[Closed] Where should I put my pension - need help from middle class mtb-ers...!

I've put all my pensions into a SIPP managed by SAM Wealth near Glasgow. Alan, the partner who looks after me is a keen biker and tends to look on here.
I'm very pleased with the performance of my fund which they manage and although fees are involved, I think the net result is way better than I could achieve and I don't need to spend lots of time proving that a little knowledge is a dangerous and expensive thing.

St James Place seems to get terrible reviews online

That's because they're a bunch of crooks who charge sky-high fees for average performance. Don't even give them the time of day, the fees they charge are an unbelievable sum of money to be paying and far outweighs any likely long term outperformance.

Start here

I like the idea of a self invested pension where I can control the funds, but I’m not sure whether I have the time / inclination to be analysing it properly and making it work.

Right, here we go...

SJP polarises opinion, but to hopefully give a balanced, informed, view:

There are a number of very vocal haters, but there are a lot, and I mean a lot, of very satisfied clients (their client satisfaction survey results, which they do each year, are very impressive).

Their ongoing management fees are not "sky-high", they are about the going rate for a managed service, especially when you factor in that there are no fund fees on top which would otherwise normally be the case; an IFA will charge you a management fee, then the funds you invest in through the IFA will charge you a management fee too, this is not the case at SJP, the one fee covers the lot. I'm surprised the SJP fee you have been quoted is 1.91%, it should be 1.5%

Their exit penalties have attracted some adverse comment, much of it justified, so read the small print.

Their fund performance is again, ball park for a managed service. Their investment approach is unashamedly long-term, so they are never likely to appear in star-performer lists which tend to focus on shorter periods.

I’m not sure whether I have the time / inclination to be analysing it properly and making it work.

This is what you pay the fees for.

Just to be clear, I'm not specifically recommending SJP, as an investment management organisation they are about as good, or bad, as any other.

I don’t think the fees are particularly high for a managed scheme, but the exit penalties are punitive in that they last forever, in that they apply to the previous 6 years of contributions. Q

The exit penalties apply in the FIRST six years, not after that point. They're effectively clawing back the set up costs.

No that unfortunately is not true. The exit charges apply for the first 6 years on the entire amount invested, however they also apply to your contributions. So if in 10 years' time I wanted to switch, there would be 6% penalty on the last 12 months of contributions, 5% on the next, 4% etc - in essence still thousands of pounds even though the original amount invested would no longer attract an exit fee.

I think you need to get this clarified, because I've just spoken to a, shall we say, well connected source, and the exit penalty period applies to each investment, not contribution.

So, in your example, if you set up a "pension with regular contributions of £1000pm", that is the investment, and the penalty clock runs for the first six years you're paying in that £1000pm.

If at a later date you decide you want to up your contributions to, say £1500pm, that extra £500pm is treated as a new investment layer, so the penalty clock will start ticking again from the date you start paying the £1500pm, but only on the £500pm 'new' portion.

You could therefore have two clocks ticking in parallel, if you upped the contribution within six years of taking the first one out, each clock ticking on it's applicable investment 'layer'.

However, treating the investments on a layered basis like this gives the advisor the ability to offer you a lower ongoing management fee on new layers as an incentive for being a good/repeat customer.

Is it easy to understand? No. And that's one of the reasons it's come under criticism.

Fees are the enemy of investors, and SJP's charging structure is indefensible. It exists to enrich the partners first, then the advisers, then the fund managers, and the poor old customer gets the crumbs from his own cake.

This is worth a read (stick with it!). Many folk start out using index funds (I did), there's no more cost effective way of investing a pension and so long as you stick to the generalist trackers its hard to screw it up. Start with one that tracks the MSCI Global index and go from there...

I'm also a huge fan of passive investment, aka tracker or index funds. A good chunk of my pension savings are in them.

The Monevator site is a good source of knowledge.

I’ll certainly look at those - thanks. As far as the fees for a managed pension SJP’s are no higher than any other less that I can see. Advisor fees are usually 0.5-1% PA, fees for the pension fund about 0.5% PA and then specific fund fees around on average 1%, making total 2-2.5%. SJP have a total fee including everything of 1.91%, which seems comparable with every other managed platform I’ve seen. The online SIPPs are lower but it’s diffifult to know whether managing your own funds makes sense or not. I don’t like the exit fees but some of the comments about SJP don’t seem to be based on fact.

https://www.pensionsadvisoryservice.org.uk/

Don't really know much about SJP so after reading this thread had a quick look and all the funds I randomly clicked on had a 5% initial charge i.e. your fund had to make 5% just to break even. As far as I can see this is in addition to all the other charges. Why pay it?
Here

I'm not sure what advice your are looking for from an advisor, but just open a SIPP and pick funds that reflect your level of risk.
Vanguard even have funds that specify a retirement date and you just leave it to them to do the rebalancing/de-risking as time goes on. [Vanguard are planning their own SIPP platform sometime this year].
Here
and here

There are more expensive and less expensive options than SJP. It is what you place a value on. For example the confidence in the advice and company. Cheap is not always the best. A wrong move with pension advice can cause huge tax implications for example. Or investing in an area with healthy potential but with volatility you might not be able to accept.

Thanks for the info so far. The SJP advisor has confirmed he made a mistake and that the exit fees don't actually apply to ongoing contributions so thanks IHN for getting me to check this again. As far as 5% charges this doesn't apply to transferring a pension so isn't relevant. I've spoken to other IFAs and charges are similar. My fathers pension performed massively better after he moved it to SJP so there are definitely happy customers out there. Vanguard has been mentioned by a few as a relatively low performing but cheap option, but this could reflect that it doesn't earn them as much, who knows!

Vanguard has been mentioned by a few as a relatively low performing but cheap option

Careful with the 'low performing'. Vanguard's speciality (indeed they invented them) is index-tracking, passive funds. So, you get whatever rises, or losses, a particular index makes. Recent research by a well-known investment management company suggests that the increase in fund performance one can typically expect from taking advice and actively managing a portfolio, to simply letting the portfolio track an index, is only 0.5%. This is across the industry, and not just their funds. It's also before fees, and passive funds are typically much, much cheaper than a managed fund/service.

this could reflect that it doesn’t earn them as much

In a way, yes. Vanguard are a mutual, unlike most (possibly every) other fund manager, so profits are ploughed back into the funds. That's one of the reasons their management fees are so low.

Vanguard don't, yet to a direct to market SIPP in the UK, but you can invest in their funds through other platforms, like HL.

If anyone wants a bit of history, Google Jack (John) Bogle. He invented the passive fund and started Vanguard. Very interesting story, his model of mutuality, low cost and debunking the investment skill myth didn't exactly make him a popular figure in his industry...

All sounds interesting, apart from the fact that they don't offer a pension, although as you say could do it via a separate online SIPP platform. Decisions...!

I'm starting to think that transferring my money to the HL SIPP is the way to go...

Please! I will look after your monies.

Top quality investment. No sting in the tail!

Disclaimer:
- I am not regulated by the FSA.
- The value of investments can go down as well as up.
- I might spend most of your capital on pies.
- Your home is at risk if you leave the gas on.

All I know about pension fund providers is that it's the fees where they hit you. Every time. Just looking at the relative performance of cash going into an ISA, as opposed to the pension fund tells a fairly depressing story.

Vanguard are opening a SIPP platform this year.
It took a little while longer than the ISA/LISA to setup due to the extra regulation on a pension platform.

Yes I see that. The HL SIPP platform looks very slick and there's loads of advice on there to help first time investors. It's worth saying that considering the general opinion on SJP is that the charges are excessive, the overall fee for using the HL platform looks like it will come in at around or just over 1% PA - platform fee of 0.45% and fees for individual funds varying but up to just under 1% - bearing this in mind, and forgetting about exit fees, it does not seem to me that the overall charge of 1.9% for ongoing advice and an actively managed pension is all that high from St James Place. The SJP guy sent me files showing that in the past 7 years or so their managed pension funds have outperformed the FTSE 100 by about 20%, after charges.

Vanguard are opening a SIPP platform this year

They've said that for the last couple of years...

I think a lot of this comes down to peculiar, growing, modern phenomenon, which I like to call "the befuddlement of choice". For every purchasing, investment, and many other types of decision, there is now a huge selection of choice.

To match that, there is an equally huge selection of resources (including faceless internet know it alls 🙂 ) telling you which is the better option. It's rare that any/many of those resources agree, leaving you stuck.

The thing is, there often is no 'right' answer. The best approach often is to find something that seems reasonable to you and go with it. If you're happy with the SJP service offering and think the fees are reasonable, go for it.

My advice would be 1) Read Tim Hales Smarter Investing 2) Join the UK personal finance reddit 3) realise you're not a fund manager and picking one is a total punt 4) invest in a global tracker with the lowest costs (note that people often point towards the vanguard lifestyle80/100, but these are actually overweight to the UK - 25% of equities vs. the 6% in reality).

Remember past performance is no guide for the future, and over 50% of managed funds are going to perform worse than a passive tracker once you take the fees into account (passive trackers always have fees less than managed funds).

The SJP guy sent me files showing that in the past 7 years or so their managed pension funds have outperformed the FTSE 100 by about 20%, after charges.

Be careful with statistics. Some common trackers and Investment Trusts:
FTSE 100 1/1/12-1/1/19 up by 23% - SJP beat this by 20% - Did SJP account for dividends on the FTSE 100 [currently ~5%]?
FTSE 250 tracker, which can be had for peanuts, 1/1/12-1/1/19 up by 73% [Plus dividends]
RIT CAPITAL PARTNERS IT 1/1/12-1/1/19 up by 63% after trust charges. [Plus dividends]
City of London IT, 1/1/12-1/1/19 up by 70% after trust charges [Plus dividends]

[These do not include platform charges, but loads of choice, e.g. AJ Bell are £100/yr max on shares and IT's in their SIPP]

There’s lies, damn lies and statistics...the graph I saw showed 71% increase since 2011 - actually that’s only 11% better than FTSE (after charges by the way) but it’s better then my pension has done in that time.
I agree with previous poster - there’s so much choice now it’s bewildering.

*Slight hijack*

I'm fortunate to have a DB final salary pension which should provide well for the future however I also have an old 'paid up' scheme. The scheme has been 'dormant' for ~15 years and is managed by Scottish Widows. The sum in the scheme isn't very large (~£75K) and the annual increase on average is growth of about £500 which is ~.7%. I've just checked and the management fees are %.781. If I wanted could I move this from Scottish Widows to a SIPP of my choice?

No you should give it to me - I’ll look after it I promise.

The answer is yes though - it’s unlikely there’d be any exit penalty so you could do what you like with it. Growth sounds pants where it is.