Do I need an IFA to manage my pensions?

[giggity]

So I hear there is a lot of IFAs being used to manage pensions.

I’m wondering if there is any value in doing so? If so I really need a recommendation and an idea of how IFAs charge and what they do.

I have two pensions (one from recently concluded employment) and one from my current employment.

Both of all pension pots / investment builder things are on the Do It for me bit where everything is just set as default. Probably means my pension and investment fund options are not doing as well as they could be.

Thoughts? What do most on here do?

No I’m not a director of on 150K plus or with huge pensions but I would like to make my pensions work for me.

[chip*]

Why do you feel your existing pensions are "not doing as well as they could be"? Have you checked your pensions (assuming DC types) and compared against same market / risk rated funds?

It's also worth reading the link below which explains the types of financial advisors on the market. If you just want a financial advisor to "manage" your pension fund, you can find them anywhere.....

https://frazerjames.co.uk/financial-advisor-financ...

[bitchstewie]

If you're with one of the big pension providers (Royal London etc.) chances are you're in a governed and "middle of the road" default option that has an allocation that changes as you reach your retirement date.

So it won't be super safe nor will it be super risky.

Difficult to say without you giving out numbers or details of the fund(s) you're in but on the IFA point you could well be in the "advice gap" where you don't have enough for an IFA to consider you to be worthwhile as a customer.

That isn't meant to sound rude it's a known issue

[Simpo Two]

chip* said:

Why do you feel your existing pensions are "not doing as well as they could be"? Have you checked your pensions (assuming DC types) and compared against same market / risk rated funds?

Yep. First I would get the figures on how your pension funds have performed, and all the costs and charges. One thing an IFA will do for sure is cost you money; whether they make you more than they cost you is the $6M dollar question. You'll still pay for them even if your funds fall.

I'd suggest there is ample knowledge on this forum to de-mystify the subject and enable you to reach a conclusion you're happy with.

Edited by Simpo Two on Wednesday 17th November 18:59

[Jambo85]

If it helps, a financial adviser I spoke to recently said best to get your pension pot to >£250k before the fees of getting someone to actively manage it start to make make sense.

[cheeky_chops]

giggity said:

So I hear there is a lot of IFAs being used to manage pensions.

I’m wondering if there is any value in doing so? If so I really need a recommendation and an idea of how IFAs charge and what they do.

Its not just pensions. My experience is when i met my OH, she paid £75pm for IFA. They looks after both of us for same fee now. We get a yearly 2-4hr meeting with our IFA (there are 3) and they crunch all the numbers and have software to do some great charting/predictions on net worth given current and future earning, savings/spendings/kids/uni etc. Can you really retire at 58 and draw £30k pa?? (He says he gives lots of people really bad news here....) Is a buy to let worth it? Other things like what if one of us died? Whats a sensible cash burn down rate to 90yo? Good example is i have 2 kids with a ex, if i died tomorrow, half would go to them so OH would of had to sell house so we took out a life insurance policy to cover that. TBH, the best thing is they do all the paperwork and running round, great when you have 8 old work pensions that need consolidating!!

Ive put 50% of my pension with them - the other 50% is thru a self managed SIPP thru ii.co.uk which costs £240pa. What put me off the whole 100% is they have access to pretty much the same funds as me but charge a intro fee and yearly mgmt fee - a few % mounts up on £200k pretty quick. Will review in a couple of years and see how im doing

[PistonHead007]

Advisers don't manage pension funds, fund managers do.
Fund managers don't advise clients, advisers do.

Sounds a bit cryptic? Basically, the point is a lot of people think advisers and ongoing advice is about managing your investments when really it's more about planning. There is usually an investment recommendation mixed in with that but day to day advisers aren't managing your investments.

What you most likely need is to be in a set of investments that have enough management inherent within them that you can leave it alone. If you need help choosing those investments then one off advice is a good idea. The advice process will consider your views on investment risk and also look at contribution levels versus your own expectations to see if you should be adjusting them (where feasible). Hint: the minimum auto-enrolment amounts are going to give you a pretty rubbish retirement on their own.

Where your ongoing position is not complicated and doesn't change much/at all you probably don't need ongoing advice. Just go and seek more advice when needed.

Most workplace schemes have a reasonable range of funds, although the default is often not the most suitable choice when you stop and look at your own requirements. Many of the default fund choices these days include a large part in passive tracker funds, so aside from the asset allocation set by the fund the performance should be mostly in line with what the world is doing. Some active funds are genuinely adept at returning more than replicating an index like the FTSE 100 but they are in the minority.

It sounds to me like the OP would benefit from a one off piece of advice to get some personalised guidance about investment risk, then either pick the best of what's available in your existing workplace scheme or if necessary transfer elsewhere for more choice. You should be able to get that type of advice for circa 1% to 2% although there may be a minimum charge like £495 for example.

Edited by PistonHead007 on Wednesday 17th November 18:30

[roger.mellie]

bhstewie said:

If you're with one of the big pension providers (Royal London etc.) chances are you're in a governed and "middle of the road" default option that has an allocation that changes as you reach your retirement date.

So it won't be super safe nor will it be super risky.

Difficult to say without you giving out numbers or details of the fund(s) you're in but on the IFA point you could well be in the "advice gap" where you don't have enough for an IFA to consider you to be worthwhile as a customer.

That isn't meant to sound rude it's a known issue

Yip. We have a FA in work who provides pension advice and other advice services for any employee who wants to avail of it including the usual risk assessment type stuff others are mentioning. Now that I consider it a normal part of life I do wonder why the practice is not more common. Employees are happy and the FA gets the chance to make a few quid on various product sales. Admittedly on the latter I can sometimes get fed up with the obvious upsell attempts but can’t criticise someone for doing their job.

Edited by roger.mellie on Wednesday 17th November 20:18

[vindaloo79]

Maybe you could sign up for a minimum account on investors chronicle and read all the back dated portfolio advice reviews where they assess the needs and assets and make recommendations to get a feel for what they suggest for variety of folks with differing circumstances

https://www.investorschronicle.co.uk/ideas/2021/09...

Edited by vindaloo79 on Thursday 18th November 18:48

[Carbon Sasquatch]

PistonHead007 said:

Where your ongoing position is not complicated and doesn't change much/at all you probably don't need ongoing advice. Just go and seek more advice when needed.

This every day of the week for me

You need some advice on accumulation - understand ing your own risk profile, how to diversify etc.
Then just leave it well alone for years and years and years
Then some more advice when you're close to retirement.

There are plenty of case studies out there that show that the more you adjust, the worse off you are likely to be. Seriously, you end up trading out at the wrong points & chasing last years performers.

For other things like extra life insurance, there's many an IFA who will review your circumstances for free & see what products they can sell you.

I've never seen the point in an ongoing retainer for someone to print me off some pretty graphs of how well things are going due to their genius, or roll out the story of how the whole market is down, but without their genius things would be looking a lot worse.

Why pay a monthly fee, then think up questions to ask. I do the reverse, think up the questions, try to answer them myself - and then if necessary pay an expert to either answer it for me or validate my thinking.
£75/month may be a bit like paying by direct debit I suppose. I'm spending £2-3k right now, but that's the first advice I've paid for in 20+ years. It's very specific advice and from a specialist in that area rather than a generic IFA and I can understand the work he is putting in to justify that fee.

Your money, your choice, but be clear on the value you are getting.

[giggity]

Some very good replies and feedback here.

The pension isn’t anything amazing. I only have two pensions.

Spanning a total of around 8-9 years with.

The first few years of my employment I didn’t opt into the pension scheme.

I’m also no where near close to my retirement yet.

If I was to use an IFA it wouldn’t be for ongoing advice but only a one off. But it’s not for right now I think.

[xeny]

Carbon Sasquatch said:

You need some advice on accumulation - understand ing your own risk profile,.

I think this is nigh impossible to judge until you've sat through the market doing something exciting. I know someone who according to every risk appetite metric is risk averse, and she spent last March buying equities like it was going out of fashion.

[Carbon Sasquatch]

xeny said:

I think this is nigh impossible to judge until you've sat through the market doing something exciting. I know someone who according to every risk appetite metric is risk averse, and she spent last March buying equities like it was going out of fashion.

Depends what you mean buy 'buying'
It's a pensions thread, so for most people it's regular monthly contributions.
Whilst buying equities last march, was clearly good in hindsight, for most people, just sticking with the plan is the best advice. Selling out of one asset class & into another will fail more times than it succeeds - and you're into trading rather than investing.
My point was more around a few periodic advice/decision points than multiple times per year.

[bitchstewie]

giggity said:

Some very good replies and feedback here.

The pension isn’t anything amazing. I only have two pensions.

Spanning a total of around 8-9 years with.

The first few years of my employment I didn’t opt into the pension scheme.

I’m also no where near close to my retirement yet.

If I was to use an IFA it wouldn’t be for ongoing advice but only a one off. But it’s not for right now I think.

Check with your employer as some may have an IFA retained by the company when people need advice.

There's a horrific statistic that the best long term investors tend to be people who die or forget they have investments so they don't fiddle

Take a look and report back but chances are the default fund(s) won't be terrible - won't make you super rich but won't make you poor either as pensions tend to be fairly conservatively run.

[Simpo Two]

xeny said:

I think this is nigh impossible to judge until you've sat through the market doing something exciting. I know someone who according to every risk appetite metric is risk averse, and she spent last March buying equities like it was going out of fashion.

Though if you're confident something is a sure-fire winner (even if it may not be), does it seem risky to you? Think of the PH Recovery Portfolio - technically high risk but in reality, you couldn't lose because of the market at the time.