SIPP charges

[Clitheroekid]

Last year I set up a SIPP on the advice of my accountants. I find the subject of pensions as dull as ditchwater, so I was happy enough to pay an IFA a few hundred quid to deal with it and transfer the contents of a couple of old pension funds into it.

I'm ashamed to say that I don't fully understand what he did, but the money seems to have been invested in something called a wrap, if that makes any sense.

About half was invested in something that appears on my statement as "Vanguard LifeStrategy80%Equi A" and the other half is in "Stan Life MyFolio Multimgr VPn B". I realise that these are both investment funds, and as such I've been very pleased with their performance. The value of both funds has increased by well over 20% in the past year.

However, on looking at the statement I received today I noticed that the "charges and rebates" amounted to 1.75% of the original sum invested, which seems high. It can't include the payment to the IFA, as I paid him separately, but I don't know if this is a one off charge at the beginning of the SIPP. If it is, I suppose I just have to live with it, but it did make me wonder what the annual charge in future is likely to be, and although I’ve tried looking at the fact sheets for each fund I can’t say I’m any the wiser.

From my back of a fag packet knowledge of this industry I understand that Vanguard has very low charges, and I assume that SL doesn’t. Vanguard have actually performed slightly better than SL, and I'm therefore wondering whether it would make sense to transfer my SL part of the SIPP into either the same or a different Vanguard fund, so as to reduce the annual charges.

Or should I consider doing something different altogether in respect of the SL fund? In my everyday investing I’ve always avoided managed funds and done my own thing, but irrespective of whether this would be advisable would it actually be possible just to sell the fund units and invest the proceeds directly into shares?

I apologise if this seems a rather – or extremely - dumb question, but I'm a bit wary of asking the IFA who set it up as although he seemed straight enough I'm never quite sure they’re as impartial as they make themselves out to be.

[Alaric]

I'm ashamed to say that I don't fully understand what he did, but the money seems to have been invested in something called a wrap, if that makes any sense.

Be wary, wraps can be an exercise in double charging.

There are any number of platforms and any number of funds to invest in if you don't want to buy individual shares.

SIPPs don't have to be much more complicated than dealing accounts and ISAs.

If your income exceeds your expenditure, or you have a windfall, you park the money in a dealing account (unlimited but potentially taxable), or an ISA (limited by amount but not taxable), or a SIPP ( can include employer contributions, gives tax relief, but complex rules and limitations and taxable, in part, on the way out)

[Degsy67]

Go back to the IFA and ask the question. I suspect that you have signed up to an ongoing investment advice service provided by the IFA whereby they charge you an annual ad valorem fee for the privilege of doing square root of bugger all. Check the advice documents they provided you and look at copies of any documents you signed which mention the IFA's charges.

Valuable lesson - read the small print, always understand what you're signing, beware of snake oil salesmen!

Degsy

[Clitheroekid]

I suspect that you have signed up to an ongoing investment advice service provided by the IFA whereby they charge you an annual ad valorem fee for the privilege of doing square root of bugger all.

No, we specifically agreed that there would just be the initial set up charge but no ongoing /annual fees payable to the IFA.

In fact his email sending the valuation says:

"As we do not have an ongoing service agreement there will be no further valuations or reports issued by *** although you can always access the wrap valuations online"

[Alaric]

although you can always access the wrap valuations online"

What organisation is the provider of the "wrap"?

Just a hunch, is it St James Place?

https://www1.sjp.co.uk/