand.
I know you mentioned equivalent to Vanguard as they don't currently offer a pension. I am with Vanguard for other investment so I might wait as the whisper is they will provide pension funds at the end of the year.0 -
I will spend a few days looking at the merits of different platforms before making any arrangements with an ifa.
Be aware that IFAs wont use the same platforms as DIY investors. Plus, if you go for a low cost simple option, they may not use a platform at all.I know you mentioned equivalent to Vanguard as they don't currently offer a pension. I am with Vanguard for other investment so I might wait as the whisper is they will provide pension funds at the end of the year.
But be aware that there is more to life than Vanguard. The IFA investments may well have a long record of beating VLS. This is one of the decisions you need to make. Low cost vs potentially higher cost with potentially higher returns. Different people take different views on that.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.0 -
Be aware that IFAs wont use the same platforms as DIY investors. Plus, if you go for a low cost simple option, they may not use a platform at all.
But be aware that there is more to life than Vanguard. The IFA investments may well have a long record of beating VLS. This is one of the decisions you need to make. Low cost vs potentially higher cost with potentially higher returns. Different people take different views on that.
Many thanks for your input. Plenty to think about.0 -
I know you mentioned equivalent to Vanguard as they don't currently offer a pension.
Vanguard funds can be bought/held in other pensions such as sipps. Some eqv funds (such as Blackrock and others) also are multi asset and again can be bought thru Sipps and some PPs0
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