You don't need to be an 'investor' to invest in Singletrack: 6 days left: 95% of target - Find out more
First world problem I know, and I may be just having a small rant, and already know the answer, sort of...and curious if anyone has been down this same path.
I've recently had some financial advice, primarily to get advice on what to do with a bit of inheritance that has unfortunately come our way. We had intro conversations with a few local IFAs and went with the chap who came across the best to us. The charging fee structure was set out up front and didn't seem unreasonable as I sort of thought that it would be based on the inheritance money alone.
We have been through the process now which included the IFA obtaining details of all my private pensions and this culminated with a meeting to discuss strategies (for which a one-off fee of £500 is due, fair enough). The advice for the inheritance made sense, and included putting a lump into a pension plan. However, the advice was that all my pensions, aside from the current workplace pension, need consolidating into a new scheme based on performance and risk. The pension fund provider suggested is only available to IFAs (Royal London) and for the pleasure of opening the account and writing to my existing pension companies, and the one-off payment into RLP, there will be a charge of just shy of £10K, with an ongoing managing charge of £450/month. So in the next twelve months, I'll be down circa £15K just on fees.
They aren't commission based, so I suppose that doesn't alter what they think is the best product, but there must be some thought process that if they said everything was fine with what I have, they will be down £10K fees for their business. A cynical view might also be that to suggest an IFA accessible only fund stops me doing this independently, which he said I can, I'm not obliged to go through with his proposals.
FWIW, I don't think I can stomach that charge and with a bit of diligence, can probably find a Vanguard 80/20 or 60/40 that would be equivalent, and just do it myself.
But what if I screw it up? Is the IFA advice actually good value and worthwhile after all, notwithstanding the above? Had, for example, I had half the pension pot, the fee would have been much less, but the advice just as valid. Will decent advice see me recoup those fees (and more) in due course?
Part of me thinks pay it, be on the safe side, but part also thinks it's a big hit and will take a bit of clawing back through growth.
Royal London are a good, reasonably priced provider. The IFA is likely to be independent of them (as far as I know they have no “tied” advisers).
However, those fees seem pretty large. How many pensions are you consolidating? What total value? Are some of them Defined Benefit/Safeguarded Rights?
Unless I was paying someone to manage a 7 figure investment I wouldn't be paying £450/month, that seems crazy high. Consolidating pensions is simple enough (you've already done the hard part if you have all the provider details). What's the expected & historic returns on the suggested pension vs your existing pension(s), did the IFA discuss why he thought you'd end up better off by switching (factoring in the additional fees)?
It's not seven figures, quit a way short!!! The fee is irrelevant to the number of pensions, it's just based on the total value to be consolidated.
There were issues with some of the pensions not being suitable for drawdown, some just poor (old Equitable Life but that's just £6K) some of the HL Blackrock ones not performing well and some had started "lifestyling".
£10k up front + £450 per month is insane.
IFA-only fund is bollocks, it'll still ultimately be invested in funds accessible to anyone.
They aren’t commission based,
They are, but nowadays it's called a fee for advice, not commission. It will however, completely coincidentally, be exactly the same amount as the previous commission would have been.
To the IFA this is money for old rope; the admin involved is trivial, the funds they 'carefully choose' will be a standard set that's based on your risk appetite that they use for all their clients, then they just sit back and let Royal London manage the funds and cream off their commission. Sorry, their advice fee.
did the IFA discuss why he thought you’d end up better off by switching
Hmm, why might they be suggesting switching, I wonder....
Interesting post for me as well. My 'managed' pension made 4% after fees last year, Vanguard 60:40 made 10% and 80:20 made 12%. And over 5 years, Vanguard is still significantly ahead. I get good long term advice /planning from my financial advisor and I trust him but, for me, it just seems that they can't compete with tracker funds
I have worked with financial advisors for most of my career, so 30 plus years now. I am afraid that experience shows that there are very few good ones. Most of them are firmly in the 'What's in it for me' camp. Very few truly have their clients needs at heart.
That said the fees quoted seem really high. The up front fee for the advice is fair at £500. The consolidation fee should be between 1.5% and 3% of the funds being transferred into the Royal London pot (most advisors would rebate the £500 too at the point of transfer). As far as the annual fee goes, I would be looking to pay 0.75% to 1.5% per year of the value of funds under management.
I have my own stuff with an IFA and I pay him 1% per year and I get a review with him once a year. I think my transfer fee was 2.5%.
I d have a search on the meaningful money podcast, he s talking about charges fairly regularly. The proposed charges are a hefty chunk I d be getting a few second opinions.
Fwiw we bought a product only available via ifas, paid 12k I think in commission, product has now paid out c 70k increase after 5 years and saved a few 100k. The if a fee was tiny in comparison and good value.
The fees are excessive.
Ask the IFA for 5 year performance information - including risk profile - for the fund being proposed.
Then compare with Vanguard 80/20 and 60/40 over the same period - other trackers are available.
The IFA commission charge for pension transfers is - or used to be - based on which band the transfer value fell into.
Even if the £450/month covers all charges - IFA, RL, platform etc - it still seems very expensive.
Just to clarify, without giving too much away re the pot, the fees and ongoing chares are inline with those suggested percentage ranges above.
The galling thing is I suppose, I can go on Vanguard, do a risk appetite quiz, and that confirms the IFA's risk assessment, that I am cautious with a dab of adventurous (4/7), and Vanguard suggest the 80/20 or 60/40. The RLP Managed Portfolio 4 being recommended, seems to align with those, as does my current workplace Aegon pension.
We did wonder about getting another opinion from our second choice firm and ponying up another £500, just as a sense check.
£450 a month!!!
Which are usually a good neutral source of advice. They suggest charges are
"0.75% to 1.25% in most actively managed funds"
So for £450 a month I would expect the sum invested to be in the region of £500k.
Presumably there was some sort of illustration to justify moving pensions?
e.g. your pensions are currently worth X, if you do nothing then in N months/years might expect them to be worth A to B. (Id expect a breakdown for each pension).
if you move them, then they will be worth X-fee, but in N months/years might be worth C to D. To be useful to the lay person that needs translated that into "which might buy you an annuity of Y per month".
if you don't spend this money on fees - what will you do with it? if that involves a hapiness factor IFAs are not great at including that in their equations.
If any of your existing pensions are DB you will, dependant on their transfer value, have to use an IFA and there is no guarantee they will recommend transferring out.
The regs around DB transfers are stringent.
They are all DC, been contributing in to various company schemes since I was 19.
You have paid £500 to get your finances looked at by an IFA. You have the suggestion that they should be consolidated in one place. So far so good. I just can't see the value in paying £10k to get someone else to move funds around.
I'd need a lot of convincing the best thing was't just a low cost pension in Vantage UK or elsewhere and do the transfers yourself.
As it happens I have two very small pensions with Aviva and Vanguard. The Avivia one has underperformed so for simplicity I'm transferring the Aviva to Vanguard. Looks very simple. Started off online. Needed my ref number and the current value. I signed a decleration that I wasn't getting advice (from Vanguard) and that was it. They say they will contact me should any further info of clarification be needed and it will be done in a few week. It wasn't £1k worth of work.
There is no such thing as an independent financial advisor. It's a total crock pot . The entire investment market is structured in a way to make it as confusing as possible for the layman . With lots of long complicated words and fancy websites.
All you are doing is paying someone else with the same amount of ability to see into the future as you do....to guess what's in the future.
Ignore vanguard 60ls performance, it was hit hard by the bond yeild issue last year so it skewed the numbers.
The fees he had quoted are in line with management of a diverse portfolio of around 10 million. So he's pulling down your pants.
Please do not do anything with this guy.
AJ bell , Vanguard or Hargreaves Lansdowne are amongst the best low value Sipp providers.
If you don't have a defined timeline you can be more risk averse now .
It's hard to advise without knowing your age , profession , savings or investment capital but a mix of , for example Vanguard LS100 , European sri , S&P 500 , Asian markets will invest in thousands of companies at very low cost with net income reinvested .
Keep say £9k in a deposit account , utilitize your ISA allowance, avoid sharks .
There is an old book about the financial services industry with a title along the lines of
"Where are all of the customers super yachts?"
Which tells you all you need to know.
What are the supposed benefits of a pension fund which is “only available to IFAs”?
That's simple, it allows the IFA to charge an exorbitant fee for a mediocre fund!
Which is quite a considerable benefit to the IFA.
I think, purely speculate, that maybe Royal London are being super cautious with who they let invest with them and maybe they get some reassurance that it isn’t a glossy brochure, or past performance, that has led to the man on the street dumping their entire wealth in with them. They probably get some reassurance that any customers have been advised, in one form another, so they can avoid any potential criticism.
Maybe.
I don’t think this makes their fund any better though, and it doesn’t seem to blow the Vanguard one out of the water. And, of course, investments can go down as well as up. Curiously, I was looking at the top fund performers over the last five years and the top ones appeared somewhat obscure. I can’t image that any FA, if we could roll back five years, would have recommended any of them to a middling risk investor.
I can’t image that any FA, if we could roll back five years, would have recommended any of them to a middling risk investor.
They'll recommend a very bland mix of trackers which you could get from anywhere on web. Probably very similar to one of the Vanguard Lifestyle funds....
Paying through the nose for exactly the same thing branded as 'exclusive to IFAs' would just be insane.
I know a few people who've chased every penny in profit as they couldn't stand to be 'safe'. One lost everything on a scheme his financial advisor set up for him.
There's so much good free advice out there now that there's no way I'd be paying £450/month for it. Not for normal person types of money.
Or you could talk to a few Mutual companies for advice (like the NFU Mutual) - admittedly they only sell their own products but they have safe records (maybe not market leading).
£450 a month is taking the piss. I pay 0.3% fees on my cheapest pension and if you work out how much you save over the term it’s amazing. You have to remember the savings compound over time. If you are paying 1-1.5% fees you are effectively giving away half of any future growth in your pot.
If you want to consolidate remember to look for any guarantees that may come with your DC pensions before going ahead. Some old schemes/funds used to have annuity rate or growth guarantees. One of my old funds guarantees a 6% return with no loss of capital. Paperwork to consolidate is pretty easy to do for DC pots.
I’m generally sceptical of the whole financial services market as the practitioners seem to be more adept at lining their pockets than providing good advice to clients. A recent example was the lifestyle profiling where funds were moved into bonds as you approached retirement to reduce risk. Given that bond prices move inversely to interest rates any fool could see you’d get rinsed when interest rates went up. With base rate near zero you could see what would happen. My old scheme saw 40% losses when interest rates rose. I’m glad I’d already turned off the lifestyle profile, but plenty of other folks didn’t and were angry they’d lost so much in a supposedly low risk scheme. The pension provider just swerved round the difficult questions the last time we had a Q&A session with them. Muppets the lot of them.
The preliminary modelling is in hand and I’m struggling to now see how it’s a decent proposal. The bumf includes comparisons of existing funds against the RL and all bar one have outperformed (over the last five years anyway) the proposed RL fund. The RL is going to have to smash it to claw back the costs.
There is also a summary figure that suggests that by staying with my current providers, I’ll have a larger pot than the prosper RL fund and it suggests that I’ll have a reduction in yield by moving.
This just seems bizarre now, how can it be dressed up as a better option? I’ve only ever paid into standard workplace pensions so I reckon most of them will be on a par with the RL proposed, from a risk POV, and the graphs I now have all plot very VERY similar growth lines. There seems to be nothing at all exceptional with the RL fund that would warrant a change for me.
Postscript, a mates BIL runs his own FA firm and has recently bought a Ferrari, an apt in Spain and a holiday home on the East Coast.
Open an Interactive Investor SIPP. The platform charge is £12.99/ month. Total. They have an offer for transferring in at the moment that will give you @£1500 Cashback on a pot of that size. Choose some global trackers at am AMC of 0.1-0.2% and laugh at the £10k that IFA wanted you to spend to do that for you.
I’ve just had everything finalised with my pensions, it’s taken ten months due to one financial entity* who ended up holding the two biggest policies, and who’ve taken their own sweet time handing over the money. There were several little ones I just got the cash for, the two big ones I’ve got a £19k lump sum, and about £400/month annuity which will top up my state pension, effectively giving me a final salary pension based on my last income. I was quoted a charge of £1800 for the work, and that’s what I’m paying. My Annuity is with Scottish Widows. Perfectly happy with the outcome, I couldn’t possibly have dealt with it myself, I have no understanding of what’s involved, and if I’d followed some people’s advice and just gone onto one of those online pension things, I reckon I’d have ended up with very little.
*Their name begins with A, I’m not impressed with their work.
Whenever I hear about IFAs or their charges, I can't help thinking "why didn't I become an IFA". Unless I'm missing something major there doesn't seem a whole lot of skill or knowledge involved - most of the time it's just picking a few funds now rather than investing in individual shares. And if they're picking anything other than trackers then it's luck whether they outperform a tracker or not.
and the fees seem huge.
The up front fee for the advice is fair at £500. The consolidation fee should be between 1.5% and 3% of the funds being transferred into the Royal London pot
Why should it be a percentage? And why would you pay anyone rather than do it yourself?
I did some consolidation a few years back. It's a 'pull' process - you contact the pension provider you want to consolidate to, they send you a form you fill in, they send that to the provider you want to leave and the funds transfer. There was no charge for it. The amount of work is the same whether it's a £2000 pension or a £200k pension. I've just been to my Standard Life website and theres a 'combine your pensions' button...
I couldn’t possibly have dealt with it myself, I have no understanding of what’s involved, and if I’d followed some people’s advice and just gone onto one of those online pension things, I reckon I’d have ended up with very little.
And this is what the financial companies and IFAs thrive on. The thing is, with the amount of online content available these days there's any number of ways to educate yourself on this subject, or, you take the alternative of having your pants pulled down by an IFA.
If you believe in the efficient market hypothesis (even in its weakest form) you can save an awful lot of money and do it yourself.
Having said that, doing it yourself isn't a complete free ride, there is stuff to do which takes time and effort and it's understandable that some might want to delegate that effort and responsibility. But you can end up paying large sums for not very much really.
I have transferred poorly performing ISAs and pension funds away from the HL platform to Vanguard. A lot lower commission fees and so far performing better.No cost to transfer and a pretty straightforward process.
Having spoken with IFAs over the last 30 years i have never felt comfortable with the advice i was given.
A friend has been paying £3000 a year into a pension for 20 years. The providers last statement showed a valuation of just £70,000 and advised him that he should be upping his contributions to provide a decent income in retirement.Great financial advice !
The interactive investor above is a fair deal, I just opened an eqi sipp at an annual fee of c 110 GBP. This is offset by trading fees, so if you trade within the sipp you effectively get your admin fee back.
A friend has been paying £3000 a year into a pension for 20 years. The providers last statement showed a valuation of just £70,000
That sounds like an absolutely shocking level of performance. I couldn't imagine how it is possible to invest so poorly.
I couldn’t imagine how it is possible to invest so poorly.
Isn’t that the issue with these life-styling options. Have just been looking at my wife’s pension and it is heavily exposed to bonds, the bond units have lost 37% over the last 2 years or so. As you would expect, this has dragged the whole pot down. Exacerbated by them charging too much in fees for ‘managing’ it.
Isn’t that the issue with these life-styling options. Have just been looking at my wife’s pension and it is heavily exposed to bonds, the bond units have lost 37% over the last 2 years or so. As you would expect, this has dragged the whole pot down. Exacerbated by them charging too much in fees for ‘managing’ it.
Just as a comparison the Vanguard Lifestrategy 40% fund which has 40% Equities and 60% Bonds was down 13.61% in 2022 but up 8.45% in 2023. So yes, the bond market did take a hit in 2022 but previous years and this year have more than made up.
Yes, time to transfer it out to a better provider. My wife’s is currently Scottish Widows.
These conversations are not easy though, I guess she got some fairly ropey financial advisor advice when she started this one and is now inclined to stay put and ride it out. Many people are simply not financially literate enough to manage these options, they think they have done the right thing by putting money away.
And if I hear one of my boomer parents/ in laws, who are rolling in final salary dosh, moan about being skint and/or comment how we have this to look forward to after their 5th holiday of the year I can’t be held responsible for my actions. 😉
these life-styling options
can you explain to a layperson what this means?
I am one of these poor fools who just pays into a work pension and doesn't know the relative merits of bonds, equities and SIPPS, nor whether my pension is 'lifestyling' 😳
Lifestyling is gradually moving your investments out of higher risk investments, like equities, into lower risk investments, like bonds, as you approach retirement age. The theory being that as you approach the point where you want to draw on the money you don't want it in investments that carry a higher risk of losing a significant amount of value quickly (i.e. you don't want the value of your pension pot to halve six months before you retire), you instead want it in stuff that's more stable, like bonds.
Unfortunately the bond market went a bit mental last year after Liz Truss's little fiscal hissy fit.
Also, it was more appropriate under the previous rules where you had to cash in your entire pot and buy an annuity. Now that you can keep your pension pot invested in stuff after you retire it makes less sense than it used to.
And if I hear one of my boomer parents/ in laws, who are rolling in final salary dosh, moan about being skint and/or comment how we have this to look forward to after their 5th holiday of the year I can’t be held responsible for my actions
You've met my neighbours then?
My experience with IFAs has been mixed at best.
On the one hand they've given me a few tips about diversification of my portfolio and risk.
On the other, they've always had some financial product that they've wanted to sell me.
My limited understanding of investing is that management fees on funds are a real drag on compounding, and therefore they should be kept to a minimum. Also that in the long term, very few funds consistently beat the market. These seem to point towards some form of passive investing being the solution for most people.
Funnily enough, the IFAs I've spoken to go quiet at this point. One even became borderline aggressive asking me why I'd decided to speak to him if I knew so much about investing.
The provider moves your investments away from risky shares into other , safer investmentsvas you near the point of needing the Dosh.
So the provider will sell units that own a few hundred shares in , let's say the FTSE 250. Which is a fairly solid performer, and reinvest your money into other derivatives. Mainly government or compy bonds. These give a fixed yeild over lifetime so tend to be less volatile hence less likely to devalue suddenly this leaving you thousands short.
Which is fine , till an unprecedented event happens like in '22 / '23 when the bottom fell out of the bond market and the government was forced to shake the magic money tree to stop a load of defaulting and potentially bankruptcy of company pension schemes iirc
So that's lifestyle , if you have enough money to be able to ride out the fluctuations they are slightly less attractive. As they tend to yeild less in the last 5 years till retirement
The lifestyling of moving into bonds etc before retiral made more sense when your main option at retiral was to buy an annuity. So you were realising your investment at a fixed point it time.
It makes less sense now IMO when you could retire at 65 and have on average 20 years ahead of you. That is long enough to smooth out ups and downs if you keep most of your money invested and draw down as required.
Also, it was more appropriate under the previous rules where you had to cash in your entire pot and buy an annuity. Now that you can keep your pension pot invested in stuff after you retire it makes less sense than it used to.
Very much this. It makes sense if you plan to buy an annuity when you retire. If you plan on a drawdown approach it might make more sense to change your investment approach.
My personal plan is to drawdown so I'm building up a 'cash' reserve which will cover my outgoings for a couple of years. Thus if there is a 'Truss moment' in future I will take less out the pension that year and withdraw from the cash. This relies on the pension recovering within a couple of years (I then refill the cash reserve in better years).
All this relies on you being happy to monitor things. For many people they just want to know how much they are going to get. Thus annuity's still have their place and are the right choice for some.
Slightly off topic for me, but I hear annuities are increasing in value a bit and James Shack (YouTube) makes a reasonable point that for someone retiring early, say 57, a ten year annuity to get you to state pension age isn’t a particularly daft plan of you want some certainty in that interim period.
Whilst talking about bonds and annuities, what's the hive thoughts about any potential fall out from the US Presidential election in November? Are you likely adjust your investments before any potential chaos and spill over?
(I'm heavily invested in US Equity at the moment and likely retiring anytime between the next time my boss makes another stupid decision and the end of this year...)
Interesting thread ... I have an old, small value pension that I could potentially throw a reasonable amount of £s at for the next 5-7 years which would probably make it a worthwhile thing. Off to see my IFA next week to see if he has any words of wisdom, but cyncial self doesn't really trust/ like him and am wondering whether to just transfer it somewhere like II and then I only have myself to blame ... decisions. ...
Annuity rates have doubled the last year according to my last statement, cash pot has fallen a bit but the purchasing power of an annuity has doubled. Best tip is diversification where poss.
Whilst talking about bonds and annuities, what’s the hive thoughts about any potential fall out from the US Presidential election in November? Are you likely adjust your investments before any potential chaos and spill over?
Perhaps one of the IFAs that are lurking on this thread may want to answer 🙂 We all know what a helpful place this is with people chipping in with their own area of expertise when asked.
poolman
Free Member
Annuity rates have doubled the last year according to my last statement
Do you mean rates to BUY an annuity have doubled?
My wife has just moved jobs. The new pension is with Standard Life. They have an annual fee of 1% for a vanguard index fund! I’ve found a global index tracker she can use there with decent performance at 0.6%, but no way we are transferring her pot to them at that level!
we’ve had a chat today and she’s going to move her old workplace fund tonight to II, which will give her £1500 cashback, no transfer fee, no fund buying/selling fees. With a Vanguard global fund, it’s under 0.3% total fee including the £12.99/ mo flat fee SIPP charge.
No Vlad , the annuity you can get per £100k of pot has doubled as global interest rates are back from the zero they were post the Global Financial Crash.
I don't think the outcome of US election is likely to be the most likely determinant of annuity rates this year as i don't think there is much differentiation on economic policies (I stand to be corrected on that). But whoever is in charge in the US does have to deal with a booming government deficit which could mean that there is a budgetary crisis (it usually gets resolved) and there is a sizeable body of intelligent people who think that there will be a crisis of confidence in the US dollar in the medium term (although the likely successor to the US position as the world's reserve currency - China - have chronic problems of their own).
In my experience, most workplace pensions held through the large providers are poor value, both in respect of their fees and the performance of their funds. I managed to get a cash alternative paid into a platform of my choice for me to do what i could do, but i got lucky there i think. IFAs can be pricey beyond the initial advice - annual fees based on assets, plus fund management fees plus admin fees etc.
Asset allocation (equities vs bonds vs cash etc and UK vs global equities etc) trumps index tracking vs stock picking. Try and get an asset allocation model and then invest using index trackers. Or just hand it over to Vanguard.
wow @claudie
My ‘managed’ pension made 4% after fees last year, Vanguard 60:40 made 10% and 80:20 made 12%
A small DC pension I've got with Standard Life was worth the same in October 21 as it is now. It's had a little up and down has never been higher than it was then.
That said, even the little chunk of final salary pension I've got has taken a big hit in real terms - it has inflation increases, but they're limited to 4% which isn't a lot when inflation has been over 10% for a few years.
though this is some good news on annuity rates at least
Oct 21 was a big booming high on the back of Covid. Most portfolios are still struggling back to that point.
Just dipping backing in here, and interesting to hear the comments.
What is crazy, is the more that I think about this, the more I google about Vanguard and Royal London and watch YouTube videos, the more confused I think I am getting and I'm nearly at the point of saying, "**** it, let them sort it".....Maybe that is a deliberate ploy with the world of finance to make consumers pap themselves about financial decisions.
For context, I am hoping to retire at 55 (summer 2025), or certainly go part time. Had it been a little further on the horizon then maybe I would have been more confident just sticking it all in a Vanguard 60/40 and watching it for five years or so. But it sort of feels like I'm going to need decent advice about drawdown, crystalizing and all that stuff sooner rather than later..
But it's such a lot of money in fees and annually, their fee is probably going to result in the growth not beating inflation.
And another but, and argument for their advice, what they have done so far is pick out that an old Aviva one started lifestyling a couple of years ago and is already in 50% bonds, 25% cash and 25% equities, so it's been static for a couple of years. Getting that out of there (which I probably wouldn't have noticed until D-day) will probably cover fees. I think.
Edit - ignore. Didn’t read the above post properly.
the more I google about Vanguard and Royal London and watch YouTube videos, the more confused I think I am getting and I’m nearly at the point of saying, “**** it, let them sort it”…..Maybe that is a deliberate ploy with the world of finance to make consumers pap themselves about financial decisions.
I think this is definitely a thing.
Rockhopper - I’d set aside a few days to listen to some podcasts on how to do drawdown. People talk about the money ladder.
Basically, different investments have a different time horizon. Working upwards, you want 2 years worth of money in cash or money market funds so it is available. The next few years is short term low risk investments such as bond heavy funds. The rest is for 7-30 years so should still be invested as it was before retirement. In normal market conditions, you keep trickling money down the ladder to keep the cash and bonds topped up.
The theory goes that most down terms are short term so you don’t want to be taking money from your long term funds in a downturn, so if there is a crash, you can use your 2 years cash, then bond funds to ride it out, not withdrawing from the long term funds until they recover.
In your situation, the £500 initial consultation fee is reasonable, the monthly fees are ok, but the £10k to transfer is just outrageous. That can be done for free.
From what you’ve said, he’s also recommended a situation which he knows will make you worse off!! Would you really trust your whole retirement planning off the back of that?
I want to spend my retirement riding bikes, walking the dog, pottering about the garden and the occasional holiday. Not, listening to finance podcasts, watching the market obsessively, fiddling about with pots, ladders , horizons and trickles. Think I’m in the market for an annuity…
Yep - that’s exactly the point of an annuity. Buy & forget. The pension freedoms were to give those who wanted the ability to manage it themselves via drawdown. But with an annuity all the market risk is priced in, so you won’t see the upside of a good market, and they’ve already priced in the downside to what they will pay you.
If I had retired last year, my annuity would’ve been under £20k, whereas a sensible drawdown would’ve been £50k. But I’ve been actively involved in my pension investments and quite enjoy it.
See, my thought process is with Robola, I don’t want a Ferrari, or a speedboat, and I’d be happy wiling away my retirement tinkering, walking, a few holidays, a bit of volunteering, but not in anyway shape or form, worried or looking or trying to outperform the pension market.
Fair play, it wasn’t a dig at you.
That is a sizeable difference, but the sensible drawdown is in a market doing ok. It may not always be like that.
Another factor I keep in mind is cognitive decline; I might be capable of managing these things early in retirement but it is quite sobering seeing how quickly my older relatives lose the capacity to think rationally about financial matters.
Sensible drawdown allies for market crashes, although it certainly is the case that the timing of a crash can make a substantial difference.
You can also buy an annuity at any stage, so if you felt unable to keep managing, you could cash out as you got older.
No offence taken! I think the pension threads on here really benefit from open and frank discussions. There is no right answer, we are all different. I often see points I hadn’t considered from other posters which change my views on things.
You don't need your advisor to transfer out of poorly performing pensions. I said up thread I want to transfer an Aviva to my Vanguard. Started the process on the Vanguard website 6 days ago. Vanguard have my Aviva cash now.
It was done online on the Vanguard website. Read a few statements then a few clicks. I didn't even need to contact Aviva. Vanguard do that. 10 minutes work. The only info I needed was the name of the provider I was transferring from, my reference, and my current value which I got in 2 minutes on the Aviva website.
£500 for an overall assessment of finances and a suggested plan is fair enough. Nobody works for free. It looks like a bit of a loss leader with the big profits being made once you sign up for a ruins and ongoing management.
10k to consolidate pensions is laughable. IMO. I'm sure as this is Single-track there will be an IFA here who can explain why it costs £10k to gather pensions together and invest them in one place
Half of my pension is managed and, as said earlier, the vanguard 60:40 is massively out performing it over 1 and 5 years so today is the day that I'm cutting ties and switching to the interactive investment sipp mentioned above and moving it into the vanguard fund. This is quite a big deal for me as the pension company has been my security blanket for the last 5 years but this thread has really opened my eyes to fees and performance. I also really like the money ladder analogy. So, thanks to all of you for your input - great thread. I must admit to being a bit over invested in Vanguard but it appears that nothing comes close to the performance for the low fees
@irc, I hear you. I did actually think I might just get that poor Aviva one into my existing workplace one asap as there is a fairly easy and streamlined way of transferring in but then I thought it might be a bit disingenuous of me, if I haven’t even told the IFA what I have decided. (Or paid the £500 fee)
Yes, £10k is crazy daft money to give up for what is, essentially, six template letters.
While there are some knowledgeable people kicking around on here, I was thinking of setting up a new pension and paying into it direct from my small ltd co (sole director/shareholder). Is that called an employer contribution?
I'm currently looking at a provider which applies a tax rebate to each payment I'd be making, but as I'm proposing to make payments from the company's profits rather than from my salary then I can't see that's right?
That’s quite niche - hopefully someone on here has done similar. Can you get advice from Pensionwise, the govt service?
With respect to being overexposed to vanguard, the whole point of the global tracker and life strategy funds is that they are inherently diversified and rebalanced.
My Vanguard Lifestrategy 100 is actually a fund of funds, composed of about 15 different Vanguard index sub funds, diversified globally and by market cap (small cap/large cap etc) The 80/20 will be the same but with a diversified bond portfolio making up 20% of it. They are designed to be a simple one stop , buy and hold product.
While there are some knowledgeable people kicking around on here, I was thinking of setting up a new pension and paying into it direct from my small ltd co (sole director/shareholder). Is that called an employer contribution?
I’m currently looking at a provider which applies a tax rebate to each payment I’d be making, but as I’m proposing to make payments from the company’s profits rather than from my salary then I can’t see that’s right?
Yep, you're right, you just make the payment from the company account, it is an Employer contribution so no tax rebate should be claimed by the provider (make sure they know it's an employer contribution, not an employee/personal contribution). I've done exactly the same in the past when I was self-employed through a LtdCo
I want to spend my retirement riding bikes, walking the dog, pottering about the garden and the occasional holiday. Not, listening to finance podcasts, watching the market obsessively, fiddling about with pots, ladders , horizons and trickles.
This describes me to a tee but my timeline is a LOT more imminent than yours (like I said up thread, mentally, I could retire tomorrow though in reality it's likely later this year).
I'm in analysis paralysis at the moment as I've just been throwing funds into my pension for last 18 years without really paying much attention but it's now dawned on me how much past fees have are into what I'll have available. And the advice I've been paying doesn't seem to have translated to a better performing fund than a low fee index EFT.
So, I'm moving stuff over to EFTs but I've just realized there are so many different types of EFT and no idea which one(s) to choose.
Another complication for me, is I'm (probably) too heavily in cash/low risk at the moment but it seems even more risky to switch out of low risk to higher risk (for better reward later) just as I'm about to retire/with a short time horizon AND (US) markets being so high at the moment...
Luckily, I've still got about 17 years of a very old Civil Service final salary pension as a security blanket should I make some catastrophic decisions! (Granted, my civil service salary 18 years ago wasn't much!)
A final salary safety blanket is very nice indeed. I have similar with an RAF Officers pension from 60 for my 12 years service.
How are you holding the cash? Have a look at money market funds. Basically you will be getting the interest rates banks can get as opposed to what they give to clients, with a risk rating of 1 they are considered the safest place possible and currently paying 4-5%.
You are right that there is thousands of ETFs available. I’m not an IFA and in no way qualified to offer you financial advice, but when I get to retirement I will be holding about 3 months money in straight cash, 2 years money in Money Market funds, 3 -5 years worth in a vanguard 50/50 lifestyle fund , and the remainder of the pot for long term in a Vanguard Diversified Global equity fund.
There are lots of podcasts and YouTube channels you can google to talk about how to set up for sustainable drawdown. Try Meaningful Money, James Shack and Many Happy returns/pensioncraft.
So, I’m moving stuff over to EFTs but I’ve just realized there are so many different types of EFT and no idea which one(s) to choose.
Are you sure you wouldn't be better off with the low cost lifestyle funds if you can't decide what to invest in?
Are you sure you wouldn’t be better off with the low cost lifestyle funds if you can’t decide what to invest in?
I might be if I knew what lifestyle funds are!
....wanders off to Google......
Lifestyle is usually the term associated with the standard workplace pension scheme fund, where as you get closer to retirement, you augomatically move out of growth funds, towards more stable, but low return, funds.
The vanguard lifestrategy is slightly different, in that you put it in the fund with the level of risk you choose, and it contains diversified funds, but doesn’t automatically change.
How are you holding the cash? Have a look at money market funds. Basically you will be getting the interest rates banks can get as opposed to what they give to clients, with a risk rating of 1 they are considered the safest place possible and currently paying 4-5%.
A word of caution...