Reply to: What does a pensions IFA do for an ongoing fee?

[Spoiler]

I had a SIPP a while back - when I thought I could do well with buying/holding high yield dividend shares.

But I was really bad at managing it. To the point where I didn't log in and check for ~2 years, missed a few corporate announcements. Cost me money ... my fault.

Transferred it to Nutmeg, moved a few sliders about. Job done.

[lukemg]

TBH...I'd rather cark it early and leave a booze addled corpse than live to a ripe old age on inadequate funds being abused in a home.

Yeah, everyone would but the lack of certainty of outcome means it probably makes sense to have fun on the way through but also stash a few bob as you go along.
That gives you some options about where/when/if to work. Worst case - you love work and keep going and everything else gets an upgrade.
Leave yourself no options and you are old Bob, the miserable b*****d who is still dragging his ar*e into work at 64 when he hates it and everyone in it or even worse can't get a job...

[ladymuck]

Ahh there is where you are wasting money you could spend on booze, holidays, loose men and shopping in future.

If you had a SIPP and put tracker funds in it to then just added to them monthly you would end up with more money in future.

TBH...I'd rather cark it early and leave a booze addled corpse than live to a ripe old age on inadequate funds being abused in a home.

[SueEllen]

My IFA phones me every six months ish (or when I tell him to call me back) and tells me whether he thinks the funds are doing ok or need shifting about. He usually nags me to pay more into it (I know I need to but...holidays, booze, loose men, the usual first world problems).

I know feck all about that stuff so I'm happy to pay half a percent to someone

Ahh there is where you are wasting money you could spend on booze, holidays, loose men and shopping in future.

If you had a SIPP and put tracker funds in it to then just added to them monthly you would end up with more money in future.

[ladymuck]

My IFA phones me every six months ish (or when I tell him to call me back) and tells me whether he thinks the funds are doing ok or need shifting about. He usually nags me to pay more into it (I know I need to but...holidays, booze, loose men, the usual first world problems).

I know feck all about that stuff so I'm happy to pay half a percent to someone

[IR35 Avoider]

I'm a gentler soul than Lukemg, so I couldn't be as blunt as he was. But I'm screaming similar things to myself in the privacy of my own head.

If you are paying approaching 2% on a balanced fund there's a real possibility that you are handing more than half the money you'll ever make to middle-men who are doing little or nothing for their money. (2% may not sound a lot in a year when the fund goes up 10%, but don't forget they will get 2% in the years when it goes down 10%, as well. Without calculating it, I'd guess a balanced fund is not going to make more than 3% to 4% over and above inflation, once you average out the returns.)

[DallasDad]

I'm right on the cusp of signing with an IFA for 0.5%. Really not sure which way to go.

If you really do have to use an IFA - moving a pension ? £30K for example or simply for the finacial planning aspect then did you ask for a one of fee instead/as well?
£Xk upfront for the 'advice' may sound a lot but could be thousands less than the drip drip of fees over many years.

@Lukemg - spot on

[lukemg]

Oh god, FFS people wise up !!!
OP - between your advisor and platform fees and no doubt expensive funds on those platforms, I will be amazed if you are even making a profit, almost ALL of the gains will be going to others NOT you. This will cost you thousands, maybe tens of depending on the amounts.
GET SIPP, GET Vanguard Lifestrategy fund 80, breathe easy.

0.5% does not sounds like much but I am telling you this could easily be 10% of your returns, add on fees from platforms/active funds and you can be giving up 50% easy.

There is only ONE good reason for getting an IFA involved in this, that is to stop you making stupid decisions like selling up when it kicks down 20, 30 or 40%. IF you can't trust yourself not to do this, you probably should not be investing in shares.

[Lockhouse]

I'm right on the cusp of signing with an IFA for 0.5%. Really not sure which way to go.

[Adlopa]

Hm, that's all pretty much what I figured. Given that the ongoing maintenance (and even the initial rejiggery) is so straightforward now, ongoing IFA fees do seem be largely pointless. Thanks, all.

[northernladuk]

Bear in mind your average user of this forum, by virtue of being here, is someone inclined to do a bit of their own research. Many can't be bothered and are happy to pay others to do it for them.

Absolutely this.

[Maslins]

I would guess just to keep an eye on it, discuss performance with you periodically, see whether you want to change tack (eg higher/lower risk), increase/decrease contributions, invest in something different etc.

I think a lot of IFAs are perhaps realising that "transactional work" is starting to dry up a little, as with increased digitisation it becomes easier for people to click the buttons to do it themselves. Many are therefore drifting to become sort of life income planners. Eg if you want to retire with an annual pension income of £X, how many more years do you need to work and contribute £Y to your pension before you can afford to do that? What if you wanted an annual pension of £1.5X? etc. Whether you feel that adds value to you or not is another matter.

Bear in mind your average user of this forum, by virtue of being here, is someone inclined to do a bit of their own research. Many can't be bothered and are happy to pay others to do it for them.

[BigRed]

He keeps his mailing list up to date and occasionally tries to get you to buy a new product to generate more income (for him).

As seasoned financial professionals they realise that asking for their fees upfront would elicit responses of how much? you've got to be kidding etc. whereas 0.5% sounds quite innocuous until you work out the value of it over a number of years. Add in the backhanders they get from the funds and they are on a nice little earner.

[barrydidit]

To line his pocket.

^ This

[SueEllen]

To line his pocket.