Down under or Thai? Aussie mum trades Oz for Land of Smiles

[chiang mai]

Before I start to fire off a few emails to the UK I thought it might be useful to try and see if anyone here on TV has input that might help:

I have a smallish private pension fund in the UK, value about £60k and I'm keen to transfer it into a drawdown program with a different provider and to be able to switch the pot into different currencies. My sometimes useful and friendly IFA is pushing me towards a SIPP with company X which means he will get paid 0.4% of the pot just for participating in the transfer process. After a bit of research I've come across the Hargreaves Lansdown Vantage SIPP which has virtually no set-up, transfer or running fees other than a periodic valuation fee (this is because it's a platform based SIPP where no advice is given). I'm not sure that I care too much about the future growth of my pension pot but I do care about getting into drawdown. Questions:

1) does the clients IFA always get paid a percentage when a transfer is made and how can that fee be avoided?

2) anyone with experience of the Hargreaves Lansdown Vantage product and if so, comments?

Thanks in advance.

[Morden]

IFA's in the UK are required by law to recommend the best product to suit your needs, whether or not they are paid commission. The pension company pays them and, as I understand the rules, your fund will not be reduced as a result. Remember all the preparatory work that an IFA does with no guarantee that his effort will lead to a sale and commission.

HL have mailed me for years even though I have never been a customer. That kind of pressure alone puts me off and their customers are paying for the wasted marketing effort one way or another. Are their employees registered as IFA's? If not, the can sell their own company's products as tied agents but are not allowed to advise on any other products. So, you might not be getting the best.

If you have any doubts, look at the Financial Services Authority website.

[chiang mai]

Yes I'm aware of those things except there are two types of products, "execution only" and "with advice", my IFA recommends the latter whereas the HL product is from the former group. The current rate of return on my pot is 2.67% net and I am confident I can equal or exceed that return, but not if I have to pay commissions to all and sundry which I wouldn't have to do with the HL product. As for HL being registered IFA's: that is only necessary where advice is given and since the HL product is "platform only", no advice is offered, it's down to the SIPP owner (me) to select the fund(s) or currency (ies) they wish to invest in.

[wordchild]

That particular HL drawdown product has an excellent reputation, a friend of mine is in it and is also very happy with it. BTW advisory commisions are always paid out of the value of your fund (one way or another) , where else would they come from?

What you are talking about is very straightforward, provided you are happy to handle the investment side, and i would have thought "execution only" is the way to go.Without having direct experience of the HL product ,my only proviso would be to check that the platform fully covers the range of investments (ie currencies, overseas stocks, bonds etc) that you may wish to invest in.

Edited October 16, 2010 by wordchild

[chiang mai]

That particular HL drawdown product has an excellent reputation, a friend of mine is in it and is also very happy with it. BTW advisory commisions are always paid out of the value of your fund (one way or another) , where else would they come from? what you are talking about is very straightforward and i would have thought "execution only" is the way to go.

That's really my question, my IFA is not in the loop unless my current provider chooses to put him there, surely I must be able to instruct my current provider to transfer the fund to HL, especially since it is execution only and no advice is given, I fail to see how my IFA earns a fee under those circumstances or am I dreaming?

[likite]

That particular HL drawdown product has an excellent reputation, a friend of mine is in it and is also very happy with it. BTW advisory commisions are always paid out of the value of your fund (one way or another) , where else would they come from? what you are talking about is very straightforward and i would have thought "execution only" is the way to go.

That's really my question, my IFA is not in the loop unless my current provider chooses to put him there, surely I must be able to instruct my current provider to transfer the fund to HL, especially since it is execution only and no advice is given, I fail to see how my IFA earns a fee under those circumstances or am I dreaming?

If you were my client I'd show you the door. You've already taken advice from your IFA and he has recommended a SIPP and a provider all at no cost to you. He will also do all the running around and do all the transfer paperwork and you don't want to pay 0.4% £240?

People who want something for nothing usually get nothing, IMHO.

[Morden]

That particular HL drawdown product has an excellent reputation, a friend of mine is in it and is also very happy with it. BTW advisory commisions are always paid out of the value of your fund (one way or another) , where else would they come from? what you are talking about is very straightforward and i would have thought "execution only" is the way to go.

That's really my question, my IFA is not in the loop unless my current provider chooses to put him there, surely I must be able to instruct my current provider to transfer the fund to HL, especially since it is execution only and no advice is given, I fail to see how my IFA earns a fee under those circumstances or am I dreaming?

If you were my client I'd show you the door. You've already taken advice from your IFA and he has recommended a SIPP and a provider all at no cost to you. He will also do all the running around and do all the transfer paperwork and you don't want to pay 0.4% £240?

People who want something for nothing usually get nothing, IMHO.

My view too! If you don't want advice, by from a salesman who wants to maximise his earnings. If you want advice, go through an IFA but don't then take that advice and go direct. People who do that get what they deserve. When it all goes t*ts up and you run to him for help, what might he say?

[chiang mai]

Now now boys, that's not quite the scenario, the road that led me to today looks like this:

I made contact with an IFA in the UK five years ago in order to examine a specific issue that was not related to pensions, that point have been covered we agreed that I would name him as my IFA on my private pension policies. I never heard anything further from him over the years until I was prompted to email him about one month ago when I told him that I was strongly inclined to transfer my long standing policies into a SIPP in order to take advantage of the draw down feature and that my research showed the HL product was the top of my list, did he have any comments. His reply was that he would recommend company X instead because of the wider range of instrument types offered - as we dug into the fees and charges associated with his recommendation it became clear that it would not work from my perspective because the costs were so high - note my earlier error, 4% not 0.4% as the IFA commission, apologies.

I have always been happy to pay IFA's and similar where they have delivered a service and/or added value, in this particular scenario I do not believe the fee is appropriate and if it all goes t*ts up I accept full responsibility but there again, that's one of the risks of SIPP's. Having said all that, I believe I am more than capable of generating a 3% return on my fund as long as the commission charges remain low hence the risk is minimal.

[Morden]

Did your IFA give you a copy of his terms of business when you appointed him?

[chiang mai]

Did your IFA give you a copy of his terms of business when you appointed him?

Honestly I do not recall since it was some years ago although I believe under FSA rules that IFA TOB are all very similar. But perhaps rather than personalise this issue let me pose the same question slightly differently:

Is there ALWAYS a relationship between the product/service provider. the IFA and the customer/client from a commission and fees perspective? When a client buys a pension product there is typically an IFA associated with the purchase and that IFA remains linked to the product (and the customer) until the customer changes the IFA - the IFA is paid a commission at the time of purchase and also an ongoing annual maintenance or watching fee, can that relationship be broken?

If the client switches the fund to another provider, without the involvement of an IFA, does the original provider deem the then named IFA to still be connected with that change? Now that I've written that it seems unlikely that many will know the real answer since it probably exists in the FSA rules albeit there must be others out there who have done similar.

[sarahsbloke]

why use an ifa in the UK ..... I use one in Chiang Mai

its a lot easier ..... pm me if you want his details

He uses Mitchell Hornbuckle as the SIPP overseer

[Morden]

why use an ifa in the UK ..... I use one in Chiang Mai

its a lot easier ..... pm me if you want his details

He uses Mitchell Hornbuckle as the SIPP overseer

Under what regulatory regime does he operate?

[wordchild]

Now now boys, that's not quite the scenario, the road that led me to today looks like this:

I made contact with an IFA in the UK five years ago in order to examine a specific issue that was not related to pensions, that point have been covered we agreed that I would name him as my IFA on my private pension policies. I never heard anything further from him over the years until I was prompted to email him about one month ago when I told him that I was strongly inclined to transfer my long standing policies into a SIPP in order to take advantage of the draw down feature and that my research showed the HL product was the top of my list, did he have any comments. His reply was that he would recommend company X instead because of the wider range of instrument types offered - as we dug into the fees and charges associated with his recommendation it became clear that it would not work from my perspective because the costs were so high - note my earlier error, 4% not 0.4% as the IFA commission, apologies.

I have always been happy to pay IFA's and similar where they have delivered a service and/or added value, in this particular scenario I do not believe the fee is appropriate and if it all goes t*ts up I accept full responsibility but there again, that's one of the risks of SIPP's. Having said all that, I believe I am more than capable of generating a 3% return on my fund as long as the commission charges remain low hence the risk is minimal.

£2400 is a ridiculous amount of money for the work involved for what is essentialy a liason job. Might be worth talking directly to your current fund (having removed him as nominated advisor) and also directly to HL yourself.Having done transfers in the past myself i would say there is a small amount of work to be done by your current fund and a little by the receiving sipp and MAYBE there is some value in having someone (eg an ifa ) liasing between them (and helping you fill in a couple of forms), but we are not talking about a big deal here. i did two transfers into a sipp myself (before moving the whole lot to a QROP) the first one i paid an ifa a fee to help with (c £500 as far as i remember) the second one i just organized myself.

[likite]

Did your IFA give you a copy of his terms of business when you appointed him?

If the client switches the fund to another provider, without the involvement of an IFA, does the original provider deem the then named IFA to still be connected with that change? Now that I've written that it seems unlikely that many will know the real answer since it probably exists in the FSA rules albeit there must be others out there who have done similar.

If you arrange and do all the paperwork etc of the transfer yourself then no commission from the new provider is either paid at the point of transfer, or in annual renewal commissions to any IFA.

Lastly it will be highly unlikely that HL will not levy charges during the lifetime of the SIPP, particularly since you seem to want to actively manage it. Those are the charges you need to check out.

[chiang mai]

why use an ifa in the UK ..... I use one in Chiang Mai

its a lot easier ..... pm me if you want his details

He uses Mitchell Hornbuckle as the SIPP overseer

I really don't want to sidetrack but it's difficult enough trying to secure a cost effective product via a UK regulated IFA without considering non-regulated ones in Thailand. Case in point is my example at the outset, my research shows that a well regarded "platform only" (this is where you select the product you wish to invest in, without any advice or guidance from others) product will cost me about 0.4% per year in charges versus an IFA recommended product that involves a 4% transfer fee, 3% set up fee and 1.5% annual fees - at age 61 it would take me several years to recoup the initial charges and that's simply not cost effective or warranted, I have to seriously question whether any offshore IFA could reduce those costs in a meaningful way and that's without even considering risks.

Now, back on track please.

[chiang mai]

Now now boys, that's not quite the scenario, the road that led me to today looks like this:

I made contact with an IFA in the UK five years ago in order to examine a specific issue that was not related to pensions, that point have been covered we agreed that I would name him as my IFA on my private pension policies. I never heard anything further from him over the years until I was prompted to email him about one month ago when I told him that I was strongly inclined to transfer my long standing policies into a SIPP in order to take advantage of the draw down feature and that my research showed the HL product was the top of my list, did he have any comments. His reply was that he would recommend company X instead because of the wider range of instrument types offered - as we dug into the fees and charges associated with his recommendation it became clear that it would not work from my perspective because the costs were so high - note my earlier error, 4% not 0.4% as the IFA commission, apologies.

I have always been happy to pay IFA's and similar where they have delivered a service and/or added value, in this particular scenario I do not believe the fee is appropriate and if it all goes t*ts up I accept full responsibility but there again, that's one of the risks of SIPP's. Having said all that, I believe I am more than capable of generating a 3% return on my fund as long as the commission charges remain low hence the risk is minimal.

£2400 is a ridiculous amount of money for the work involved for what is essentialy a liason job. Might be worth talking directly to your current fund (having removed him as nominated advisor) and also directly to HL yourself.Having done transfers in the past myself i would say there is a small amount of work to be done by your current fund and a little by the receiving sipp and MAYBE there is some value in having someone (eg an ifa ) liasing between them (and helping you fill in a couple of forms), but we are not talking about a big deal here. i did two transfers into a sipp myself (before moving the whole lot to a QROP) the first one i paid an ifa a fee to help with (c £500 as far as i remember) the second one i just organized myself.

Thank you for that, I think I'll start firing off those emails!

[wordchild]

Now now boys, that's not quite the scenario, the road that led me to today looks like this:

I made contact with an IFA in the UK five years ago in order to examine a specific issue that was not related to pensions, that point have been covered we agreed that I would name him as my IFA on my private pension policies. I never heard anything further from him over the years until I was prompted to email him about one month ago when I told him that I was strongly inclined to transfer my long standing policies into a SIPP in order to take advantage of the draw down feature and that my research showed the HL product was the top of my list, did he have any comments. His reply was that he would recommend company X instead because of the wider range of instrument types offered - as we dug into the fees and charges associated with his recommendation it became clear that it would not work from my perspective because the costs were so high - note my earlier error, 4% not 0.4% as the IFA commission, apologies.

I have always been happy to pay IFA's and similar where they have delivered a service and/or added value, in this particular scenario I do not believe the fee is appropriate and if it all goes t*ts up I accept full responsibility but there again, that's one of the risks of SIPP's. Having said all that, I believe I am more than capable of generating a 3% return on my fund as long as the commission charges remain low hence the risk is minimal.

£2400 is a ridiculous amount of money for the work involved for what is essentialy a liason job. Might be worth talking directly to your current fund (having removed him as nominated advisor) and also directly to HL yourself.Having done transfers in the past myself i would say there is a small amount of work to be done by your current fund and a little by the receiving sipp and MAYBE there is some value in having someone (eg an ifa ) liasing between them (and helping you fill in a couple of forms), but we are not talking about a big deal here. i did two transfers into a sipp myself (before moving the whole lot to a QROP) the first one i paid an ifa a fee to help with (c £500 as far as i remember) the second one i just organized myself.

it should be possible to remove your ifa as nominated advisor by writing to your current fund. They may require you to have an advisor (depending on their rules) in which case switch to someone who will do the job on a fee basis at a more realistic price (this can also be charged to the fund prior to transfer).

[chiang mai]

Did your IFA give you a copy of his terms of business when you appointed him?

If the client switches the fund to another provider, without the involvement of an IFA, does the original provider deem the then named IFA to still be connected with that change? Now that I've written that it seems unlikely that many will know the real answer since it probably exists in the FSA rules albeit there must be others out there who have done similar.

If you arrange and do all the paperwork etc of the transfer yourself then no commission from the new provider is either paid at the point of transfer, or in annual renewal commissions to any IFA.

Lastly it will be highly unlikely that HL will not levy charges during the lifetime of the SIPP, particularly since you seem to want to actively manage it. Those are the charges you need to check out.

HL does indeed levy charges in two forms, the first is a government required valuation which is required every five years and HL charges 0.4% of the fund value for this. The second area where HL makes money is on dealing fees although they are up front about what those charges are and they are really no different from any share trading company for buy/sell. Where HL does appear to win the day is it's platform based ability to switch into cash in a large range of currencies at no cost other than FOREX margin charges.

[chiang mai]

Now now boys, that's not quite the scenario, the road that led me to today looks like this:

I made contact with an IFA in the UK five years ago in order to examine a specific issue that was not related to pensions, that point have been covered we agreed that I would name him as my IFA on my private pension policies. I never heard anything further from him over the years until I was prompted to email him about one month ago when I told him that I was strongly inclined to transfer my long standing policies into a SIPP in order to take advantage of the draw down feature and that my research showed the HL product was the top of my list, did he have any comments. His reply was that he would recommend company X instead because of the wider range of instrument types offered - as we dug into the fees and charges associated with his recommendation it became clear that it would not work from my perspective because the costs were so high - note my earlier error, 4% not 0.4% as the IFA commission, apologies.

I have always been happy to pay IFA's and similar where they have delivered a service and/or added value, in this particular scenario I do not believe the fee is appropriate and if it all goes t*ts up I accept full responsibility but there again, that's one of the risks of SIPP's. Having said all that, I believe I am more than capable of generating a 3% return on my fund as long as the commission charges remain low hence the risk is minimal.

£2400 is a ridiculous amount of money for the work involved for what is essentialy a liason job. Might be worth talking directly to your current fund (having removed him as nominated advisor) and also directly to HL yourself.Having done transfers in the past myself i would say there is a small amount of work to be done by your current fund and a little by the receiving sipp and MAYBE there is some value in having someone (eg an ifa ) liasing between them (and helping you fill in a couple of forms), but we are not talking about a big deal here. i did two transfers into a sipp myself (before moving the whole lot to a QROP) the first one i paid an ifa a fee to help with (c £500 as far as i remember) the second one i just organized myself.

it should be possible to remove your ifa as nominated advisor by writing to your current fund. They may require you to have an advisor (depending on their rules) in which case switch to someone who will do the job on a fee basis at a more realistic price (this can also be charged to the fund prior to transfer).

That certainly looks like the best way to go, thanks again.

[nong38]

I dont know if this help but I give you my twopeneth anyway. Hargreaves Lansdowne had an excellent reputation before they were sold by the owners, I dont know if they are as good now.

I keep my funds with Bestinvest.co.uk Ipay no fees, their up front fees are usually 0 or near to it, I think they make their money from the 1/2% trailing commission. I get on line valuations if I want them everyday free. Its execution only,or, if you want advice then there will be a charge, chech them out you have nothing to lose, they do do sipps so costsmight be lower.

When I left work I had a nest egg and was advised to take out a distribution bond with Standard Life and another Portfolio Bond with Legal and General. I asked how much does this cost me? Nothing in fact I had about 500bgp added to my principal, that was just before the financial crisis blew up, I am now just about back to where I started as I dont need the cash right now and will not be 65 till next year when I might start to take some cash. It is available on a draw down system of which up to 5% per annum is tax free. You can also leave this in your will, whats left to whoever.

I hope this is useful, its always a difficult one, make your choice and hope it right, look into what I have done, may be ok for you too.

[chiang mai]

I dont know if this help but I give you my twopeneth anyway. Hargreaves Lansdowne had an excellent reputation before they were sold by the owners, I dont know if they are as good now.

I keep my funds with Bestinvest.co.uk Ipay no fees, their up front fees are usually 0 or near to it, I think they make their money from the 1/2% trailing commission. I get on line valuations if I want them everyday free. Its execution only,or, if you want advice then there will be a charge, chech them out you have nothing to lose, they do do sipps so costsmight be lower.

When I left work I had a nest egg and was advised to take out a distribution bond with Standard Life and another Portfolio Bond with Legal and General. I asked how much does this cost me? Nothing in fact I had about 500bgp added to my principal, that was just before the financial crisis blew up, I am now just about back to where I started as I dont need the cash right now and will not be 65 till next year when I might start to take some cash. It is available on a draw down system of which up to 5% per annum is tax free. You can also leave this in your will, whats left to whoever.

I hope this is useful, its always a difficult one, make your choice and hope it right, look into what I have done, may be ok for you too.

Thanks nong, I'll check them out.

[fletchsmile]

I've been a client of Hargreaves Lansdown for over a decade. Throughout this time they've been excellent, and continually improved. IMO the flotation on LSE has given them the capital to improve further.

I have a SIPP with them an a SIPP (PR) for Protected Rights when I contracted out of SERPs. In fact aside from one employer scheme I consolidated all schemes under their umbrella.

If you are looking for a UK based pension provider, and invest largely in unit trust (or mutual funds as people internationally call them) they are great. Also provide a good UK share deal service for buying and selling shares.

Benefits include:

- Discounted initial charge - often to zero on many top name funds

- Great IT platform

- Loyalty bonus, where they rebate part of the annual fee to you. In case you're unaware all unit trusts charge an annual fee regardless of how you purchase it. Normally it is simply lost to you. HL get back a small % for you

- Excellent range of funds: 2,000+

- Easy to transfer in / out cash to / from your bank account

- Good analysis tools

- Good free investment guides

- Good range of articles

- Very easy to do everything online from 6,000 miles away!

I can't comment on income drawdown for SIPPs, as I have never done this. I'd expect to pay an extra small fee each year for this given the compliance requirements and reporting.

I would question on the small amount you mentioned why you are opting for income drawdown. Even Hargreaves L will tell you it is more suited to large amounts. Might be better and cheaper to just buy an annuity for the amounts involved, but there are many factors to consider. If buying an annuity they encourage you to shop around and use their service to find the best rate.

For me they are the best I've found in UK. But HL may not fit a truly international investor, with much larger assets. I use them for most of my UK based stuff, including buying emerging market, commodity and other overseas funds.

But for currencies I use Thai banks for THB and Thai funds. Then Singapore and other locations for other currencies, and structures outside the UK tax system. While HL's currency service seems OK, it is more geared to UK based people.

[fletchsmile]

Specifically on your questions:

1) does the clients IFA always get paid a percentage when a transfer is made and how can that fee be avoided?

No. % is very common, but some will do for a fixed fee. Personally I would rather educate myself and not use an IFA. However, if you've no clue, they can be useful. If you are using them for their advice, it strikes me as fair you should pay one way or another. The beauty of HL is they offer "with advice" or "execution only" = without advice - which I use. I recommended them to my parents, who wanted advice and there fees seemed reasonable. In the end they asked me to manage on their behalf and save the fees as circumstances changed. HL didn't give a hard sell at any point.

2) anyone with experience of the Hargreaves Lansdown Vantage product and if so, comments?

Comments as above. In addition to SIPP, SIPP(PR), I also use them for stocks and shares ISA and a regular Vantage fund account.

[chiang mai]

Specifically on your questions:

1) does the clients IFA always get paid a percentage when a transfer is made and how can that fee be avoided?

No. % is very common, but some will do for a fixed fee. Personally I would rather educate myself and not use an IFA. However, if you've no clue, they can be useful. If you are using them for their advice, it strikes me as fair you should pay one way or another. The beauty of HL is they offer "with advice" or "execution only" = without advice - which I use. I recommended them to my parents, who wanted advice and there fees seemed reasonable. In the end they asked me to manage on their behalf and save the fees as circumstances changed. HL didn't give a hard sell at any point.

2) anyone with experience of the Hargreaves Lansdown Vantage product and if so, comments?

Comments as above. In addition to SIPP, SIPP(PR), I also use them for stocks and shares ISA and a regular Vantage fund account.

Thank you for all of the above, you've simply reinforced what I already thought was a sensible way forward.

Re. your question on draw down vs annuity: the amount involved here is quite small in pension fund terms and it does not form part of my retirement planning, rather I see it as a bonus. Having said that though, £55k is still £55k and the benefit to be derived from it needs to be maximised.

Indeed, buying an annuity would be one avenue but annuity rates, even impaired life rates are poor and there's little chance they will improve much - draw down provides an opportunity to continue to keep the money invested whilst also getting an income from it (120% of annuity returns). Also, draw down gives me an opportunity to bequeath the balance of the fund in my Will versus it being lost completely under annuity rules (unless it is joint life of course) and that annoys me.

[fletchsmile]

Thank you for all of the above, you've simply reinforced what I already thought was a sensible way forward.

Re. your question on draw down vs annuity: the amount involved here is quite small in pension fund terms and it does not form part of my retirement planning, rather I see it as a bonus. Having said that though, £55k is still £55k and the benefit to be derived from it needs to be maximised.

Indeed, buying an annuity would be one avenue but annuity rates, even impaired life rates are poor and there's little chance they will improve much - draw down provides an opportunity to continue to keep the money invested whilst also getting an income from it (120% of annuity returns). Also, draw down gives me an opportunity to bequeath the balance of the fund in my Will versus it being lost completely under annuity rules (unless it is joint life of course) and that annoys me.

Funnily enough for me, in terms of my SIPPS I'm in a similar position to me. Small amounts.

Because of that though I reached the opposite conclusion to you. I will look after the bigger assets and ensure they are maximised for bequeathing. I think annuity is a simpler option for a small pension. My view, (for me, as I don't know you or your circumstances )and bearing in mind amounts are small:

- Take the cash free lump sum (often 25%) and buy an annuity as early as possible, so I get most number of years

- Simplest and easiest option.

- Buy a joint life annuity, so no matter how much the Mrs messes up on the bigger stuff later, she'll always have something until the die she dies, regardless of who goes first.

- The Mrs is much better than me at many things. Money isn't one of them. The bigger problem will be managing the non-pension assets and investments. At least I know this one is guaranteed and safe

Yes you're right an annuity is often reduced for second life or dies with you. Even a joint-life annuity dies with the second one. As you say lost forever. Then again if it's a small %, for me the guarantee it gives is compensation.

Don't forget on drawdown or with poor investing you could suffer serious loses in values in bad times. Drawing from a portfolio that lost say 40%-50% in 2008 would have really stuffed up many people.

HL have an annuity tool on their website - worth a try. Why not also write to them and see what they suggest? You can always say no.

[nong38]

Specifically on your questions:

1) does the clients IFA always get paid a percentage when a transfer is made and how can that fee be avoided?

No. % is very common, but some will do for a fixed fee. Personally I would rather educate myself and not use an IFA. However, if you've no clue, they can be useful. If you are using them for their advice, it strikes me as fair you should pay one way or another. The beauty of HL is they offer "with advice" or "execution only" = without advice - which I use. I recommended them to my parents, who wanted advice and there fees seemed reasonable. In the end they asked me to manage on their behalf and save the fees as circumstances changed. HL didn't give a hard sell at any point.

2) anyone with experience of the Hargreaves Lansdown Vantage product and if so, comments?

Comments as above. In addition to SIPP, SIPP(PR), I also use them for stocks and shares ISA and a regular Vantage fund account.

Thank you for all of the above, you've simply reinforced what I already thought was a sensible way forward.

Re. your question on draw down vs annuity: the amount involved here is quite small in pension fund terms and it does not form part of my retirement planning, rather I see it as a bonus. Having said that though, £55k is still £55k and the benefit to be derived from it needs to be maximised.

Indeed, buying an annuity would be one avenue but annuity rates, even impaired life rates are poor and there's little chance they will improve much - draw down provides an opportunity to continue to keep the money invested whilst also getting an income from it (120% of annuity returns). Also, draw down gives me an opportunity to bequeath the balance of the fund in my Will versus it being lost completely under annuity rules (unless it is joint life of course) and that annoys me.

I arranged my two bonds with Skipton BS, they are not tied and seemed straightforward might be worth a visit and make an appointment, remember what I told you 5% draw down tax free and unlike an annuity any proceeds left can be put into your will, annuities are bad value steer clear if you can, as you said its a bonus, just make the most of it.

[chiang mai]

Thank you for all of the above, you've simply reinforced what I already thought was a sensible way forward.

Re. your question on draw down vs annuity: the amount involved here is quite small in pension fund terms and it does not form part of my retirement planning, rather I see it as a bonus. Having said that though, £55k is still £55k and the benefit to be derived from it needs to be maximised.

Indeed, buying an annuity would be one avenue but annuity rates, even impaired life rates are poor and there's little chance they will improve much - draw down provides an opportunity to continue to keep the money invested whilst also getting an income from it (120% of annuity returns). Also, draw down gives me an opportunity to bequeath the balance of the fund in my Will versus it being lost completely under annuity rules (unless it is joint life of course) and that annoys me.

Funnily enough for me, in terms of my SIPPS I'm in a similar position to me. Small amounts.

Because of that though I reached the opposite conclusion to you. I will look after the bigger assets and ensure they are maximised for bequeathing. I think annuity is a simpler option for a small pension. My view, (for me, as I don't know you or your circumstances )and bearing in mind amounts are small:

- Take the cash free lump sum (often 25%) and buy an annuity as early as possible, so I get most number of years

- Simplest and easiest option.

- Buy a joint life annuity, so no matter how much the Mrs messes up on the bigger stuff later, she'll always have something until the die she dies, regardless of who goes first.

- The Mrs is much better than me at many things. Money isn't one of them. The bigger problem will be managing the non-pension assets and investments. At least I know this one is guaranteed and safe

Yes you're right an annuity is often reduced for second life or dies with you. Even a joint-life annuity dies with the second one. As you say lost forever. Then again if it's a small %, for me the guarantee it gives is compensation.

Don't forget on drawdown or with poor investing you could suffer serious loses in values in bad times. Drawing from a portfolio that lost say 40%-50% in 2008 would have really stuffed up many people.

HL have an annuity tool on their website - worth a try. Why not also write to them and see what they suggest? You can always say no.

Yes there are trade off's to be considered between the two options and the best answer is not immediately clear. Part of my current logic says that draw down might be better because luckily I don't have to take payments every year. it therefore follows that if I screw up on the value of the fund I can let it ride until it recovers. The other part of this has to do with SIPP's, I've left it late in the day but I am absolutely confident I can generate a better rate of return in a SIPP than my current plan provides, if I can't beat 2.55% I should probably be banned from having access to any money or assets.

Since I'm making the change to a SIPP the ability to go into drawdown later is a nice option to have that I don't have currently.

I agree also in terms of bequeathing money to my Thai spouse, like yours my wife is not the sharpest in this respect and it is a concern. My other assets are quite substantial and I have tried to explore ways to set up trusts etc so that some control is placed over my estate after I die, a drip feed of funds scenario would be ideal but I have yet to come across a suitable and acceptable mechanism to accomplish this. I had discussions with my UK Solicitor on this point recently and sensed that he was already planning to take on new staff just to invoice me for the advice he wanted to give so I had to call a halt to our little chats! I am however exploring other avenues and fighting my way through the legal financial maze.

[fletchsmile]

To me there are two separate questions for you:

1) To convert to a SIPP or not

2) Income drawdown or annuity

On the first, given you're getting a return of 2.55%, and you think you can do better, seems you made you mind up on that. I did too and took out a SIPP with HL. The reason being there were no extra charges for the pension/ SIPP vehicle compared to other invested I already had with HL.

For 2) HL offer you the choice. Not sure if you've read their website or not, but loads of good info, for example.

http://www.h-l.co.uk/pensions/income-drawdown

One section sets out the pros and cons vs annuities - which is useful.

Another section clearly shows charges. There's a regular flat fee, and then depends on your investments. For 2,000+ no extra charge. If you need other than these 2,000 there's a 0.5% fee. I doubt you'd need much more than these 2,000...

http://www.h-l.co.uk/pensions/income-drawdown/charges--and--interest-rates

You can also get a free illustration from them

Edited October 18, 2010 by fletchsmile

[chiang mai]

I'm negotiating with my UK based IFA his fees for a transfer into the HL SIPP draw down and have decided to link his fee to his performance, there are two aspects:

The first is his fee for the transfer, if paid on a commission basis he would receive 4%, his flat fee quote works out to be 3% and I think we'll likely end up at around 2% or £1,200.

But I'm also going to buy advice from him which he quotes at 0.5% per year, I want to link that to his performance on a sliding scale and am quite happy to split profits above a certain level although I don't see there should be any fee unless he achieves a certain threshold. I have it in mind to offer 0.5% for anything over a 2.5% return but then I want to tier his remuneration so that the better his performance, the more he gets paid - anyone have any experience of negotiating/compiling such a beast since I want to present both parts to him as a package.

[chiang mai]

My initial thoughts on the commission for advice are that for any return below 2.99% he gets nothing for the advice he gave, thereafter his remuneration increases as a percentage of the total net return, starting at 20% commission for a net increase of between 3% and 3.99%, 22.5% commission for any increase of between 4% and 4.99% up to a maximum of 30% commission on any return equal to or greater than 7%. If the returns stated above are compared to his flat rate quote of 0.5% of total fund he can achieve a 300% increase in commission fees and I can consider him fully incentivised! Thoughts?