Financial advisors and pension

[Passmethehappyjuice]

Been to see a financial advisor about my pensions. A nice local lad working for a company in there city. His advice of course was to consolidate all my pensions into one of their products where they can actively manage my portfolio to get approx 8% returns average over the years and also to add diversity to my portfolio. My current providers charge between 0-1% per year. Advisor would charge about 1.9% per annum for the group to actively manage my money with a 6/5/4/3/2/1% withdrawal if I leave them in the next 6 years. Currently my money is just in a pot going up and down with market volatility so it can lose thousands/gain thousands in manner of days. Anyone think an advisor is a better way to go or is the fees proposed too much? I agree I need to consolidate some of these pensions but feel unsure trusting it all to one policy? WWYD? I’d like to retire in less than 6 years (this would be ‘early’).

St James's Place, by any chance?

Seems expensive. I’m paying 0.8%

1.9%??? Sounds flipping expensive to me! I'd be running a mile! See those hills? That's where I'm going.

Wherever you invest, you will be subject to market volatility. Obviously the more money you have invested, the greater the amount of money involved in the swings. Nothing will change on that front unless you only have cash. If I were you, I'd consider consolidating the pensions into a SIPP (self invested personal pension) through Hargreaves Lansdowne or a similar platform, spreading your money over a number of funds to give diversity. You can personally manage the funds, and pay far lower fees for the privilege.

Was just about to ask if SJP as seems expensive

Advisor would charge about 1.9% per annum for the group to actively manage my money with a 6/5/4/3/2/1% withdrawal if I leave them in the next 6 years.

Do not touch with a barge pole! Those are rip off prices. If you get the claimed 8% return you immediately lose 1.9% of that into the pocket of shiny suited salesman

Pensions are fluctuating a lot due to Trump bonkersness. Going through an advisor charging fat fees won't prevent that.

If you want to consolidate you can do easily enough yourself through a SIPP, charging a fraction of the fees quoted above.

You are FAR too close to drawing your pension to do this.

you will always have volatility if invested in the markets, and no way are 8% returns available without a fair amount of risk (and as a pp pointed out, that 8% is actually 6% net of fees)

notwithstanding the current volatility, what have your current funds returned over the past 5 years? That’s your baseline.

also, whilst consolidating funds makes your admin simpler, unless you have sufficient fund size to trigger a sliding scale (eg half a million or so should get you a better rate of charge than 80k), it also means you have to make the same decision on retirement for the whole pot. I’ve kept some of mine separate, am drawing down (as unchrystalised funds drawdown) the pot with the highest charges leaving the other pot to grow. When I come to take that one I can choose to take 25% tax free from that one, more of the same or even buy an annuity

so consolidation does come with downsides!

finally has this adviser taken you through a risk profile and explained to you how his proposal meets your needs ? If he hasn’t, run as far and fast as you can, most people’s risk profile gets more risk averse as they near retirement and it sounds like you dislike volatility, making you even further along the curve towards low risk, yet he seems too be proposing a medium-high risk approach for those returns

Everyone’s pension is doing the same.

You may not be able to consolidate, some pensions have an age limit or time limit.

Some pension scheme don’t allow XYOr Z transfers.

Some give 30% cash lump sums, some are final salary pensions.

You need to look into this more. You may be worse off.

It’s worth checking if there are apps attached to you schemes and check your in steady funds.

You would be better off getting an independent advisor who doesn’t recommend their own products / get commission for the products they recommend. Pay a fee for the advice, not for the product. Far more independent and trustworthy.

That’s really hight, aim for 0.8% and below.

Thanks for the advice! Yes it’s SJP. I am a risk taker but would like someone to teach me the ropes if I managed my own funds. Yeah current pensions are charging 0-1%. Think he said Aegon was the most expensive! I do have a decent stash to grow further. I’m about to start a new job where they’ll contribute quite a lot so it will grow naturally

Don’t do it. Join rebel finance Facebook group and get on to their free course.

Do the rebel course which starts next weekend it’s free

I’ve just consolidated a few DC works pensions into a SIPP with vanguard - for ease of management plus growth as they were all frozen

It's worth using an online compound interest calculator to show the difference in returns over 20 years of a 1% difference in fees. Scary.

The chances of fund managers beating the market is very very very very very low

Agree with others too.

I wouldn't normally post actual advice re investing but am pretty comfortable in saying don't sign up to SJP, and definitely take time to learn. There's some really good resources out there.

I used to have an advisor like you have looked at. As I’m financially savvy I decided to go alone as I don’t need the additional advice and all he did was invest in the big funds….so I sacked him off and I manage the funds myself. The big ones ion funds like Aviva etc you can research and have long track records….i e actually dine better now than if I had just continued as is

Just in case you did not realise SJP are NOT independent financial advisors they are restricted in what they are able to recommend much better to look for an advisor who is an Independent Financial Advisor (IFA) who can look at whole of market for you and as a bonus their charges are often lower.

Agree with others OP, I wouldn’t use SJP, they are v expensive and not independent. I seem to remember reading that many of their funds perform poorly. Have a look at Yodelar - https://www.yodelar.com/insights/topic/st-jamess-place

Please look at their exit charges as I believe they are very high. Leaving them isn’t as straight forward as just changing platform for example.

https://www.sjp.co.uk/individuals/charges/pensions-charges

When people are saying aim for 0.8% or below is that just the management charge? I am paying a total of 1.51% but only 0.6% of that is management charge/advisor fee, the rest is made up of fund charges and platform charges. I struggle to see how you could get your funds managed in total for 0.8% if it included platform and fund charges too.

Novice investor here keen to learn...

Reddit’s UK personal finance is a good place to start. To be honest if you want your money for retirement in 6 years you aren’t really looking at an investment timescale, as you won’t have the time to ride out any market madness. I’d consider investing some in a global tracker but most of it should be moving towards fixed income if you want to draw it down so soon.

Consolidation isn’t necessarily a bad idea but it is a PITA. And as everyone else has said, St James Place are absolute rip off merchants, and the fees need to be as low as possible. It’s a very rare financial advisor that can beat market tracker funds.

Please do not go with SJP. They are notoriously expensive/bad value.

You shouldn't have to pay exit fees.

Do not move all your money into fixed income, whatever you do, unless you’re buying an annuity. This is really outdated advice from the days before pension freedom.

You aren’t going to access all your money on the day you retire (unless you want an annuity) - most of it will be invested for many years after this.

Rebel finance, meaningful money- both vg sources of info. This book is also excellent https://amzn.eu/d/32vwYnP

Avoid SJP. Your best bet is to ask friends/family for recommendations for an IFA. Much better value, and a good IFA will want to you as a client for years so do the best for you and your money.

Also be careful about consolidating pensions as you may lose valuable additional benefits by doing so that are built into existing schemes that you may have preferred to keep.

You can do it yourself if you have the time to do some research. Get listening to the Meaningful Money Podcast & The Rebel Finance School Course (just about to start on You Tube). Do not use SJP!