pension numpty
Discussion
Hi
Ive got a couple of pensions and one with Aviva which I don't currently contribute to is worth around £100k right now (I've had it for a long time)
About once a year I get a visit from a pension advisor and I normally just sign a few forms, listen to his banter and off he goes. Upon reading the forms this time around it seems he gets 1% fee for managing this account (around £85 a month) for basically feck all.
Is this about right? Do I need him? am I being had?
Ive got a couple of pensions and one with Aviva which I don't currently contribute to is worth around £100k right now (I've had it for a long time)
About once a year I get a visit from a pension advisor and I normally just sign a few forms, listen to his banter and off he goes. Upon reading the forms this time around it seems he gets 1% fee for managing this account (around £85 a month) for basically feck all.
Is this about right? Do I need him? am I being had?
Badvok said:
Hi
Ive got a couple of pensions and one with Aviva which I don't currently contribute to is worth around £100k right now (I've had it for a long time)
About once a year I get a visit from a pension advisor and I normally just sign a few forms, listen to his banter and off he goes. Upon reading the forms this time around it seems he gets 1% fee for managing this account (around £85 a month) for basically feck all.
Is this about right? Do I need him? am I being had?
This is the adviser fee you have (somewhere along the line) agree to pay him. As you state this amounts to £1,000 a year on this pension.Ive got a couple of pensions and one with Aviva which I don't currently contribute to is worth around £100k right now (I've had it for a long time)
About once a year I get a visit from a pension advisor and I normally just sign a few forms, listen to his banter and off he goes. Upon reading the forms this time around it seems he gets 1% fee for managing this account (around £85 a month) for basically feck all.
Is this about right? Do I need him? am I being had?
The question is does your adviser provide £1,000 a year worth of value? You don't say if he is advising you ond your other two pensions - is he aware of these?
If he is then you will most likely be paying him 1% on these pensions too.
What service levels are you getting? Does he review your attitude to, and capacity for, risk? Has he created a model portfolio for you or are you invested in a bog standard pension fund. Does he look at your whole financial position or just the pension?
Without this information it is impossible to tell whether you are getting value for this fee. It may be the case that the work being done for you across the board represents excellent value for the fee charged. But it may also be the case that the fee is very excessive for the work undertaken.
The other question is does having an adviser in place give you greater comfort or are you more than happy to take responsibility for everything on your own?
For a 1% annual fee I would expect your adviser to be covering all aspects of your finances, rather than just one pension in isolation.
He will say it's for his liability insurance. If he's not doing anything for the money or you don't want to change your pensions, terminate the contract and make sure the pension companies keep the fee in your pension. If you fund grows by 4% he's getting 25% of the growth. Om nom nom.
Badvok said:
Hi
Ive got a couple of pensions and one with Aviva which I don't currently contribute to is worth around £100k right now (I've had it for a long time)
About once a year I get a visit from a pension advisor and I normally just sign a few forms, listen to his banter and off he goes. Upon reading the forms this time around it seems he gets 1% fee for managing this account (around £85 a month) for basically feck all.
Is this about right? Do I need him? am I being had?
Are you sure it's 1% per annum purely for him, or is the total Pension cost 1% per annum, which covers ongoing investment management, administration, regulation and any commission due to the advisor etc?Ive got a couple of pensions and one with Aviva which I don't currently contribute to is worth around £100k right now (I've had it for a long time)
About once a year I get a visit from a pension advisor and I normally just sign a few forms, listen to his banter and off he goes. Upon reading the forms this time around it seems he gets 1% fee for managing this account (around £85 a month) for basically feck all.
Is this about right? Do I need him? am I being had?
A 1% fee purely for (non-existent) investment advice appears extortionate!
sidicks said:
Are you sure it's 1% per annum purely for him, or is the total Pension cost 1% per annum, which covers ongoing investment management, administration, regulation and any commission due to the advisor etc?
A 1% fee purely for (non-existent) investment advice appears extortionate!
Unfortunately that has become the new standard for advisers. When they used to get paid commission from the providers this was generally set at 0.5% a year.A 1% fee purely for (non-existent) investment advice appears extortionate!
Than the rules changes banning this commission and advisers had to agree a fee with their clients. They seem to have decided to double it to 1% in most cases.
The regulator doesn't care if it costs the client more, as long as the client knows what they are paying - but 1% sounds like such a tiny amount most people don't stop and think that over 25 years the adviser will take 25% of their money
Then you have their initial fees as well... There are some really good financial advisers out there who are worth their fees, but there are also a load who are just taking the micky with what they charge vs what they do.
Ozzie Osmond said:
I'm a huge fan of the low cost self-select SIPPs offered by people like Fidelity and Hargreaves Lansdown. Just pick some "mainstream" funds with a bit of common sense about risk. IIRC costs for under £250k invested should be less than 0.5% p.a.
That is a myth unfortunately. Hargreaves Lansdown charge 0.45% for its SIPP platform but you also have to pay the fund costs (typically 0.75%) so you are left with around 1.2% of specified annual costs when holding mainstream funds and that is before you factor in all of the additional ongoing fund costs.For example Jupiter Merlin Balanced (a mainstream balanced managed fund) has an annual charge of 0.75% - but the total annual cost of the fund is 1.64% so your total annual cost (HL + Jupiter + fund costs) would be 2.09% (£2,090 on a £100k pension) a year for no advice/structuring/rebalancing whatsoever
What about a managed option using passive investments?
Nutmeg has been going a few years and has a 0.75% annual charge, but again does not offer any advice or age/risk appropriate rebalancing so is a decent cheap and basic model (if you are happy to review your holding yourself regularly) - nutmeg.com
Fiver a Day in newer and has a 0.5% initial charge with a 0.82% "average" annual charge, but does have an adviser on hand for advice and rebalancing (I believe at 0.5% for each portfolio rebalance) - fiveraday.co.uk
Intelligent Money is very established and has a 1.5% one off initial with a fixed 0.87% annual charge (including unlimited ongoing rebalancing). It is also more sophisticated, rebalancing ongoing risk/reward using target dating based upon your end requirement (lump sum to withdraw or ongoing income) - intelligentmoney.com
I am sure there are others as well. Parmenion offers a similar no advice or age/risk appropiare rebalancing service, for example - parmenion.co.uk and Club Finance are the cheapest DIY platform you will ever find (whilst also being very good) and I never understand why they don't get more media coverage.
Sorry - that ended up being very long winded!
Whichever way you look at it the fund charge is the fund charge - there's no escaping that one.
I said the HL charge is under 0.5% and, yes, 0.45% is less than o.5%. This reduces to 0.25% for larger investors. (Compare Fidelity at 0.2%)
If the 1% which OP is paying to "Mr Financial adviser" is truly all inclusive I'll eat my hat. No, better than that I'll switch all of my investments to him.
I said the HL charge is under 0.5% and, yes, 0.45% is less than o.5%. This reduces to 0.25% for larger investors. (Compare Fidelity at 0.2%)
If the 1% which OP is paying to "Mr Financial adviser" is truly all inclusive I'll eat my hat. No, better than that I'll switch all of my investments to him.
Ozzie Osmond said:
Whichever way you look at it the fund charge is the fund charge - there's no escaping that one.
I said the HL charge is under 0.5% and, yes, 0.45% is less than o.5%. This reduces to 0.25% for larger investors. (Compare Fidelity at 0.2%)
If the 1% which OP is paying to "Mr Financial adviser" is truly all inclusive I'll eat my hat. No, better than that I'll switch all of my investments to him.
Sorry if there is any mistake, but I agreeing with you (and just adding the extra costs). As per my previous post I don't believe for as second that the adviser fee of 1% covers anything other than his 'advice'. I'm not sure what I said that made you think otherwise.I said the HL charge is under 0.5% and, yes, 0.45% is less than o.5%. This reduces to 0.25% for larger investors. (Compare Fidelity at 0.2%)
If the 1% which OP is paying to "Mr Financial adviser" is truly all inclusive I'll eat my hat. No, better than that I'll switch all of my investments to him.
Jockman said:
If we query a 1% IFA charge should we accept a 10 to 15% insurance broker charge?
No mate, it's apples and pears. A 10% - 15% commission/charge/mark up for providing something tangible (be that insurance, a house, a car, anything basically) is a world away from an embeded, ongoing annual charge simply because someone retains that product.A crude but useful analogy would be putting £100,000 into buying an Aston Martin (seeing as we both have one) from a dealership. We know they are putting their commission/charge/mark up onto the car but are happy because of the service/security/standards we expect to receive in return for this.
But would you be happy if they also charged you an extra £1,000 every year you owned the car to advise you if this was still the best car for your needs?
If in doing this they were providing a full service package that represtented great value and peace of mind you probably would be happy with this. But if they were not really doing anything for this money then you certainly wouldn't be happy.
Not the best analogy as I say, but you get what I mean.
Interactive investor charge about £160 a year, including some trades. They charge for additional trades though. Given most people don't trade their pension all that much, I think it's great value. Clearly there's a biting point on % fee vs absolute cost depending on how much you have invested. II have a huge range of funds too.
OP gets an annual physical visit during which a thorough analysis of his needs is undertaken as well as a future strategy devised. He gets charged 1% for this. If the pot was £20k then this would amount to £200. As it is the pot is £100k as noted.
How do we know the pot isn't growing at 6% pa? How do we know what was discussed? Did the IFA put a lot of the funds into safe areas just before equities crashed?
As a business owner the rate of commission I pay to all professionals is important. The rate my IFA charges is the lowest of them all, albeit I get tax relief on the others.
How do we know the pot isn't growing at 6% pa? How do we know what was discussed? Did the IFA put a lot of the funds into safe areas just before equities crashed?
As a business owner the rate of commission I pay to all professionals is important. The rate my IFA charges is the lowest of them all, albeit I get tax relief on the others.
JulianPH said:
Fiver a Day in newer and has a 0.5% initial charge with a 0.82% "average" annual charge, but does have an adviser on hand for advice and rebalancing (I believe at 0.5% for each portfolio rebalance) - fiveraday.co.uk
Not long winded at all, a great objective contribution. I charge 0.34% though, for ongoing advice and nothing for rebalancing portfolios. I expect that the overwhelming majority of our clients will be paying 0.82% per annum for an ongoing, all inclusive service. This includes advisory, discretionary fund management, all dealing, buying and selling, platform and reporting costs. If you don't subsequently need my advice, I'm quite clear about it.. you shouldn't pay for me. Turning off the advice tap saves you an extra 0.34%. That's a decision that will depend on the client. These days, there's something out there for everyone. I suppose the issue is one of sorting the wheat form the chaff and working out what you do and don't need.
JulianPH said:
...you are left with around 1.2% of specified annual costs when holding mainstream funds
I think that's about right as an "all in" figure for a small investor. What punters have to decide is whether they're happy to pay for fund managers and platforms to look after their money. Note that this version of "all in" will EXCLUDE any costs for personal financial advice. I think what GingeR is saying is that he charges 0.34% p.a. for ongoing financial advice and that a "full service" without advice would cost only 0.5% but in that case I don't see enough money to go round. No mention of initial advice though.IIRC since the unbundling of funds my own costs work out somewhere between 0.9 and 1% p.a. which is apparently about 2/3rds of what they were before the changes. I'm happy to accept those charges because I don't want to try to DIY all around the globe.
Edited by Ozzie Osmond on Saturday 26th March 14:16
Jockman said:
OP gets an annual physical visit during which a thorough analysis of his needs is undertaken as well as a future strategy devised.
In fairness, that is not what the OP said, he said the adviser asked him questions abount his salary and expenses.That is why I first tried to establish from the OP what exactly the adviser did do (as it could be of significant value). Obviously it is hard to offer an opinion/advice without all the facts to hand.
On a seperate note I see you sold your Aston - any particular reason?
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