Reply to: IFA for Pension Fees

[lionheart79]

So - my understanding is that this charge is applied against any cash in the SIPP as opposed to a separate charge ? and so will come out of contributions you have made.
So if that contribution is from the company then they will take it from this.
This is no different from any dealing charges you incur (I think II has some included in the charge ?) which are a SIPP account expense and not personal to you.

I went ahead with II - they require card payment as part of the SIPP setup process, there was no getting away from that as this step occurs prior to due diligence on their part etc. I'm hoping that in future years they will extract the annual fee from the SIPP cash balance and will just take the hit this year.

[Lance]

So - my understanding is that this charge is applied against any cash in the SIPP as opposed to a separate charge ?

It depends.

HL suggest you leave a small amount of cash they can take their (HL) fees out of.
But also, depending on the funds you've invested in, there may be additional fees taken from the funds pot.

[lukemg]

So - my understanding is that this charge is applied against any cash in the SIPP as opposed to a separate charge ? and so will come out of contributions you have made.
So if that contribution is from the company then they will take it from this.
This is no different from any dealing charges you incur (I think II has some included in the charge ?) which are a SIPP account expense and not personal to you.

[lionheart79]

SIPP admin charges

slightly off topic [of IFAs] but related to pension fees:-

I am opening a SIPP with Interactive Investor as I already hold my ISA through them. The quarterly fee, which can be used towards two trades, is already shared with (and therefore accounted for) my ISA which makes the II SIPP the best value for me.

the only additional charge for the wrapper (not withstanding the integral fees on the individual securities invested in) is the annual SIPP admin fee, circa £100. Presumably this cannot be considered a company expense? It is paid up front and not out of the pension contribution, which was what I was hoping for.

[rectifier]

Go with iii, choose a vanguard lifestrategy or vanguard target retirement fund and just go away and forget about it.

Research quote in the Telegraph this week showed how paying just 1% extra in fees would cost you 16 years of retirement income by the time you retired.

Good figures. I'm really leaning towards this option of self management now, although I don't necessarily agree with totally forgetting about it. I use Vanguard Lifestrategy in a few other funds I have and whilst it's good now, past performance doesn't etc etc etc.

I spoke to another IFA who came up with more sensible charges, but as you've noted here, even charges of a couple of percent make an enormous difference.

[lukemg]

Already know the level of destruction fees can do, visible and invisible (funds transactions and expenses etc) but this is still shocking.
Looks a bit like my endowment stitch up from 1993, big chink of the first 3 years payments went in fees.
Even 1% is a huge amount when you might only be getting 4% over inflation.
It is madness, start reading (monevator.com) set up a SIPP and find out who Vanguard is.
It will be the best paid work you ever do...

[kaiser78]

Go with iii, choose a vanguard lifestrategy or vanguard target retirement fund and just go away and forget about it.

Research quote in the Telegraph this week showed how paying just 1% extra in fees would cost you 16 years of retirement income by the time you retired.

Thanks - interesting article.

[northernladuk]

This is for someone looking after your investments for you. It's not a million miles off what many contractor accountants charge per year .

Isn't that like comparing apples and oranges?

[Maslins]

Whilst I'm not vouching for this IFA or saying their fees are a bargain, just thought I'd add a bit of balance.

To those saying some IFAs charge 0.5%-1% whilst this guy apparently charges ~30%, you're comparing apples with oranges. The former are typically an annual recurring fee based on the total value of the funds they look after, and I'd imagine many would also have a minimum charge for modest value pots. The latter seems to be a one off fee.

Also, look at the amounts they're talking about, it's contributions of circa £500/month. So 30% of that is £150. Add that up over a year and it's £1,800. This is for someone looking after your investments for you. It's not a million miles off what many contractor accountants charge per year (including ourselves)...though I can't really comment on how the workload would compare.

Definitely not saying you should go with this person...but I don't think the fees are quite as outrageous as some people are suggesting.

[eek]

Nope. I talked it through with them on the phone, and the relevant bit of their terms is this:

Should you invest through regular premiums, our range of charges taken over 12 months are:
 Up to 50% of the first £250 of monthly premiums
 Up to 30% of the next £500 of monthly premiums and up to 10% over £750pm.
For a regular premium of £1,000 per month, this would equate to £3,600 (12 x £1,000 x 0.3)

It's a flat charge of 4% if you invest a lump sum, but given that most pension contributions will surely be a regular premium, then 30% seems to be the charge.

Louis Bacon doesn't charge 30%!

Crazy.

Looks about right for an IFA setting up a regular payment pension plan 20 years ago. I told them where to go and went for one off payments instead.

[dingdong]

Go with iii, choose a vanguard lifestrategy or vanguard target retirement fund and just go away and forget about it.

Research quote in the Telegraph this week showed how paying just 1% extra in fees would cost you 16 years of retirement income by the time you retired.

[Jessica@WhiteFieldTax]

Are you sure its not 30% of the first months payment rather than each months payment?

eg paying £250 a month in, is he charge (a) 30% x 250 x1 or (b) 30% x 250 x12?

(a) would make more sense

[northernladuk]

Or ask them for possible scenarios and what you will make/lose. I can't believe they can come up with one where you actually make any money.

[SueEllen]

Nope. I talked it through with them on the phone, and the relevant bit of their terms is this:

Should you invest through regular premiums, our range of charges taken over 12 months are:
 Up to 50% of the first £250 of monthly premiums
 Up to 30% of the next £500 of monthly premiums and up to 10% over £750pm.
For a regular premium of £1,000 per month, this would equate to £3,600 (12 x £1,000 x 0.3)

It's a flat charge of 4% if you invest a lump sum, but given that most pension contributions will surely be a regular premium, then 30% seems to be the charge.

Louis Bacon doesn't charge 30%!

Crazy.

Do you have it in writing? Get them to at least email you or provide their terms in writing so you aren't mistaken.

If they match what was said on the phone then report them as already suggested.

[kaiser78]

Nope. I talked it through with them on the phone, and the relevant bit of their terms is this:

Should you invest through regular premiums, our range of charges taken over 12 months are:
 Up to 50% of the first £250 of monthly premiums
 Up to 30% of the next £500 of monthly premiums and up to 10% over £750pm.
For a regular premium of £1,000 per month, this would equate to £3,600 (12 x £1,000 x 0.3)

It's a flat charge of 4% if you invest a lump sum, but given that most pension contributions will surely be a regular premium, then 30% seems to be the charge.

Louis Bacon doesn't charge 30%!

Crazy.

Defo look elsewhere, and report them to the FCA for fraud/extortion/improper practises (whatever you want to call it)...