Why does PH have an obsession with SIPPs?

[Zigster]

So rather than using a SIPP, would the question for most of us be more along the lines of recommending a PP as a platform for cheap access to funds? And what then happens on retirement with the new flexible drawdown option? (Or is it too early to say yet how that might work from PPs?)

[ringram]

Define peanuts?

What is the cheapest personal pension for DIY types that are on offer?
H&L is a fixed amount per annum if you avoid funds. So is attractive at a certain level.
IIRC its £200. No costs for holding ETF's Investment trusts, bonds or shares.

I accept some people may be happy paying for "value" however they may define it, but anyone with a brain who can read should not need to pay anyone. After all most people have learnt to tie their own shoe laces and feed themselves. So reading a few books and buying shares isn't exactly challenging.

[walm]

ringram said:

So reading a few books and buying shares isn't exactly challenging.

Utter bks.

Unless you are an incredibly rich hedge fund manager? And your PA trading has outperformed the market through multiple cycles?

I absolutely LOATHE people who perpetuate the ridiculous myth that "buying shares is easy".

[aka_kerrly]

walm said:

ringram said:

So reading a few books and buying shares isn't exactly challenging.

Utter bks.

Unless you are an incredibly rich hedge fund manager? And your PA trading has outperformed the market through multiple cycles?

I absolutely LOATHE people who perpetuate the ridiculous myth that "buying shares is easy".

Strictly speaking buying shares is easy as there are many trading platforms that can allow relatively cheap and easy access to the majority of recognised stock exchanges.

Buying good shares is what requires skills!

[ringram]

Who said anything about stock picking.
Buy the market and you will outperform 99% of fund managers over the long term.

Why do I need to pay someone to do that!?

[walm]

ringram said:

Who said anything about stock picking.
Buy the market and you will outperform 99% of fund managers over the long term.

Why do I need to pay someone to do that!?

Sorry - I thought you meant stock picking.
In which case I totaly agree and I would go further - you don't need even to read a book to buy the market!!

Cheap trackers for the win!

[ringram]

Indeed, but you might want to read something on asset allocation and rebalancing..

[Mellow Matt]

Ginge R said:

I started 4 personal pensions for clients today, all four recommendations were different. Which is best depends on your input and what features you require, how much you have and what your other assets/plans are.

I am seeing a client tomorrow who is maxing out her unused annual allowance for the past few years and it's going into very cheap funds to dimply sit there and gather the tax relief for 3 years time. No need for fund management sophistication, uber functionality and expense - rather, focus on drawdown characteristics and good admin from the life company.

Post budget a Higher Rate tax payer might just want the cheapest wrapper before drawdown, or a professional person might want a personal pension to work hand in glove with an investment bond and other investments, which might suggest a platform or Wrap.

If you have a SIPP and if you like your research, you should have been on top of Lipper these past few weeks. If you have a SIPP and are letting the funds role - fine.. but are you paying for something you don't need? Many personal pensions with decent managed funds or passives can be had for peanuts these days. And getting monkeys if you pay peanuts is so 2005.

Is a personal pension cheaper than a SIPP if you just want to invest in some funds? I can't really see the benefit of going for a personal pension unless you can do so for less than 0.3%?

For example, for me, I want to invest a few grand (<10k) per year into the Vanguard Lifestrategy 80% Acc fund. Nothing complicated, I just want to do this in the cheapest way possible.

[ringram]

I think we are still waiting for OP or similar to explain their definition of cheap.
Im not paying even 1/100th of a percent with my SIPP.

What is 1990's is paying an ad valorem fee!

[Mellow Matt]

ringram said:

I think we are still waiting for OP or similar to explain their definition of cheap.
Im not paying even 1/100th of a percent with my SIPP.

What is 1990's is paying an ad valorem fee!

Do you mind me asking how you've managed that? Or is it just a fixed rate on a large pension?

[ringram]

Sorry my bad, its way less than 1/10th of 1%. Take an over eager 0 off!
But yes fixed fee.

[Mr Noble]

ringram said:

Sorry my bad, its way less than 1/10th of 1%. Take an over eager 0 off!
But yes fixed fee.

So you're paying less than 0.09% for your TER? I'd be interested to know which platform you're on to get such wonderful fee structures!?

[Ginge R]

Mellow Matt said:

Is a personal pension cheaper than a SIPP if you just want to invest in some funds? I can't really see the benefit of going for a personal pension unless you can do so for less than 0.3%?

For example, for me, I want to invest a few grand (<10k) per year into the Vanguard Lifestrategy 80% Acc fund. Nothing complicated, I just want to do this in the cheapest way possible.

Depends. I'm with clients this morning but out of interest, I'll run some research for you. I'll assume you're 25, want to retire at 60, and are investing (gross, after 20% tax relief) £5000 pa.

It isn't a recommendation remember, if you put slightly more or less in and took payment holidays, increased each year by a different amount etc, the numbers would come out differently. The numbers reflect total cost of ownership of the course of the investment so annual management costs only form a small part of that. The figure that you quote is the screamer - scratch the surface and there's lots more factors to be taken into account.

I'll get back to you. For now, I like that fund, it's a shame that Vanguard institutionally doesn't offer a pension wrapper. I like it wrapped around actives for now - the jury is still out in the actives Vs passives bun fight. Slightly off at a tangent, and post budget, Vanguard reduced the 'entry' charges for its FTSE UK Equity Income Index and UK Equity Index funds from 0.5 to 0.4% (annual fees not affected).

[Mellow Matt]

Ginge R said:

Mellow Matt said:

Is a personal pension cheaper than a SIPP if you just want to invest in some funds? I can't really see the benefit of going for a personal pension unless you can do so for less than 0.3%?

For example, for me, I want to invest a few grand (<10k) per year into the Vanguard Lifestrategy 80% Acc fund. Nothing complicated, I just want to do this in the cheapest way possible.

Depends. I'm with clients this morning but out of interest, I'll run some research for you. I'll assume you're 25, want to retire at 60, and are investing (gross, after 20% tax relief) £5000 pa.

It isn't a recommendation remember, if you put slightly more or less in and took payment holidays, increased each year by a different amount etc, the numbers would come out differently. The numbers reflect total cost of ownership of the course of the investment so annual management costs only form a small part of that. The figure that you quote is the screamer - scratch the surface and there's lots more factors to be taken into account.

I'll get back to you. For now, I like that fund, it's a shame that Vanguard institutionally doesn't offer a pension wrapper. I like it wrapped around actives for now - the jury is still out in the actives Vs passives bun fight. Slightly off at a tangent, and post budget, Vanguard reduced the 'entry' charges for its FTSE UK Equity Income Index and UK Equity Index funds from 0.5 to 0.4% (annual fees not affected).

Great, thanks very much! It seems that I've missed some information in the course of my research, as I'm not sure about payment holidays or of the other costs involved you've mentioned. I've basically been assuming that the platform charge (i.e. the 0.3% I've mentioned), plus the fund charge (0.29% for the Vanguard 80% Acc) and the initial entry charge (0.17% for the Vanguard) are the only things I need to worry about. Except possible transfer out costs if I needed to change SIPP provider.

I'd be grateful for any more light you could shed on the subject!

[Ginge R]

Matt, I hope my e-mail made sense!

The FCA today released the results of its review into SIPP advice and it, erm.. wasn't very happy.

http://www.fca.org.uk/news/sipps-further-alert

It found very poor standards of advice - firms typically failed to carry out an adequate assessment of the client's overall financial position, needs, attitude to risk and objectives (including the characteristics and risk of the wrapper and of the underlying investments).

Quite damning really.. I don't think the reality is anywhere nearly as bad as that, but I am not a fan of SIPPs for the overwelming majority of clients. The FCA didn't like the fact either, that lots of advisers had a poor understanding of non-mainstream propositions that tend to be placed into a SIPP wrapper.

A SIPP has so often been a veneer, a cloak of respectability for these crazy investments and many greedy advisers were (let's be honest, fellow IFAs!) suckered in order to promote this stuff. Rule of thumb - the more spot varnish there is on a brochure, the less reliable it is - my favourite fund details were sent to me as a black and white photocopy.

I (like most advisers I know, and have read about on here) am confident enough in my abilities as an IFA to help clients without resorting to Bulgarian wine futures, Kabul property developments (they exist!), store pods in anywhere from Carlisle to Calais and dodgy forestry schemes. The problem is, many advisers seem to think that in this social media age, they need to do something to get noticed - they don't - or to do things that somehow set them apart from their peers. Those sorts of investments also pay very well..

Oh, if this appeals to you..

http://www.propertyafghanistan.com/buy.html?lang=

.. you must be maaaad!

[Grandfondo]

If you have a SIPP through an IFA how much on average do you pay % wise

A) on monthly payments

B) annual fund management

C) on exit?

[Mellow Matt]

Ginge R said:

Matt, I hope my e-mail made sense!

The FCA today released the results of its review into SIPP advice and it, erm.. wasn't very happy.

http://www.fca.org.uk/news/sipps-further-alert

It found very poor standards of advice - firms typically failed to carry out an adequate assessment of the client's overall financial position, needs, attitude to risk and objectives (including the characteristics and risk of the wrapper and of the underlying investments).

Quite damning really.. I don't think the reality is anywhere nearly as bad as that, but I am not a fan of SIPPs for the overwelming majority of clients. The FCA didn't like the fact either, that lots of advisers had a poor understanding of non-mainstream propositions that tend to be placed into a SIPP wrapper.

A SIPP has so often been a veneer, a cloak of respectability for these crazy investments and many greedy advisers were (let's be honest, fellow IFAs!) suckered in order to promote this stuff. Rule of thumb - the more spot varnish there is on a brochure, the less reliable it is - my favourite fund details were sent to me as a black and white photocopy.

I (like most advisers I know, and have read about on here) am confident enough in my abilities as an IFA to help clients without resorting to Bulgarian wine futures, Kabul property developments (they exist!), store pods in anywhere from Carlisle to Calais and dodgy forestry schemes. The problem is, many advisers seem to think that in this social media age, they need to do something to get noticed - they don't - or to do things that somehow set them apart from their peers. Those sorts of investments also pay very well..

Oh, if this appeals to you..

http://www.propertyafghanistan.com/buy.html?lang=

.. you must be maaaad!

Apologies - I don't appear to have received an email? Just re-checked my junk but couldn't see it there either. Would you be able to re-send it?

I think I'll hold off on Afghan properties and forestry schemes for the moment, but it certainly sounds like there's more to SIPPs thank I first thought, and you certainly seem to know what you're talking about and so I'd be interested in your email!

Thanks

[Grandfondo]

Grandfondo said:

If you have a SIPP through an IFA how much on average do you pay % wise

A) on monthly payments

B) annual fund management

C) on exit?

This was a question directed at IFAs on here and if you don't want to go public on PH could you pm me please!

[Ginge R]

Mellow Matt said:

Apologies - I don't appear to have received an email? Just re-checked my junk but couldn't see it there either. Would you be able to re-send it?

I think I'll hold off on Afghan properties and forestry schemes for the moment, but it certainly sounds like there's more to SIPPs thank I first thought, and you certainly seem to know what you're talking about and so I'd be interested in your email!

Thanks

Matt,

I will send it again in a couple of days. In essence, I took the advice of my compliancy team who advised me against sending you research, however many caveats and disclaimers I included. What I did do though, was send you a list of e-mail addresses and an e-mail for you to mail to 8 pension companies, asking for an illustration based on input that you could include, and asking for the reduction in yield. I'm out now for a bit but will resend it on my return ( I don't have remote access to the letter, alas).

[Ginge R]

Grandfondo said:

This was a question directed at IFAs on here and if you don't want to go public on PH could you pm me please!

Drop me a line with contact details if you like. No hard and fast rule but I can certainly give you a steer if you like, based on your circumstances.