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  • FIRST POST
    • TeeDubya
    • By TeeDubya 17th Apr 18, 5:16 PM
    • 11Posts
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    TeeDubya
    Personal pension advice
    • #1
    • 17th Apr 18, 5:16 PM
    Personal pension advice 17th Apr 18 at 5:16 PM
    Hi

    I'm after some general personal pension advice. I was in a workplace pension with Aegon until a couple of years ago when I left to work for myself. I kept contributing to the Aegon pension but following advice from an IFA I moved it from a lifestyle univeral fund into about a dozen separate funds. These funds have higher fund changes but apparently perform better that the previous one.

    A year on from that I thought I should get some further advice to see how the pension is doing. I contacted the previous guy who advised on the dozen funds. He now recommends I go for a managed pension with him and pay 1% amc and move it elsewhere for a further 2%. I went through unbiased and spoke with a couple of other people who said that they can help me but one wants 3% initial followed by 1% amc. I also spoke with a prudential adviser who said that it would be 2% transfer in and 1.2% amc.

    I'm pretty confused by it all and also a bit mistrusting. I'm not competent enough in this area to want to manage my own pension so I'm happy for someone else to do it but am wary of getting bad advice, not getting value for money or frankly getting ripped off.

    Does this ring true for anyone else out there. Can anyone offer me some advice or recommendations as to what to do?

    Thanks
Page 1
    • Brynsam
    • By Brynsam 17th Apr 18, 6:06 PM
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    Brynsam
    • #2
    • 17th Apr 18, 6:06 PM
    • #2
    • 17th Apr 18, 6:06 PM
    A year is a very short time in pensions, so moving funds so soon after you've set up these funds is quite a strange thing to do, unless there are really good reasons for a change of direction. Ask him why he is now suggesting you change again.
    • dunstonh
    • By dunstonh 17th Apr 18, 6:10 PM
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    dunstonh
    • #3
    • 17th Apr 18, 6:10 PM
    • #3
    • 17th Apr 18, 6:10 PM
    I kept contributing to the Aegon pension but following advice from an IFA I moved it from a lifestyle univeral fund into about a dozen separate funds.
    Was that proper advice (written report etc) or man-down-the-pub style advice?

    I contacted the previous guy who advised on the dozen funds. He now recommends I go for a managed pension with him and pay 1% amc and move it elsewhere for a further 2%.
    Has his status changed? A lot of IFAs have been giving up their IFA status to go restricted. Many of these restricted models have own-brand funds. These are usually best avoided as they rarely offer value for money.

    I'm happy for someone else to do it but am wary of getting bad advice, not getting value for money or frankly getting ripped off.
    Advisers deal with 3.2 million customers a year. Yet the FOS only have around 2500 complaints a year against IFAs. So, the odds of getting bad advice are low.

    However, if you use a restricted FA rather than an IFA you are less likely to get value for money if they only offer their own in-house funds. If you use an IFA, they typically deal with larger investors and some may price smaller investors more expensively (to act as a passive blocker).

    Whilst ongoing servicing is optional, you tend to find IFAs will use model portfolios only if there is an ongoing service. This is because more ongoing work is required. If you go transactional (one off advice) then you are more likely to end up in a simple solution that is cheap but offers less potential than a model portfolio.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • zagfles
    • By zagfles 17th Apr 18, 6:28 PM
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    zagfles
    • #4
    • 17th Apr 18, 6:28 PM
    • #4
    • 17th Apr 18, 6:28 PM
    Hi

    I'm after some general personal pension advice. I was in a workplace pension with Aegon until a couple of years ago when I left to work for myself. I kept contributing to the Aegon pension but following advice from an IFA I moved it from a lifestyle univeral fund into about a dozen separate funds. These funds have higher fund changes but apparently perform better that the previous one.

    A year on from that I thought I should get some further advice to see how the pension is doing. I contacted the previous guy who advised on the dozen funds. He now recommends I go for a managed pension with him and pay 1% amc and move it elsewhere for a further 2%. I went through unbiased and spoke with a couple of other people who said that they can help me but one wants 3% initial followed by 1% amc. I also spoke with a prudential adviser who said that it would be 2% transfer in and 1.2% amc.

    I'm pretty confused by it all and also a bit mistrusting. I'm not competent enough in this area to want to manage my own pension so I'm happy for someone else to do it but am wary of getting bad advice, not getting value for money or frankly getting ripped off.

    Does this ring true for anyone else out there. Can anyone offer me some advice or recommendations as to what to do?

    Thanks
    Originally posted by TeeDubya
    You're right to be skeptical. He suggests a complete charge of direction after one year? For which he'll charge you 2%??!! Ask him why his advice of a year ago was so wrong. Or have circumstances changed dramatically?
    • zagfles
    • By zagfles 17th Apr 18, 6:30 PM
    • 13,015 Posts
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    zagfles
    • #5
    • 17th Apr 18, 6:30 PM
    • #5
    • 17th Apr 18, 6:30 PM
    Advisers deal with 3.2 million customers a year. Yet the FOS only have around 2500 complaints a year against IFAs. So, the odds of getting bad advice are low.
    Originally posted by dunstonh
    Do you really think every bit of bad advice results in a complaint? Quite often people won't even know they've been given bad advice.
    • dunstonh
    • By dunstonh 17th Apr 18, 8:12 PM
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    dunstonh
    • #6
    • 17th Apr 18, 8:12 PM
    • #6
    • 17th Apr 18, 8:12 PM
    Do you really think every bit of bad advice results in a complaint? Quite often people won't even know they've been given bad advice.
    Originally posted by zagfles
    I sure your comment is very helpful to the OP. Keep it up.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • zagfles
    • By zagfles 17th Apr 18, 9:52 PM
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    zagfles
    • #7
    • 17th Apr 18, 9:52 PM
    • #7
    • 17th Apr 18, 9:52 PM
    I sure your comment is very helpful to the OP. Keep it up.
    Originally posted by dunstonh
    I will. To expand on the point, and perhaps be even more helpful: I don't believe the proportion of complaints can in any way reflect the proportion of bad advice given for the following reason.

    For a customer to put in a complaint of bad advice, the customer would need to know, or at least strongly believe the advice was bad. Except in the most glaringly obvious of cases, that would require the customer to have sufficient knowledge to make a judgement that it was bad, that an alternative approach would have been better, and that the IFA should have taken that approach and their reasons for thinking so (without using the benefit of hindsight).

    If the customer had such knowledge, they wouldn't have needed the advice in the first place!
    Last edited by zagfles; 17-04-2018 at 9:54 PM.
    • TeeDubya
    • By TeeDubya 18th Apr 18, 9:27 AM
    • 11 Posts
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    TeeDubya
    • #8
    • 18th Apr 18, 9:27 AM
    • #8
    • 18th Apr 18, 9:27 AM
    Perhaps I'm doing this guy an injustice. I believe the reason was that the existing advice was based on keeping the funds within Aegon to save the costs of transfer elsewhere. The following advice was considering moving to better funds outside of Aegon.


    I'm curious about what you say about moving the funds after only a year. The reading and general advice I read about suggests that you should regularly keep an eye on funds to make sure that hey are performing and if not then switch them. Isn't this part of the service that an IFA offers?
    • TeeDubya
    • By TeeDubya 18th Apr 18, 10:58 AM
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    TeeDubya
    • #9
    • 18th Apr 18, 10:58 AM
    • #9
    • 18th Apr 18, 10:58 AM
    Thanks dunstonh


    He was the real deal rather than bloke down the pub, although I do have a couple of mates at the local that I can trust whether the advice is totally professional or not.


    I'm interested to know what you mean by a simple solution for one off advice rather than a model portfolio.
    • dunstonh
    • By dunstonh 18th Apr 18, 11:08 AM
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    dunstonh
    I'm curious about what you say about moving the funds after only a year. The reading and general advice I read about suggests that you should regularly keep an eye on funds to make sure that hey are performing and if not then switch them. Isn't this part of the service that an IFA offers?
    Reviews result in changes. The weightings in each fund can be x% one year but y% the next. Also, you may get the odd fund that you feel needs changing.

    However, what you describe is a wholesale change of strategy from using single sector funds to using a multi-asset fund. Now this could be down to your wording or our interpretation. I read "managed pension with him" to be multi-asset using in-house funds. However, based on your latest post, it may be that the strategy is going to remain multiple single sector funds but just with a new provider. That may well make sense as the workplace schemes are typically limited in what they offer and most do not give the IFA access to the data and fund details. So, if the adviser is being employed to provide the advice, they will usually want it with a provider that deals with IFAs.

    I'm interested to know what you mean by a simple solution for one off advice rather than a model portfolio.
    IFAs can provide one off advice or ongoing advice. When the advice is one off, you are likely to end up with more simple options, like a single multi-asset fund. We find our model portfolio has higher returns than most multi-asset funds but we still use multi-asset funds for people that dont want ongoing advice. Some prople are cost focused. Some are returns focused. Its a case of catering for all types.
    Last edited by dunstonh; 18-04-2018 at 12:37 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • OldMusicGuy
    • By OldMusicGuy 18th Apr 18, 11:46 AM
    • 362 Posts
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    OldMusicGuy
    Several thoughts here:

    - What are your investment objectives? That's the most important thing to define. If you don't do that you will be easily swayed by someone saying "this option is better than what you are doing now". Chopping and changing all the time is not a good strategy and will be expensive.

    - If your strategy is growth in your pension pot, a higher risk investment strategy could be the way forward. In that circumstance, using an IFA could make sense if you don't want to pick the funds yourself.

    - If your strategy is protecting the gains you have made, then low cost investing using multi-asset funds like Vanguard Lifestrategy could make sense. This is what I am doing. I have just retired and am looking to protect my pot and only want minimal growth. So my strategy is low cost and defensive.

    - You said the IFA you worked with said his choices would outperform the Aegon fund. Did they, and by how much? You can look at how the Aegon fund performed on a site like Trustnet or Hargreaves Lansdown. How much better/worse did that fund do compared to your pension pot over the last year? That might help you gauge how good the initial advice was.

    - Like others said, you need to question your previous IFA and ask why the recommended strategy has changed so drastically. That does not sound good to me. Like Dunstonh said, there may be some tweaking and rebalancing of funds but a wholesale change after one year sounds like a bad idea to me, unless there is a really good reason. Again, Dunstonh's advice is good - has this guy become a tied FA and is therefore trying to sell you a new bunch of stuff for no other reason than he has effectively changed jobs?

    - Do some reading and educate yourself. Go to sites like Monevator and read on this forum about multi-asset passive funds so that you can understand the difference between a more actively managed portfolio and low cost investing.

    Hopefully that will give you better grounds for making a decision.
    • zagfles
    • By zagfles 18th Apr 18, 12:05 PM
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    zagfles
    Perhaps I'm doing this guy an injustice. I believe the reason was that the existing advice was based on keeping the funds within Aegon to save the costs of transfer elsewhere. The following advice was considering moving to better funds outside of Aegon.
    Originally posted by TeeDubya
    But did he charge you a % of your portfolio a year ago? Why didn't he recommend the outside funds a year ago? What has changed?
    I'm curious about what you say about moving the funds after only a year. The reading and general advice I read about suggests that you should regularly keep an eye on funds to make sure that hey are performing and if not then switch them. Isn't this part of the service that an IFA offers?
    A year really is far too short a time to assess performance. Is he going to move them every year based on performance and charge you 2% a time? Annual tweaking/rebalancing, yes, but not wholesale changes, unless something substantial has changed.

    Google "churning" (not saying this is necessarily happening here..but I'd be asking serious questions of the adviser and perhaps considering a complaint if he doesn't give a plausible justification).

    https://www.investopedia.com/terms/c/churning.asp

    http://www.financial-ombudsman.org.uk/publications/technical_notes/churning.htm
    Last edited by zagfles; 18-04-2018 at 12:14 PM.
    • TeeDubya
    • By TeeDubya 23rd Apr 18, 11:01 AM
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    TeeDubya
    Thanks Dunstonh

    Well when I first spoke to him he gave me the two options of one off or on-going advice. The one off advice was a fixed fee and the ongoing was a percentage. When I asked about what constitutes the on-going advice he said that we would review the funds in a years time and amend if necessary.
    To me there wasn't any difference between that and getting in touch with him myself in a years time and saving the dfference in cost between the payments. So I opted for the one off and did get in touch with him after a year as I said to him that I would.
    So based on his initial advice I have it split across 15 funds. A selection of which are:
    SE Artemis Income
    SE NEWTON GLOBAL INC
    SE BLACKROCK EUR DYN
    SE SCHROD US MID CAP
    SE THREAD UK PROP
    SE M&G GLOBL EM MKTS

    Aren't these multi asset funds with themselves anyway? What does on-going advice really mean? My understanding of fund managers is that they are constantly working to make sure that their fund is performing and that's what you are paying for if you select those funds. so I would have thought it would be the same thing if you were paying for on-going advice from an IFA.
    An annual review doesn't make me feel very comfortable about what may happen to my pot if the markets are looking vulnerable and my review isn't due for 9 months.
    • TeeDubya
    • By TeeDubya 23rd Apr 18, 11:05 AM
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    TeeDubya
    That is sound advice and much appreciated OldMusic Guy. All this joining the forum and discussing with you all is my new education
    • TeeDubya
    • By TeeDubya 23rd Apr 18, 11:13 AM
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    TeeDubya
    Thanks Zagfles

    He did say I could move them but keeping them within Aegon saved me the cost of the tansfer fee so I believe that what he was doing was giving the best option as he saw it for funds within Aegon as I did say that keeping costs down was important to me.


    I did it as one off advice rather than an on-going percentage. The reason being that he said that on-going service would mean that I would get annual review. To me that was no different to me getting in touch with him in a years time myself and paying for another one off cost.


    I said it in my response to dunstonh but what do these guys do as part of an on-going service?
    • dunstonh
    • By dunstonh 23rd Apr 18, 12:03 PM
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    dunstonh
    To me there wasn't any difference between that and getting in touch with him myself in a years time and saving the dfference in cost between the payments. So I opted for the one off and did get in touch with him after a year as I said to him that I would.
    The difference is that with ongoing, any changes are not charged for as they are covered under the ongoing servicing agreement. When you go ad-hoc/transactional, you are charged for each event.

    So based on his initial advice I have it split across 15 funds. A selection of which are:
    SE Artemis Income
    SE NEWTON GLOBAL INC
    SE BLACKROCK EUR DYN
    SE SCHROD US MID CAP
    SE THREAD UK PROP
    SE M&G GLOBL EM MKTS

    Aren't these multi asset funds with themselves anyway?
    They are single sector funds. Not multi-asset.

    The SE prefix indicates and old pension version as well.

    What does on-going advice really mean? My understanding of fund managers is that they are constantly working to make sure that their fund is performing and that's what you are paying for if you select those funds. so I would have thought it would be the same thing if you were paying for on-going advice from an IFA.
    Ongoing servicing can vary across firms. Typically, it would include reviewing the funds, checking due diligence against them, rebalancing them and recommending any changes.

    An annual review doesn't make me feel very comfortable about what may happen to my pot if the markets are looking vulnerable and my review isn't due for 9 months.
    You dont normally change your investments because of fear of an event that is always coming but you dont know when. Trying to chase the returns or moving up and down the risk scale to try and time events usually results in lower returns over the long term.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • TeeDubya
    • By TeeDubya 30th Apr 18, 9:53 AM
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    TeeDubya
    What do you mean by 'old' pension version?


    Also based on what you are saying I have paid for one off advice but been given single asset funds which I am no longer getting advised on.


    What would you recommend and far as getting back on track?
    • TeeDubya
    • By TeeDubya 30th Apr 18, 10:03 AM
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    TeeDubya
    I'm looking into your advice OldMusicGuy including for my ISA's for low-cost funds.


    I understand that you've changed your strategy since retiring. Out of interest how did you manage it all pre-retirement. Did you use an IFA and if so how did you go about choosing one. I've used one of the recommended websites from pension advisory service and received call backs from advisers. I used the service 3 times and each time only got one call from the same IFA which is the one that wanted to charge me 3% initial arrangement fee. I was pretty shocked by that and adds to my mistrust of finding someone honest.
    • dunstonh
    • By dunstonh 30th Apr 18, 10:31 AM
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    dunstonh
    What do you mean by 'old' pension version?
    The SE in front of the fund name means you are using insured funds. Those insured funds are only available on previous generation pension products or the more basic workplace pension. That doesnt make it bad. It does make it harder to provide ongoing advice though and switching to a modern product that integrates with the IFA systems and accepts instructions directly from the IFA is normal when you move to ongoing advice. When its transactional, staying on the old product is not an issue.

    Also based on what you are saying I have paid for one off advice but been given single asset funds which I am no longer getting advised on.
    Which is allowed. The spread is basic (which could be partly due to the lack of range available on the product version and partly due to there not being ongoing servicing).

    What would you recommend and far as getting back on track?
    I can't as a) not enough to go on and b) not allowed to on the board. Anything here is just discussion. However, I would think the product is likely to be improved and if you went ongoing servicing, the fund range would change. If you went DIY, the product would likely need changing and the fund range would change.

    I've used one of the recommended websites from pension advisory service and received call backs from advisers. I used the service 3 times and each time only got one call from the same IFA which is the one that wanted to charge me 3% initial arrangement fee. I was pretty shocked by that and adds to my mistrust of finding someone honest.
    Why does it create mistrust and question their honesty? The adviser needs to earn a living. You cannot get advice for free. One of the first things an adviser is going to have to do is analyse the existing pension and compare it to others and make a recommendation. That is initial advice and carries an initial cost. If you then decide to employ them to provide ongoing advice, then each year your pension is going to be reviewed, rebalanced etc and you pay on an ongoing basis.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • kidmugsy
    • By kidmugsy 30th Apr 18, 10:52 AM
    • 10,539 Posts
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    kidmugsy
    The reading and general advice I read about suggests that you should regularly keep an eye on funds to make sure that hey are performing and if not then switch them.
    Originally posted by TeeDubya
    You chose the funds originally because you believed that you, or your advisor, had magic fund-choosing skills. If they haven't "performed" then clearly your skills are deficient. Why do you think you'll do better next time?

    Frequent trading wil make money for someone but it probably won't be you.
    Free the dunston one next time too.
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