Pensions

TheBigBean

Does anyone have a view on interative investor? Their SIPP seems very cheap in comparison with all other options (it's less than half of Vanguard's capped £375 pa). This makes me suspicious.

wakemalcolm

I have my SIPP with them and they're kosher. They're owned by ABRDN who used to be the investment arm of Standard Life.
It's cheap because it's simple and the online experience is a bit shonky compared to, say, Hargreaves Lansdown.
I'm only in the accumulation phase mind. Might transfer if the experience of getting them to make payments is poor.

surrey_commuter

TheBigBean said:

Does anyone have a view on interative investor? Their SIPP seems very cheap in comparison with all other options (it's less than half of Vanguard's capped £375 pa). This makes me suspicious.

They have been around a long time. The cap will not apply to he vast majority of people, so is a cheap marketing gimmick.

I have a legacy acct with iShares and whilst most money is in Vanguard I do like the idea of being able to buy other stuff so am considering II as a test drive for future switching and AJ Bell as a pricier option but more bells and whistles

TheBigBean

surrey_commuter said:

TheBigBean said:

Does anyone have a view on interative investor? Their SIPP seems very cheap in comparison with all other options (it's less than half of Vanguard's capped £375 pa). This makes me suspicious.

They have been around a long time. The cap will not apply to he vast majority of people, so is a cheap marketing gimmick.

I have a legacy acct with iShares and whilst most money is in Vanguard I do like the idea of being able to buy other stuff so am considering II as a test drive for future switching and AJ Bell as a pricier option but more bells and whistles

I'm thinking Vanguard funds through ii, which is cheaper than Vanguard funds through Vanguard and also adds more options.

My concern is that they suddenly increase the fee. I feel this is more likely than a fund increasing a fee which is expressed as a percentage.

Pross

I ended up going with AJ Bell in the end as Vanguard didn't seem to allow my employer to pay contributions directly into my account. It was all much easier than I'd feared when starting this thread. I had visions of having to buy and sell shares directly but it doesn't seem much different from a company pension other than getting to choose which fund to go for (with about 15 years to go I've taken a moderately adventurous option for now).

wakemalcolm

This is a fairly comprehensive sweep of the market if you've got a spare hour or so. The cost differences can amount to 1000s a year so I'd recommend it as a decent investment of your time.

https://monevator.com/compare-uk-cheapest-online-brokers/

They update the info quarterly, if I remember correctly.

Dorset_Boy

Got to love these DIY investors

surrey_commuter

Dorset_Boy said:

Got to love these DIY investors

Go on I will bite and if we all keep it civilised I may even learn something.

I would describe my financial knowledge as more than most (but less than many) and do not believe a wealth manager would be able to outperform their fee.

I would be happy to pay somebody by the hour for taxation advice. I appreciate you have skin in he game but would you suggest an IFA or accountant?

wakemalcolm

Dorset_Boy said:

Got to love these DIY investors

How much is your fund management and advice costing you each year, Dorset_Boy?

TheBigBean

wakemalcolm said:

Dorset_Boy said:

Got to love these DIY investors

How much is your fund management and advice costing you each year, Dorset_Boy?

It's his job!

wakemalcolm

TheBigBean said:

wakemalcolm said:

Dorset_Boy said:

Got to love these DIY investors

How much is your fund management and advice costing you each year, Dorset_Boy?

It's his job!

Excellent! Which bit: advice, fund management or kool-aid manufacturing?

Dorset_Boy

Do you understand risk?
Do you understaand the level and types of risk in your DIY portfolio?
Do you know how to construct a portfolio?
Do you understand the benefits of regular rebalancing?
Do you understand when trackers are / are not appropriate?
Do you understand when and in what way to amend asset allocations to reflect market conditions?
Do you have any idea of what level of withdrawal is sustainable over the longer term?
How do you research the 4,000+ funds?
Can you speak with the fund managers?
Do you understand the changes needed when moving from accumulation to decumulation?
Do you know how to set up any withdrawals to be as tax efficient as possible?

TheBigBean

surrey_commuter said:

Dorset_Boy said:

Got to love these DIY investors

Go on I will bite and if we all keep it civilised I may even learn something.

I would describe my financial knowledge as more than most (but less than many) and do not believe a wealth manager would be able to outperform their fee.

I would be happy to pay somebody by the hour for taxation advice. I appreciate you have skin in he game but would you suggest an IFA or accountant?

The argument in favour is that an IFA will sit down and take into account all of your assets (and liabilities) as well as your future plans and come up with something that matches your willingness to take risk.

For example, you might have a large house that is great for the family, but that you would sell in retirement. How does that feature in your plans?

All of that said, I do mostly agree with you which is why I was looking at a very low cost SIPP.

wakemalcolm

Dorset_Boy said:

Do you understand risk?
Do you understaand the level and types of risk in your DIY portfolio?
Do you know how to construct a portfolio?
Do you understand the benefits of regular rebalancing?
Do you understand when trackers are / are not appropriate?
Do you understand when and in what way to amend asset allocations to reflect market conditions?
Do you have any idea of what level of withdrawal is sustainable over the longer term?
How do you research the 4,000+ funds?
Can you speak with the fund managers?
Do you understand the changes needed when moving from accumulation to decumulation?
Do you know how to set up any withdrawals to be as tax efficient as possible?

Yes to all the above apart from speaking to fund managers.

I don't think they should be wasting time talking to me, they should use it to consider whether their additional fees provide consistent above median and benchmark performance.

Advisers have their place at the more esoteric end of financial planning. Joe Punter like me would be better served by decent financial education (preferably starting at school).

The current regulatory framework just doesn't make it good value for the sub 2 comma crowd.

Dorset_Boy

You are able to properly research the 4,000+ funds on your own?
Really?

And with respect, I suspect the real answer to many of those questions is actually no. You only think you do.

However carry on.

I do agree that some financial education would be hugely beneficial and that the regulatory framework is excessive , but have no idea what the 'sub 2 comma crowd' is.

Pross

wakemalcolm said:

Dorset_Boy said:

Do you understand risk?
Do you understaand the level and types of risk in your DIY portfolio?
Do you know how to construct a portfolio?
Do you understand the benefits of regular rebalancing?
Do you understand when trackers are / are not appropriate?
Do you understand when and in what way to amend asset allocations to reflect market conditions?
Do you have any idea of what level of withdrawal is sustainable over the longer term?
How do you research the 4,000+ funds?
Can you speak with the fund managers?
Do you understand the changes needed when moving from accumulation to decumulation?
Do you know how to set up any withdrawals to be as tax efficient as possible?

Yes to all the above apart from speaking to fund managers.

How can the answer to all the others be 'yes' when one of the questions started with 'how'? Sorry for the pedantry

pangolin

Dorset_Boy said:

You are able to properly research the 4,000+ funds on your own?
Really?

And with respect, I suspect the real answer to many of those questions is actually no. You only think you do.

However carry on.

I do agree that some financial education would be hugely beneficial and that the regulatory framework is excessive , but have no idea what the 'sub 2 comma crowd' is.

1,000,000

shirley_basso

Dorset_Boy said:

You are able to properly research the 4,000+ funds on your own?
Really?

And with respect, I suspect the real answer to many of those questions is actually no. You only think you do.

However carry on.

I do agree that some financial education would be hugely beneficial and that the regulatory framework is excessive , but have no idea what the 'sub 2 comma crowd' is.

Sub £1,000,000 - hence the 2 commas (is my guess)

Dorset_Boy

To suggest there is no value in advice for those with less than £1m in assets is incredibly stupid!

pangolin

Dorset_Boy said:

To suggest there is no value in advice for those with less than £1m in assets is incredibly stupid!

It does cost a larger % of your assets to get that advice though, and I think people are right to question the value of managed funds + financial advice.

TheBigBean

Dorset_Boy said:

You are able to properly research the 4,000+ funds on your own?
Really?

And with respect, I suspect the real answer to many of those questions is actually no. You only think you do.

However carry on.

I do agree that some financial education would be hugely beneficial and that the regulatory framework is excessive , but have no idea what the 'sub 2 comma crowd' is.

Do you have any views on the question I asked (interactive investor)? That would be more helpful than judging my expertise on other questions.

Presumably "sub 2 comma crowd" means having less than £1,000,000

super_davo

The real question is whether an IFA is worth their fee over what you can do yourself via internet research.

I think the answer is an undoubted yes at key times e.g. initial pension start up, last few years before retirement, and every few years in retirement, for taxation advice alone.

I'm less convinced about researching and picking through the 4000+ funds on the market though. In reality, the overwhelming majority of investments at any one time are made in a tiny subset of that (30 funds max). Looking at just those makes the research much easier. And to actually get all the good value an IFA can add that Dorset Boy mentioned, you need to keep going back for reviews, which costs. I don't doubt you'll get a better outcome with the IFA advice, the question is whether that outcome is sufficiently better than the cost of the fee. And just simply doing the maths, that's not likely to be the case for people with pension pots under a certain size.

wakemalcolm

Dorset_Boy said:

To suggest there is no value in advice for those with less than £1m in assets is incredibly stupid!

We can discuss the relative merits of calling someone in your target demographic 'incredibly stupid' at a later date but having retired after spending 35 years in the business I'd have to conclude that for too many customers it's just not fit for purpose.

Whilst I can look back with some pride at industry initiatives that delivered efficiencies to the advised market, I spent too long on projects refunding customers (& remunerating consultants) holding unfairly expensive contracts because IFAs would only place their business with us if we'd match the inflated commission terms of another provider offering a similar vanilla product (remember 145% lautro?).

We couldn't go after the advisers because it would bust them and we still needed them to put 'new' business our way. I say 'new' because the vast majority of the money floating around was just a churn of business that was placed 5 years previously. The IFA would then 'review' the market and conclude that times had changed and the business should be placed elsewhere (for more commission).

Apologies, I'm ranting (but it's slightly cathartic for me).

Dorset_Boy

TheBigBean said:

Dorset_Boy said:

You are able to properly research the 4,000+ funds on your own?
Really?

And with respect, I suspect the real answer to many of those questions is actually no. You only think you do.

However carry on.

I do agree that some financial education would be hugely beneficial and that the regulatory framework is excessive , but have no idea what the 'sub 2 comma crowd' is.

Do you have any views on the question I asked (interactive investor)? That would be more helpful than judging my expertise on other questions.

Presumably "sub 2 comma crowd" means having less than £1,000,000

Interactive Investor are direct to consumer so I have no views on them, or experience of them. Sorry.

Dorset_Boy

super_davo said:

The real question is whether an IFA is worth their fee over what you can do yourself via internet research.

I think the answer is an undoubted yes at key times e.g. initial pension start up, last few years before retirement, and every few years in retirement, for taxation advice alone.

I'm less convinced about researching and picking through the 4000+ funds on the market though. In reality, the overwhelming majority of investments at any one time are made in a tiny subset of that (30 funds max). Looking at just those makes the research much easier. And to actually get all the good value an IFA can add that Dorset Boy mentioned, you need to keep going back for reviews, which costs. I don't doubt you'll get a better outcome with the IFA advice, the question is whether that outcome is sufficiently better than the cost of the fee. And just simply doing the maths, that's not likely to be the case for people with pension pots under a certain size.

How much do you think the fees are? Advisers will offer different levels of service.
Which 30 funds should you be using?
How do you know why a fund is performing they way it is and whether that should remain a hold, a watch or a sell?
Why would you not review things regularly (I agree annual is too frequest for most under 55, but the FCA knows better!) but in decumulation annual reviews are really important.
What is the 'certain size' of pot that you suggest is too small?

TheBigBean

Dorset_Boy said:

TheBigBean said:

Dorset_Boy said:

You are able to properly research the 4,000+ funds on your own?
Really?

And with respect, I suspect the real answer to many of those questions is actually no. You only think you do.

However carry on.

I do agree that some financial education would be hugely beneficial and that the regulatory framework is excessive , but have no idea what the 'sub 2 comma crowd' is.

Do you have any views on the question I asked (interactive investor)? That would be more helpful than judging my expertise on other questions.

Presumably "sub 2 comma crowd" means having less than £1,000,000

Interactive Investor are direct to consumer so I have no views on them, or experience of them. Sorry.

I find this surprising. I'm far more interested in an IFA's view on cost effective ways to invest in funds than their view on the funds themselves. I assume that this means you don't advise any of your clients to use interactive investor even if this might be the cheapest option for them? The difference in costs is quite significant e.g. Standard Life would charge someone with £1m in their pot around £4,000 per year for potentially the same as interactive investor are charging £150.

Dorset_Boy

TheBigBean said:

Dorset_Boy said:

TheBigBean said:

Dorset_Boy said:

You are able to properly research the 4,000+ funds on your own?
Really?

And with respect, I suspect the real answer to many of those questions is actually no. You only think you do.

However carry on.

I do agree that some financial education would be hugely beneficial and that the regulatory framework is excessive , but have no idea what the 'sub 2 comma crowd' is.

Do you have any views on the question I asked (interactive investor)? That would be more helpful than judging my expertise on other questions.

Presumably "sub 2 comma crowd" means having less than £1,000,000

Interactive Investor are direct to consumer so I have no views on them, or experience of them. Sorry.

I find this surprising. I'm far more interested in an IFA's view on cost effective ways to invest in funds than their view on the funds themselves. I assume that this means you don't advise any of your clients to use interactive investor even if this might be the cheapest option for them? The difference in costs is quite significant e.g. Standard Life would charge someone with £1m in their pot around £4,000 per year for potentially the same as interactive investor are charging £150.

II don't deal with IFAs and if we can't access their platform why would we use them? We can't obtain valuations and our investment partners can't manage portfolios on the platform. So there's an information block. That may be a factor in lower charges as they don't provide the tech for the various feeds and trading options required elsewhere.
An adviser simply would never use a D2C platform. They're aimed at the DIY crowd.

As with many things, it's all about relationships. Client adviser and adviser provider.

I don't try to select funds - I, like you, don't have the qualifications to do that, so I outsource the portfolio management to those with those skills and capabilities. An who don't have an emotional tie either.

wakemalcolm

Dorset_Boy said:

How much do you think the fees are?

What is the 'certain size' of pot that you suggest is too small?

There's only one way to find out: care to publish your terms of business?

super_davo

I should have given a disclaimer that I work for a large financial services company doing business outsourcing for Wealth Managers and L&P companies. Though largely on the account of a certain company with 'tied' advisors, that would probably be an even dirtier word than DIY investing (and I do not have an account with them!)

It's generally £300 upwards for a consultation. Hence if your pot is in the tens of thousands, the post advice outcome would need to seriously outperform the default choice to make an annual review worthwhile.

HL and AJ Bell top picks are a good place to whittle down the market to what people are actually buying. Others are available but they are easy for the layman & you don't even need an account with them.

wakemalcolm

I agree, HL is a great place to gather information but I have my reservations about their 'Wealth shortlist' as the qualifying criteria used to be notoriously opaque. I see that they've renamed from the Wealth 150 after not having enough fund managers being able to 'meet the cri£eria' for appearing on the list.

I'll forgive them for having their noses so far up Neil Woodford's bahookey when it all went TU. Plenty of others did.