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  • FIRST POST
    • billy2shots
    • By billy2shots 14th Sep 18, 1:17 PM
    • 113Posts
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    billy2shots
    General Pension waffle
    • #1
    • 14th Sep 18, 1:17 PM
    General Pension waffle 14th Sep 18 at 1:17 PM
    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?
    Last edited by billy2shots; 14-09-2018 at 1:58 PM.
Page 1
    • Linton
    • By Linton 14th Sep 18, 1:51 PM
    • 9,970 Posts
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    Linton
    • #2
    • 14th Sep 18, 1:51 PM
    • #2
    • 14th Sep 18, 1:51 PM

    EDIT - this is not a DC pension

    Dont you mean that it is a DC pension?
    • billy2shots
    • By billy2shots 14th Sep 18, 1:58 PM
    • 113 Posts
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    billy2shots
    • #3
    • 14th Sep 18, 1:58 PM
    • #3
    • 14th Sep 18, 1:58 PM
    Yes, Sorry
    • dunstonh
    • By dunstonh 14th Sep 18, 2:07 PM
    • 95,847 Posts
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    dunstonh
    • #4
    • 14th Sep 18, 2:07 PM
    • #4
    • 14th Sep 18, 2:07 PM
    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). 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.
    • billy2shots
    • By billy2shots 14th Sep 18, 2:20 PM
    • 113 Posts
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    billy2shots
    • #5
    • 14th Sep 18, 2:20 PM
    • #5
    • 14th Sep 18, 2:20 PM
    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?
    • atush
    • By atush 14th Sep 18, 2:37 PM
    • 17,269 Posts
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    atush
    • #6
    • 14th Sep 18, 2:37 PM
    • #6
    • 14th Sep 18, 2:37 PM
    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.
    • El Torro
    • By El Torro 14th Sep 18, 2:46 PM
    • 313 Posts
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    El Torro
    • #7
    • 14th Sep 18, 2:46 PM
    • #7
    • 14th Sep 18, 2:46 PM
    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.
    Originally posted by billy2shots


    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.




    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?
    Originally posted by billy2shots

    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.
    • billy2shots
    • By billy2shots 14th Sep 18, 2:53 PM
    • 113 Posts
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    billy2shots
    • #8
    • 14th Sep 18, 2:53 PM
    • #8
    • 14th Sep 18, 2:53 PM
    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.
    Originally posted by atush

    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.
    • dunstonh
    • By dunstonh 14th Sep 18, 3:14 PM
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    dunstonh
    • #9
    • 14th Sep 18, 3:14 PM
    • #9
    • 14th Sep 18, 3:14 PM
    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). 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.
    • billy2shots
    • By billy2shots 14th Sep 18, 3:34 PM
    • 113 Posts
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    billy2shots
    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.
    Originally posted by dunstonh
    Many thanks for your input. Plenty to think about.
    • atush
    • By atush 15th Sep 18, 4:30 PM
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    atush
    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 PPs
    • billy2shots
    • By billy2shots 15th Sep 18, 4:47 PM
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    billy2shots
    I invest in a VLS 80 separately in a s&s isa so was looking for something different. Although the vls is global it's also highly weighted to the uk (in my uneducated eyes).

    I'm still keen on global trackers but can't pretend on not looking at Fundsmith and Lindsll Train global equity funds.
    Whichever way I go , I think the main fund will be truely.

    The platform is causing more of a headache. I mentioned Vanguard because I find it easy to follow their charges , I'm struggling with HL, AJ Bell etc.

    HL looks good for me on the face of it , a higher annual fee but the other fees seem more than fair. The problem is I put my position into the this is money calculator and it churns out some wild figures.

    115k lump
    1000 a month invested for 20 years
    Total cost (today's rates) 20k odd.

    Others are coming in at around 3k-5k but I'm not sure exactly where the difference is coming from.

    I'm in no rush so will take time to get my head around this.
    Last edited by billy2shots; 15-09-2018 at 4:49 PM.
    • nrsql
    • By nrsql 15th Sep 18, 6:01 PM
    • 1,825 Posts
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    nrsql
    The high fee total for hl is because of their high annual fee on a percentage basis. Times it by 20 and factor in the increase in value of the fund and it’s easy to see why it grows. Good for small pots as no trading fees but gets bad quickly.
    The low total fees are probably for those that have capped or no annual fees.

    Hl tend to be good for setting things up as their staff are knowledgable and easy to contact and they will email documents. Worth maybe pursuing for the initial transfer then moving elsewhere later?
    Also depends on whether you expect to contribute more to this - I tend to open new SIPPs with different platforms - it’s useful if you end up in a regulated industry for a time.

    Weighted to UK? Globally should be weighted to USA - which would you prefer.

    There are a number of spreadsheets around that show charges for various platforms. There’s a pretty good one linked from this site somewhere.

    I was going to suggest you take advice and split your pot into two - one to invest following advice and the other as you think, then you can compare. But you have an ISA which will do that for you.

    I wouldn’t go for the IFA apart from maybe the initial advice - the ongoing charges may not get you much apart from a document summarised as “don’t do anything”. It might be useful down the line as your situation changes but would be worth asking what might incur further charges.
    Last edited by nrsql; 15-09-2018 at 6:03 PM.
    • billy2shots
    • By billy2shots 17th Sep 18, 4:32 PM
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    billy2shots
    Update.

    I believe I have chosen the platform that I wish to use. Fidelity may not have the cheapest ongoing charge (0.35 changing to 0.2 after 250k) andthe website might be a little clunky to use but the fees to join, trade funds and exit are free which is important to me.

    My current uk all company tracker with ReAssure is costing me 1% a year and I don't need an IFA to tell me that the same fund costing less than a total of 0.5% elsewhere would be more sensible. I also strongly believe that a global tracker will be better going forward. For that reason I am not going to pay for an IFA.

    I know what I want to invest in, it's just how I make up that portfolio.

    Option 1. Vanguard global all cap. The fund covers larger and smaller companies and is global as the name suggests. It also holds some emerging markets which some global trackers neglect. This would be a 1 fund portfolio of Fire and forget. I would explore less equities as I near retirement.

    Option 2.
    A global tracker fund ex uk (most neglect emerging)
    An emerging markets tracker fund.

    A 2 fund portfolio that I will add uk exposure to following Brexit to make a 3 fund portfolio or consolidate into the above 1 All Cap fund.

    I appreciate any input on my decision.
    • BLB53
    • By BLB53 17th Sep 18, 6:14 PM
    • 1,396 Posts
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    BLB53
    Suggest HSBC Global Dynamic OCF 0.19% with AJ Bell Youinvest sipp 0.25%
    If you choose index funds you can never outperform the market.
    If you choose managed funds there's a high probability you will underperform index funds.
    • billy2shots
    • By billy2shots 17th Sep 18, 6:25 PM
    • 113 Posts
    • 123 Thanks
    billy2shots
    Suggest HSBC Global Dynamic OCF 0.19% with AJ Bell Youinvest sipp 0.25%
    Originally posted by BLB53

    Thanks for the advice but I'm not keen on that fund.

    Not looking for fund advice more after input whether my 2 options sound right.
    • billy2shots
    • By billy2shots 18th Sep 18, 11:56 AM
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    billy2shots
    Stupid question.

    Would it be easier to set up a new SIPP so I can contribute through salary sacrifice and my employer can contribute from day 1. Then transfer my original pension into the new sipp.

    Or

    Just go for the transfer straight away as a way of opening the sipp.


    Going for the transfer route leaves me in limbo for what looks like weeks so the first option is a no brainier isn't it?
    • MallyGirl
    • By MallyGirl 18th Sep 18, 12:34 PM
    • 3,052 Posts
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    MallyGirl
    will your employer sal sac into a SIPP?
    • billy2shots
    • By billy2shots 18th Sep 18, 1:16 PM
    • 113 Posts
    • 123 Thanks
    billy2shots
    will your employer sal sac into a SIPP?
    Originally posted by MallyGirl

    Yes, although strictly speaking I am the employer as one of the directors.

    I have spoken to fidelity and they recommend opening it as a transfer but by post rather than online. The forms you can print have space for personal and company info direct debit etc.
    As I will be salary sacrificed I will not complete the personal direct debit part and just total up my contribution and that of the business and put that total as a direct debit from the business.
    Last edited by billy2shots; 18-09-2018 at 1:20 PM.
    • atush
    • By atush 18th Sep 18, 1:55 PM
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    atush
    As a director, surely you are paying the pension by company contributions? So no sAl sacrifice?

    No NI though anyway.
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