Reply to: Setting up a workplace pension without excessive costs

[Ebenezer]

There are a couple of other considerations here.
Firstly, HL don't charge for trading in funds so if you're investing in those and do it fairly regularly i.e. more than once a month then that can add up on other platforms that charge you per trade.
Also, HL provides a discount on many funds - somewhere around 0.2% which is reasonably significant against a 1% standard charge. Other providers don't do this.
Note that there isn't usually a discount on cheap trackers so it depends what you're invested in.

So, the calculation can be a bit more complex depending on what you invest in and how often.

It's possible that YANCOTBAC if dealing charges are an issue though; on any reasonable deal size it's probably better to suck up the £1.50/£5/£10/whatever in exchange for a fixed (or capped) annual platform charge.

Once again, Compare the UK’s cheapest online brokers is recommended reading.

[Smartie]

I think you need to look a bit deeper than regurgitating HL's party line, to be honest. It isn't so simple. HL are fine as long as you don't invest in funds. Shares have a capped fee, so HL would be a good option. If you do invest in funds, and many of us do, then HL have your eyes out for the privilege.

I really don't care what platform people want to use. Simply offering a bit more information.
Example - Jupiter Asian Income, Interactive Investor 0.98% ongoing charge, HL 0.69%
Cost to buy funds HL £0, cost to buy on III, free (included) a few times a year then £10 per trade (reduced if you trade several times a month).
So, the platform fee is not the only consideration.

Personally I'll be moving a good chunk of my funds to a cheaper provider because you're right, HL is generally more expensive. The service is good though and the platform is pretty nice.
Probably start with the trackers and then decide what to do with the more active funds later.

[Fred Bloggs]

There are a couple of other considerations here.
Firstly, HL don't charge for trading in funds so if you're investing in those and do it fairly regularly i.e. more than once a month then that can add up on other platforms that charge you per trade.
Also, HL provides a discount on many funds - somewhere around 0.2% which is reasonably significant against a 1% standard charge. Other providers don't do this.
Note that there isn't usually a discount on cheap trackers so it depends what you're invested in.

So, the calculation can be a bit more complex depending on what you invest in and how often.

I think you need to look a bit deeper than regurgitating HL's party line, to be honest. It isn't so simple. HL are fine as long as you don't invest in funds. Shares have a capped fee, so HL would be a good option. If you do invest in funds, and many of us do, then HL have your eyes out for the privilege.

[Smartie]

Other considerations

There are a couple of other considerations here.
Firstly, HL don't charge for trading in funds so if you're investing in those and do it fairly regularly i.e. more than once a month then that can add up on other platforms that charge you per trade.
Also, HL provides a discount on many funds - somewhere around 0.2% which is reasonably significant against a 1% standard charge. Other providers don't do this.
Note that there isn't usually a discount on cheap trackers so it depends what you're invested in.

So, the calculation can be a bit more complex depending on what you invest in and how often.

[Fred Bloggs]

I suspect Aegon's "corporate entertainment" budget is rather more generous than Cavendish Online's!

Regarding Hargreaves Lansdown, yes their charges are a bit excessive - they're roughly the same as the IPSE scheme but with a wider choice of funds - but I have heard it said that there are customer service arguments in favour of using them over the lowest of the low-cost brokers, viz. iWeb, Cavendish, etc. I'm not a customer, but I know quite a few otherwise reasonable people who are.

Also, if you don't have much money invested, then the difference between 0.45% and 0.25% isn't particularly important; when you get to the level where 0.2% would pay for a dirty weekend in Rhyl you might want to re-evaulate whether you're on the right platform. My criteria for switching, back when I did this, was that the cost of the switch needed to be less than the first year's cost saving in platform charges.

Absolutely my take on it too. I also suspect that none of the low cost platforms will pay kick backs for referrals either. We'll never know because that kind of information is commercially sensitive, apparently. So when paying members ask they are told they are not going to find out.

[Ebenezer]

Hmm... OK.

So if it's more expensive than anything else on the market, it makes you wonder why IPSE spent several months with Aegon designing a simple low cost solution specifically for freelance contractors, doesn't it... (And before some troll leaps up, IPSE don't make money on it at all, it's just another element in the membership package)

I neither know nor care, since my pensions are all sorted out. I only offered a suggestion. If someone wants to look further into the offer then I suggest they speak to IPSE.

I suspect Aegon's "corporate entertainment" budget is rather more generous than Cavendish Online's!

Regarding Hargreaves Lansdown, yes their charges are a bit excessive - they're roughly the same as the IPSE scheme but with a wider choice of funds - but I have heard it said that there are customer service arguments in favour of using them over the lowest of the low-cost brokers, viz. iWeb, Cavendish, etc. I'm not a customer, but I know quite a few otherwise reasonable people who are.

Also, if you don't have much money invested, then the difference between 0.45% and 0.25% isn't particularly important; when you get to the level where 0.2% would pay for a dirty weekend in Rhyl you might want to re-evaulate whether you're on the right platform. My criteria for switching, back when I did this, was that the cost of the switch needed to be less than the first year's cost saving in platform charges.

[kaiser78]

I have decided to set up a workplace pension to take advtantage of the associated pension tax breaks. My Accountants passed me onto their recommended Financial Advisor but his charges seem very excessive (4.5% of all money invested with them). All I want is a simple set up of the pension scheme so the company can start making contributions, potentially just with the pension provider I have already pre-chosen.

Can anyone advise how this can be done cheaply without incurring massive costs to a FA? Any recommendations?

4.5% is very excessive. I pay 1% for my IFA to look after my investment/pension affairs which takes the hassle away from me. He is pretty proactive and does a good job for me. However I am in discussions to reduce this to <1%...

[sludgesurfer]

I posted this link in another forum about the same topic.

I'd encourage you to visit. Its the best resource I've found on investment platform cost comparison.

Compare the UK’s cheapest online brokers

[l35kee]

Vanguard do not do a SIPP, yet.

Sorry wires crossed, they do an ISA now. I think a SIPP is coming this year.

[Fred Bloggs]

Had no experience or knowledge up until a few months ago, so went with a known name that has a lot of information ready for me to absorb. Well aware (now) it's cheaper to through Vanguard direct, once I get a full grip on this side of my finances I'll be considering the best option for what I intend to do with my money.

Vanguard do not do a SIPP, yet.

[l35kee]

So, you pay HL 0.45% to hold your low cost Vanguard fund for you? I'd have a think about that for a second if I were you.

Had no experience or knowledge up until a few months ago, so went with a known name that has a lot of information ready for me to absorb. Well aware (now) it's cheaper to through Vanguard direct, once I get a full grip on this side of my finances I'll be considering the best option for what I intend to do with my money.

[malvolio]

And the others suggested on here are only 0.25% and if you only want to invest in a passive fund there's no other charges besides the fund charge (which you'd still pay through the IPSE pension too).

Hmm... OK.

So if it's more expensive than anything else on the market, it makes you wonder why IPSE spent several months with Aegon designing a simple low cost solution specifically for freelance contractors, doesn't it... (And before some troll leaps up, IPSE don't make money on it at all, it's just another element in the membership package)

I neither know nor care, since my pensions are all sorted out. I only offered a suggestion. If someone wants to look further into the offer then I suggest they speak to IPSE.

[Fred Bloggs]

This is pretty much what I've done, but with Hargraeves Lansdown as teh platform. Set up a SIPP, took minutes online. Then downloaded the form to allow for direct Company payments to be set up. Now I just pop online and my LTD can make payments directly.

Pick a Vanguard Lifestrategy fund and let it sit there is probably the simplest advice. As ever it's good to read up, recommend this over an IFA https://www.amazon.co.uk/Smarter-Inv...dp/0273785370/

So, you pay HL 0.45% to hold your low cost Vanguard fund for you? I'd have a think about that for a second if I were you.

[TheCyclingProgrammer]

I suggest you look into it properly. It's only 0.43%, no other commissions or hidden charges.

And the others suggested on here are only 0.25% and if you only want to invest in a passive fund there's no other charges besides the fund charge (which you'd still pay through the IPSE pension too).

[l35kee]

I’ve just finally got around to opening a SIPP. Cavendish does seem like the cheapest option for a new portfolio. Only 0.25% platform fee. I’m putting all of mine into a Vanguard Lifestrategy 80. That will do me until it gets to 6 figures at least, at which point I will review and get professional advice if I think I need it.

This is pretty much what I've done, but with Hargraeves Lansdown as teh platform. Set up a SIPP, took minutes online. Then downloaded the form to allow for direct Company payments to be set up. Now I just pop online and my LTD can make payments directly.

Pick a Vanguard Lifestrategy fund and let it sit there is probably the simplest advice. As ever it's good to read up, recommend this over an IFA https://www.amazon.co.uk/Smarter-Inv...dp/0273785370/