SIPPS - how to assess advisors motives

[trendie]

I have recently been approached to move my pensions into a SIPP.

The pitch was, unsurprisingly, about how pensions have underperformed, and how funds skim large amounts off as fees, and leave investors with scraps. I am aware this pitch may have been opportunistic given the current economic situation.

I am due to speak to an advisor soon. Are there any clues as to whether this is simply a pitch to take my money; can they genuinely get better performance, etc?
Are there any questions I can ask to determine their suitability for the role of wealth managers?

Are there any clues/questions to ask to ascertain whether this has any "scamminess" quotient?

Are there any league tables or data to determine the better SIPPs managers from the mediocre?

thanks

NB: SIPPs are supposed to allow a broader range of investments than conventional pension funds, including commercial property, etc.

 

[neil]

Trendie.
Have a look at this site. Martin Lewis regularly appears on TV and Radio 2 etc as a consumers champion.
http://www.moneysavingexpert.com/

 

[Jack o'Clubs]

Hi Trendie -

In my view the main advantage of having is a SIPP is that you move it out of the realm of a narrow cohort of pension managers and can look after (and take responsibility for) it yourself. If you're just going to hand the management over to a third party I'd be very sceptical about their motives, or what they are going to offer above and beyond specialist pension managers.

 

[Jack o'Clubs]

Trendie - one other thing to be very careful about. The financial advisor industry is going through a huge amount of change at the moment. A couple of years ago the FSA launched a 'Retail Distribution Review' which came to the conclusion that having advisors paid with up-front and trailing commissions on the investments they recommended 'for free' was a bit of a conflict of interest. In the new regime they will be banned and IFA's will have to charge a professional fee for their time, just like when you go to see a lawyer or accountant.

Understandably, IFAs are crapping themselves, because they see that a large number of clients are likely to go down the DIY route rather than pay an advisor. Since commissions are grand-fathered on any investment products in place when the new rules come into play, they are going absolutely hell for leather at the moment to sign up as many people as possible before the RDR comes into force. Caveat emptor!

 

[DashRiprock]

good posts jack of clubs

2 thumbs up.

 

[anley]

Odds on he's going to try to skim you for fees as that's what 95% of IFAs do.

As him to break down the total fees that you'll likely to pay in a given year. If the number is in excess of 2% then your SIPP money will be working for him rather than you.

Work out for example if you saved 2% on fees per year and then compounded that saving over 1 20 year period. You're talking about major money which is why I advise you build a portfolio of ETFs and manage the SIPP money yourself. Believe me, there's a 95% chance you'll out perform any IFA for one simple reason - the reduction of fees/charges which are then compouned back into your SIPP.

 

[bangkoker]

I think everyone has covered the main points. I did a stint at the Financial Ombudsman, I know how popular they are on here... but anyway.. the main thing like already covered that always came up was the impact of explicit and implicit charges. So my two pennies worth, is just this.. be very thorough on all charges/costs if they are in the region of what you are already paying.

The main problem I came across was people being moved from a product such as a stakeholder with relative low charges to a product such as a SIPP with higher charges but remaining in similar funds, or funds that could have been pretty well matched in a product with lower charges.

Anyway I am sure you get the point, I am waffling..

 

[arabianights]

financial advisors are retards

 

[bangkoker]

financial advisors are retards

Good point and like most people they have their own motive. Well earning the most they can.

 

[arabianights]

Yes, although (perhaps naively) I believe the majority of them are doing the best they can. Sadly they can only go off what they've been taught - when it comes to market related things they're idiots. 95% won't even be able to explain why "investing" in commodities is SPECULATING in commodities, you can't invest in them, softs anyway (yes you can invest in something non perishable... but ask them to explain what backwardation is). Not to mention the fund manager **** licking. And so on and so on.

Someone mentioned moneysavingexpert; that's a fantastic website... but check out the forum, when it comes to the financial advice their main savings forum is coupled with a few IFAs who are brilliant fun to troll but not great for much else. Dustonh is their leader! Go troll him!