Private Pension - which?

[GSXRMovistar]

Talk to an IFA, I've had two private pensions running for the the past couple of years. One managed by myself (Aviva) and one managed via an IFA, the IFA managed pension is producing much better returns and currently well worth the IFA fees.

 

[smr]

Talk to an IFA, I've had two private pensions running for the the past couple of years. One managed by myself (Aviva) and one managed via an IFA, the IFA managed pension is producing much better returns and currently well worth the IFA fees.

I was thinking that if I spoke to an IFA they'd set everything everything up for me in terms of the best personal pension to use and that'd be it ? Why does it need to be managed by an IFA once it's been set up?

 

[M1k3H]

T

I was thinking that if I spoke to an IFA they'd set everything everything up for me in terms of the best personal pension to use and that'd be it ? Why does it need to be managed by an IFA once it's been set up?

They could be moving the funds based on their performance

 

[GSXRMovistar]

I was thinking that if I spoke to an IFA they'd set everything everything up for me in terms of the best personal pension to use and that'd be it ? Why does it need to be managed by an IFA once it's been set up?

As above, you want them actively managing your pension moving funds based on performance. Assuming you are fairly young you can afford to invest in higher risk funds to build up a pension pot, then once you have a substantial amount it makes sense to lower the risk, move it into a safer lower return fund and let it sit there.

In general an IFA may charge you 2-3% of the original investment amount for doing the setup and initial transfers, then ongoing fees of 1-2% for managing the fund each year. So assuming they can give you a return at least 3% more than using a standard high street product it's worth it.

 

[Narj]

I'd recommend seeing an IFA too. Fees may be more but better performance can negate then altogether.

 

[smr]

Sounds like it may be wise. Any advice on how to find a good IFA?

 

[Jokester]

My two main pensions are with Legal and General and Scottish Widows.

Both appear to give me similar and acceptable returns.

 

[GSXRMovistar]

My two main pensions are with Legal and General and Scottish Widows.

Both appear to give me similar and acceptable returns.

Purely out of interest, and only if you don't mind sharing, what sort of annual percentage return are you seeing on those?

 

[The_Abyss]

I was thinking that if I spoke to an IFA they'd set everything everything up for me in terms of the best personal pension to use and that'd be it ? Why does it need to be managed by an IFA once it's been set up?

It doesn't. Once set up you can run it yourself and discharge your relationship with the adviser, if you want.

Sounds like it may be wise. Any advice on how to find a good IFA?

https://www.vouchedfor.co.uk

https://www.unbiased.co.uk

http://www.thepfs.org/membership/findanadviser/

 

[Moley]

Read Tim Hales 'Smarter Investing' and don't waste money on actively managed funds. You can do better with a SIPP invested in global index trackers.

 

[dowie]

In general an IFA may charge you 2-3% of the original investment amount for doing the setup and initial transfers, then ongoing fees of 1-2% for managing the fund each year. So assuming they can give you a return at least 3% more than using a standard high street product it's worth it.

so probably not worth it in general tbh.. those % fees add up and there will be further % fees charged by the people managing the products the IFA is investing your funds into

 

[The_Abyss]

If you find an IFA that's selling superior investment performance then run a mile in the opposite direction.

 

[GSXRMovistar]

so probably not worth it in general tbh.. those % fees add up and there will be further % fees charged by the people managing the products the IFA is investing your funds into

If the overall return (minus fees) is greater than what you were obtaining before then of course its worth it.

 

[dowie]

If the overall return (minus fees) is greater than what you were obtaining before then of course its worth it.

that's a big 'if' and in reality is rather unlikely that they're offering much value there - see the statement from @The_Abyss above too

 

[GSXRMovistar]

that's a big 'if' and in reality is rather unlikely that they're offering much value there - see the statement from @The_Abyss above too

Well everyone's preferences are different, but for me my fund being actively managed by an IFA is returning much better returns than both a passive fund I had and one I was actively managing myself, so yeah to me it offers value.

 

[dowie]

Well everyone's preferences are different, but for me my fund being actively managed by an IFA is returning much better returns than both a passive fund I had and one I was actively managing myself, so yeah to me it offers value.

maybe... but even then - supposing we accept as true the idea that you're getting additional value from the IFAs actively managing your pension, moving money between funds and changing you an apparent 2-3% for the privilege - it would still be better surely to not invest most of your money with them but simply shadow them with the bulk of your funds in the one you manage yourself... someone skimming 1-2% off your capital each year in addition to grabbing 2-3% up front is a big hit and it will compound over the decades you have the pension

 

[Irish_Tom]

Just like compound interest has a big impact on building your pot, ongoing fees can reduce the potential pot size over the long term. Not only that, the high-fee managed fund(s) have to continually outperform their fees to make it worthwhile, something very few actually manage.

Through my SIPP I’m paying 0.49% in fees, for both the platform and the fund, and I’m looking to reduce that.

 

[Jokester]

Purely out of interest, and only if you don't mind sharing, what sort of annual percentage return are you seeing on those?

L&G average is a smidge over 10% a year (0% fee) for the last 7 years, Scottish Widows is my current pension plan that I pay into and looks to be getting something similar with a 0.5% fee, in the past 6 years I've been paying into it.

My best performing pension though is my pension from the first company that I worked for. It's average yearly return for the past 10 years is over 14% a year. Just a shame I didn't pay much into it at the time!

 

[Narj]

There is a difference between seeing a financial adviser and investment in actively managed funds. Some setups will re-balance rather than being fully active which can be a compromise.

Most IFAs will do a free initial consultation. Definitely worth it in my experience. We all have different attitudes to risk so it's worth at least having that initial chat.

 

[The_Abyss]

Well everyone's preferences are different, but for me my fund being actively managed by an IFA is returning much better returns than both a passive fund I had and one I was actively managing myself, so yeah to me it offers value.

Is the money actively managed though, or is the adviser selecting funds and then periodically rebalancing the portfolio?