Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Feeling lazy - is there a cheat's guide to SIPPs?

Including Financial Independence and Retiring Early (FIRE)
Snakey
Lemon Pip
Posts: 73
Joined: January 29th, 2017, 1:31 pm
Has thanked: 97 times
Been thanked: 118 times

Feeling lazy - is there a cheat's guide to SIPPs?

#497239

Postby Snakey » April 28th, 2022, 2:24 pm

Soooo, my pension provider - let's call them SL - has been telling me the wrong charges for the last five years. I now want to move my pension elsewhere:
1. All the comparisons made by the IFA's I used to use, and paid good money for, had grudgingly concluded that SL was as cheap as or a bit cheaper than the various alternative platforms that they would otherwise want to move me to. But that was based on false information. The real charges are higher.
2. The way SL has dealt with me over this has left a really bad taste in my mouth.

As I had not previously thought about doing this (and I no longer use an IFA), I now have to put myself on a crash course to work out what my options even are, never mind what's the best one for me! I work in a finance-adjacent profession, so I don't need to be led by the hand through "first, you need to work out what sort of pension you've got" etc, but my only experience of pension platforms this millennium is paying into a series of SL ones (all now consolidated) and I've never needed to make a choice before.

I was wondering if anyone on here feels generously inclined to give me either a useful link, a brief run-down of the obvious options, or even just their gut feel on where I should move my money to?

I've got about £1.2m in there. While I haven't planned in detail yet, my broad intention is to crystallise at 55 (ideally there'll be a one-day stock market crash on that day so that I scrape below the LTA, but hey ho) and take the tax-free lump sum plus £50,270 (or whatever) per year in the hope of no second LTA event. I turn 55 in 2026/27.

I am invested across about ten funds, based on IFA advice from 2017 and 2018. As I understand it, the idea of asset allocation is that you let it sit there, rather than changing it in response to anything the market is doing. I think I last rebalanced in 2019. Without having yet thought about it, I suppose I would keep it like this - as opposed to, for instance, sticking it all in a Vanguard Lifestrategy - although it wouldn't need to be in the exact same named funds.

Because I am now self-employed, and my income is only going to be around £10-12k a year from now on, I will not be making any further contributions.

Anyone got any thoughts for me? Is there a provider, or a couple of providers, that stands head and shoulders above the others based on my fund size, making it a nice easy decision? Or am I being unrealistic and I'm going to have to roll up my sleeves and start from scratch working it out for myself?

Thanks for reading!

ursaminortaur
Lemon Half
Posts: 6942
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1717 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#497255

Postby ursaminortaur » April 28th, 2022, 2:43 pm

Snakey wrote:Soooo, my pension provider - let's call them SL - has been telling me the wrong charges for the last five years. I now want to move my pension elsewhere:
1. All the comparisons made by the IFA's I used to use, and paid good money for, had grudgingly concluded that SL was as cheap as or a bit cheaper than the various alternative platforms that they would otherwise want to move me to. But that was based on false information. The real charges are higher.
2. The way SL has dealt with me over this has left a really bad taste in my mouth.

As I had not previously thought about doing this (and I no longer use an IFA), I now have to put myself on a crash course to work out what my options even are, never mind what's the best one for me! I work in a finance-adjacent profession, so I don't need to be led by the hand through "first, you need to work out what sort of pension you've got" etc, but my only experience of pension platforms this millennium is paying into a series of SL ones (all now consolidated) and I've never needed to make a choice before.

I was wondering if anyone on here feels generously inclined to give me either a useful link, a brief run-down of the obvious options, or even just their gut feel on where I should move my money to?

I've got about £1.2m in there. While I haven't planned in detail yet, my broad intention is to crystallise at 55 (ideally there'll be a one-day stock market crash on that day so that I scrape below the LTA, but hey ho) and take the tax-free lump sum plus £50,270 (or whatever) per year in the hope of no second LTA event. I turn 55 in 2026/27.

I am invested across about ten funds, based on IFA advice from 2017 and 2018. As I understand it, the idea of asset allocation is that you let it sit there, rather than changing it in response to anything the market is doing. I think I last rebalanced in 2019. Without having yet thought about it, I suppose I would keep it like this - as opposed to, for instance, sticking it all in a Vanguard Lifestrategy - although it wouldn't need to be in the exact same named funds.

Because I am now self-employed, and my income is only going to be around £10-12k a year from now on, I will not be making any further contributions.

Anyone got any thoughts for me? Is there a provider, or a couple of providers, that stands head and shoulders above the others based on my fund size, making it a nice easy decision? Or am I being unrealistic and I'm going to have to roll up my sleeves and start from scratch working it out for myself?

Thanks for reading!


You might want to look at Interactive investor which has fixed fees for all types of investments and hence is cheaper than other platforms which charge percentage fees on either all or some types of investments.

https://www.ii.co.uk/our-charges

Other popular options are A J Bell (Youinvest) and Hargreaves Lansdown which have low charges if you buy shares directly, ETFs or ITs but are rather more expensive with large pots if you stick to Unit trust or OEIC funds.

https://www.hl.co.uk/pensions/sipp/charges-and-interest-rates

https://www.youinvest.co.uk/sipp/charges-and-rates

Boots
2 Lemon pips
Posts: 177
Joined: August 1st, 2021, 2:51 pm
Has thanked: 153 times
Been thanked: 116 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#497265

Postby Boots » April 28th, 2022, 3:04 pm

I'm not entirely sure if it will tell you what you want to know, but I have always liked the reports from The Lang Cat.

Sadly, they have chosen over the years to massively complicate their offerings and separate ISAs from SIPPs (presumably to better market their work). I have rather failed to keep up to date on exactly what is offered where, but perhaps you will have the time and vested interest to wade through it.

The last report that is free and includes SIPPs that I can readily lay my hands on is from 2018 - your guess as to whether the passage of time will make a significant difference is as good as mine. It can be found at https://langcatfinancial.co.uk/publications/come-and-have-a-go-the-late-summer-special/

Personally, I suspect that this older report will be fine for your purposes. Alternatively the more recent reports which only look at ISAs might also help you understand relative charging. Either way a bit of browsing around The Lang Cat may be of help.

Good luck

BullDog
Lemon Quarter
Posts: 2443
Joined: November 18th, 2021, 11:57 am
Has thanked: 1964 times
Been thanked: 1196 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#497281

Postby BullDog » April 28th, 2022, 3:49 pm

In your shoes, Interactive Investor is likely to be the lowest cost option. The fees there are flat rate, so they are the same for £100 as for £1 million in the pot. If you're happy with where the money is already invested, it's very likely that you will find the same or similar funds you already have at II. One important thing to remember, is that if you are interested in funds, the per centage fee based platforms are going to be very expensive for you. The charges situation does get a lot different at some platforms if you exclusively own shares (including investment trust shares) and ETFs rather than funds.

hiriskpaul
Lemon Quarter
Posts: 3852
Joined: November 4th, 2016, 1:04 pm
Has thanked: 681 times
Been thanked: 1489 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#497289

Postby hiriskpaul » April 28th, 2022, 4:27 pm

I agree with ursaminortaur's list. I am with HL which are probably the most expensive of the 3, but I have always had excellent service from them.

With both HL and Youninvest there is a capped fee (£200 per year with HL) provided you avoid OEICS. They charge extra for those. II I beleive do not charge extra for OEICS.

When you reach 55 you might like to consider crystallising precisely 100% of the LTA and then leaving the rest uncrystallised*. If you do this at HL that will leave you with 2 accounts and so 2 lots of charges. As I understand it this does not happen with Youinvest, which would certainly make Youinvest the cheaper option. Not sure what happens at II.


* This leaves the excess amount of money outside your estate and so free of inheritance tax. You will not dodge the LTA test though as this will still happen at age 75 or before if you die before reaching 75. There is also a (slim) chance that the LTA rules might be abolished or changed in your favour!

TedSwippet
Lemon Slice
Posts: 577
Joined: November 4th, 2016, 12:57 pm
Has thanked: 134 times
Been thanked: 299 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#497302

Postby TedSwippet » April 28th, 2022, 5:09 pm

Snakey wrote:I was wondering if anyone on here feels generously inclined to give me either a useful link, a brief run-down of the obvious options, or even just their gut feel on where I should move my money to?

If you haven't already found it, this comparison table gives a good general overview of options, and is kept up to date:

Best trading platforms and stock brokers - Monevator

Gut feeling is that Interactive Investor is likely to be the best all-round option, given your desire to stick relatively closely to the SL funds you already hold. A flat annual platform fee, and no percentage add-ons. YouInvest and Hargreaves Lansdown are percentage based, but cap for ETFs and shares, so if you're happy for a platform to corral you into not-funds you can shave a bit off Interactive Investor. Personally, I prefer to use platforms that don't play silly annual fee games with different types of holding, so my own LTA-level SIPP is with Interactive Investor. £239.88/year, including one free trade a month (enough for sporadic rebalancing, and occasional crystallisations). Quite happy with it.

iWeb and Halifax (really one and the same) are other options. I'm sure they'd be fine too. My ISAs are there, so I use Interactive Investor for my SIPP for some platform diversification. Quite happy with iWeb also.

hiriskpaul wrote:When you reach 55 you might like to consider crystallising precisely 100% of the LTA and then leaving the rest uncrystallised*. If you do this at HL that will leave you with 2 accounts and so 2 lots of charges. As I understand it this does not happen with Youinvest, which would certainly make Youinvest the cheaper option. Not sure what happens at II.

Interactive Investor operates the same as YouInvest. One pension 'pot', of which a portion is crystallised, and the rest uncrystallised. It's not the clearest way to arrange things (for example, it entirely removes the option to hold different investments in the two portions), but it works once you get your head round it. And at least there's no double-dipping on the platform charges.

BullDog
Lemon Quarter
Posts: 2443
Joined: November 18th, 2021, 11:57 am
Has thanked: 1964 times
Been thanked: 1196 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#497310

Postby BullDog » April 28th, 2022, 5:41 pm

hiriskpaul wrote:I agree with ursaminortaur's list. I am with HL which are probably the most expensive of the 3, but I have always had excellent service from them.

With both HL and Youninvest there is a capped fee (£200 per year with HL) provided you avoid OEICS. They charge extra for those. II I beleive do not charge extra for OEICS.

When you reach 55 you might like to consider crystallising precisely 100% of the LTA and then leaving the rest uncrystallised*. If you do this at HL that will leave you with 2 accounts and so 2 lots of charges. As I understand it this does not happen with Youinvest, which would certainly make Youinvest the cheaper option. Not sure what happens at II.


* This leaves the excess amount of money outside your estate and so free of inheritance tax. You will not dodge the LTA test though as this will still happen at age 75 or before if you die before reaching 75. There is also a (slim) chance that the LTA rules might be abolished or changed in your favour!

My bold -

Within II there is no distinction between any asset type for charging purposes. Flat rate is exactly that. Flat rate fee per month.

When starting taking pension benefits, at II everything stays in the one SIPP account. There is a menu link that you click and it shows that days crystallised and uncrystallised value within the SIPP. (Previously, that was buried within a sub menu, but now it's one click to view).

Snakey
Lemon Pip
Posts: 73
Joined: January 29th, 2017, 1:31 pm
Has thanked: 97 times
Been thanked: 118 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#497591

Postby Snakey » April 29th, 2022, 9:12 pm

Thanks all! Sounds like it might be a less complicated decision than I had feared.

A lot of the funds I'm in are SL branded - I forget the terminology, is it a "mirror fund"? - and the OCFs of the underlying funds seem to be mostly cheaper (there are a couple I can't find). I'm probably paying thousands more than I need to. Oh well, better late than never.

Next week I'll get on with fund selection and making sure the stuff I need is in the platform I end up going with. And make sure they won't charge me to move it, and all that stuff.

Veering off topic and at the risk of parading my total ignorance of these things, I'm thinking that if I can work out what sector everything is in, it would make sense (since I'll have to sell in order to move anyway) to check that the "current" funds are performing reasonably well compared to other funds in the sector and consider shifting to a different fund where that's not the case. Is that sort of information fairly easy to find, or is it going to take me forever?

A very specific question totally unrelated to my original one, in case anyone happens to know... one of the funds (SL Aviva Property Pension Fund) is marked as having a delay period - I'm pretty sure that's been the case for a couple of years so I assume it won't change any time soon. Anyone got any experience of what that means - is it going to stop me being able to do the transfer?

Snakey
Lemon Pip
Posts: 73
Joined: January 29th, 2017, 1:31 pm
Has thanked: 97 times
Been thanked: 118 times

Shred my portfolio!

#502001

Postby Snakey » May 21st, 2022, 5:03 pm

I'm about to set the ball rolling to move from Standard Life to Interactive Investor.

My portfolio was built by an IFA 4-5 years ago and hasn't been touched since then other than that the property fund got frozen - I can't sell the units in that one so they have to stay where they are for now. Apparently they can still do the transfer of all the rest.

I've been told I can't transfer in specie, so I have to sell and move cash and then re-buy.

Here's what I've got in SL at the moment. They all have the words "Pension Fund" at the end of the fund name, so I haven't typed that out each time. Current percentage holdings in round brackets, original percentages in square brackets to give you a better idea what it's supposed to look like and show how long it's been since I rebalanced. (Neither totals 100 because I've left the property fund off the list.)

SL M&G Global High Yield Bond (9.5) [10]
SL BlackRock Gold & General (11.1) [7]
SL Vanguard FTSE UK All Share Index (19.8) [19]
SL Vanguard Pacific ex Japan Stock Index (3.5) [3]
Standard Life Mixed Bond (22.6) [24]
SL Vanguard US Equity (4.3) [3]
SL Ninety One UK Special Situations (5.5) [6]
SL iShares Continental European Equity Index (3.4) [3]
SL JP Morgan Emerging Markets (6.8) [6]
SL BlackRock UK Absolute Alpha (4.8) [5]
SL Schroder Tokyo (2.6) [3]

A search for each fund name without "SL" at the front turned up what I assume to be the genuine article for each, with the exception of the bond fund. But then I was thinking well, this is a few years old now, good time to step back and look again, say maybe there are newer funds with lower charges. My understanding is that whether a fund underperforms or overperforms is impossible to predict and so you can pick more or less anything in the same sector - and also that performance comes and goes but charges are forever, so if in doubt go for the one with the lowest charges. Also, it looks as if II has a higher charge if you buy more than £100k of any one thing, so perhaps with some of the larger percentages I can split the investment across two similar funds.

I rolled up my sleeves but soon got out of my depth. How do I find out what category each of the above is in, and then how do I find out what the other funds are in the same category so that I can compare them? (Is there an easier way of finding the charges for each one than having to locate and read every one of the KIIDs?)

Thanks to anybody still reading!

Alaric
Lemon Half
Posts: 6031
Joined: November 5th, 2016, 9:05 am
Has thanked: 20 times
Been thanked: 1398 times

Re: Shred my portfolio!

#502033

Postby Alaric » May 21st, 2022, 7:20 pm

Snakey wrote:SL M&G Global High Yield Bond (9.5) [10]


You noted earlier that these were "mirror" funds. What happens is that SL set up a fund and keep track of units and prices, but rather than directly employ an investment manager, they just dump the lot into a third party fund, in this case M&G Gloabl High Yield Bond. You can however run into double dipping, whereby both SL and M&G are taking their percentage. You can try to spot this by comparing the relative performance of the open to all version with the SL branded version. If SL have done a good deal on your behalf, they would have got rebates from M&G and used these to enhance performance rather than pocketing them.

EthicsGradient
Lemon Slice
Posts: 570
Joined: March 1st, 2019, 11:33 am
Has thanked: 33 times
Been thanked: 231 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#502039

Postby EthicsGradient » May 21st, 2022, 8:12 pm

https://www.morningstar.co.uk/ is probably your best tool. The ETF Screener and Fund Screener allow you to look for a category (look for Morningstar Category, after clicking 'Show More' for the filters if needed), and, eg, for JG Morgan Emerging Equity competitors, select Global Emerging Markets Equity. You may have to guess, but on the whole the funds you have look like they'd invest in large cap companies, so if there's a choice, choose that category. 'You get a list, which you can sort by ongoing charge (and you can limit it to lower charges to keep it smaller). It'll give you all funds and ETFs listed in many currencies, so you'll look through a lot that are almost identical. There's no way, as far as I know, of looking at funds and ETFs simultaneously.

You might find II doesn't deal in something you fancy - check by starting the 'buy' process and get their website to search for the fund/ETF name.

TedSwippet
Lemon Slice
Posts: 577
Joined: November 4th, 2016, 12:57 pm
Has thanked: 134 times
Been thanked: 299 times

Re: Shred my portfolio!

#502074

Postby TedSwippet » May 22nd, 2022, 9:56 am

Snakey wrote:My portfolio was built by an IFA 4-5 years ago ... Here's what I've got in SL at the moment. ...

I am finding it hard to see any strategy in this portfolio. Did your IFA explain the reasons for each of these funds, and their proportions?

Looking through what you posted, it appears (using square bracketed figures) to boil down to 34% bonds, 7% cash/gold, 30% UK stocks, 6% emerging markets stocks, and just 3% each of US, Europe, Japan, and Pacific ex-Japan stocks. That's a huge bias towards UK stocks, and away from US stocks. UK stocks comprise around just 6% of world market cap; US stocks around 60%.

Although over the past few months the shine has come off US stocks, this bias has crimped performance considerably. Over the 4-5 year period shown, your (outsized) UK all share tranche has grown just 4.2%, from 19 to 19.8, whereas your (undersized) US tranche has grown 43.3%, from 3 to 4.3.

If it were me, rather than replicate this at Interactive Investor, I would take the opportunity to completely redesign it. At its simplest, a single holding of Vanguard LifeStrategy 60% if you're happy with the UK bias in that (some, but far lower than you currently have). Otherwise, pair a single all-world stock tracker fund with a small selection of gilt and corporate bond tracker funds, for a three or four fund portfolio. Use accumulation units to avoid having to manually reinvest dividends.

xxd09
Lemon Slice
Posts: 419
Joined: November 19th, 2016, 2:44 pm
Been thanked: 255 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#502091

Postby xxd09 » May 22nd, 2022, 10:46 am

Really tough decision time for you with serious implications for the long term growth of the portfolio
Take Teds advice -re a global equities index tracker and the same sort of vehicle for bonds
Personally as 75 year old retiree dependent on my portfolio……..
I have 3 funds only -index funds( which perform better than 85% of their active equivalents)
2 equity and 1 bond fund
Simple cheap and easy to understand
It’s a lot for you to take in and and a critical time(retirement) for you to be doing all this never mind the current serious stockmarket downturn!
Perhaps a compromise would be to recreate your old portfolio with which you are familiar within your new provider then start making changes as you learn more and get more confident
You do not want to be out of the market for any length of time!
You could do so much better -some reading required-Monevator.com is good
xxd09

Snakey
Lemon Pip
Posts: 73
Joined: January 29th, 2017, 1:31 pm
Has thanked: 97 times
Been thanked: 118 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#502181

Postby Snakey » May 22nd, 2022, 6:11 pm

Thanks all! This is really useful stuff. Really, even just hearing other people are interested in these things is motivational - I'm a bit on my own in that respect in real life. Everyone I know either just goes into their employers' default funds (if they make contributions at all) or they are banging on about crypto - or making £££s in their spare time selling things with Aloe Vera in!

I've checked the charges as best I can, and if I've got it right the underlying funds are all cheaper (Vanguard considerably so) than SL with the one exception of Absolute Alpha in which I've only got £58k invested. I'm going to save an Absolute Fortune by moving to ii, even if I don't change anything.

As for allocations, I've dug out the initial advice (summer 2017) for my own amusement and it says "Our [blah blah 40] portfolio is most likely to appeal to the typical investor looking for growth over a period of at least ten years and willing to accept a moderate degree of risk. This asset allocation comprises of equity exposure in the region of 37% and bond, gilts and cash in the region of 40%. The remainder of the portfolio is made up of property, commodity-related or alternative investments."

From memory the rationale was that since the pension was forecast to be at or slightly above the LTA - before we knew they were going to freeze it - I'd be splitting the upside with the taxman 45:55 while any downside would be suffered 60:40 by me, so it made sense to go for safety in the pension and take more risks with the ISA to balance it out.

The ISA was a [blah blah 10] portfolio and the wording is the same but "only for investors who can tolerate high levels of risk in pursuit of higher growth" and has 70% equities and 10% bonds. I haven't changed the holdings in that either - maybe I should consider that at the same time.

My ISA:
Blackrock UK Absolute Alpha (10)
HSBC Global UK FTSE 250 (33)
iShares Core UK Gilts UTC (10)
iShares Physical Gold (10)
iShares MCSI World GBP Hedged (37)

I've rebalanced that each April via allocation of new funds.

My GIA I did myself and dumped the whole lot into VLS100 (I've bounced it to VLS80 and back in alternate years to use my CGT annual exemption), I'm not sure I shouldn't have just done that across the board and saved all the IFA fees! And don't even get me started on the EIS investments they were so positive about recommending...

If I had to pick a villain I'd point the finger at SL though. They consider that the only relevant point is that the "correct" charges were being deducted. The fact that they were consistently (January 2017 to December last year) telling me it was £2k a year lower, and that I was making decisions to stay with them at least partly on the basis of that false information, is apparently neither here nor there. They seem so sure of it that I'm now wondering whether I'm the one being unreasonable! I asked them to refund the £10k difference to put me back in the position they'd incorrectly led me to believe I was in, and they've told me they'll see me at the Ombudsman if I fancy my chances :lol: .

Anyway. Leaving aside random bitterness, I had a beautifully timely e-mail from Monevator a couple of weeks ago with lowest-cost funds, so maybe I'll go with that as a guide. My only problem was that it's split into sectors and I just wasn't sure how to do "like for like" because how do I know (for instance) whether "Absolute Alpha" means small cap or emerging market or whatever of the categories on the list, or what "mixed bonds" translates to. But maybe it's as you say - just stick it in a couple of big funds. (I guess being careful not to overcompensate into the US, if all of the gains there have already been taken in recent years so I'd be buying high?)

Thanks all so much for holding my hand and making me feel like it's easily possible to do this myself!

Oh, quick final Q: can I assume that ii will need to do full KYC and to-and-fro with various forms for signature before I can move the money? I only ask because ii appear to have six months free if I open an account before the end of May and £1k cashback for me if I instruct the transfer before the end of June (but I think I need to have sold my holdings in SL by then and I don't know how long that takes). If those dates are realistically unlikely, I'll try to forget I knew about them.

Alaric
Lemon Half
Posts: 6031
Joined: November 5th, 2016, 9:05 am
Has thanked: 20 times
Been thanked: 1398 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#502197

Postby Alaric » May 22nd, 2022, 8:47 pm

Snakey wrote: because how do I know (for instance) whether "Absolute Alpha" means small cap or emerging market or whatever of the categories on the list, or what "mixed bonds" translates to. But maybe it's as you say - just stick it in a couple of big funds. (I guess being careful not to overcompensate into the US, if all of the gain.


Absolute Alpha usually implies they are trying to square the circle by both preventing the capital value from falling and beating returns on cash. As such it likely to be invested in whatever managers consider the best bets. Generally speaking funds labelled in this way haven't done particularly well. "mixed bonds" probably means a mix of government backed and corporate bonds.

Many brokers say that SIPPs can be opened almost instantly. That's an empty SIPP with no funds in it. Gettind existing assets transferred is likely to be the longer process.

TedSwippet
Lemon Slice
Posts: 577
Joined: November 4th, 2016, 12:57 pm
Has thanked: 134 times
Been thanked: 299 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#502207

Postby TedSwippet » May 22nd, 2022, 9:41 pm

Snakey wrote:As for allocations, I've dug out the initial advice (summer 2017) for my own amusement and it says "Our [blah blah 40] portfolio is most likely to appeal to the typical investor looking for growth over a period of at least ten years and willing to accept a moderate degree of risk. This asset allocation comprises of equity exposure in the region of 37% and bond, gilts and cash in the region of 40%. The remainder of the portfolio is made up of property, commodity-related or alternative investments."

Hmm. Rather generic, isn't it? Cynic that I am, I find myself increasingly of the opinion that advisers cannot resist complexificating a portfolio purely in order to create the appearance of it being some magical, mystical, and cryptic process known only to initiates. Whereas in practice, you can use (and have already used!) something like Vanguard LifeStrategy as a literal one-fund virtually full coverage portfolio.

Snakey wrote:From memory the rationale was that since the pension was forecast to be at or slightly above the LTA - before we knew they were going to freeze it - I'd be splitting the upside with the taxman 45:55 while any downside would be suffered 60:40 by me, so it made sense to go for safety in the pension and take more risks with the ISA to balance it out.

I can follow the logic here. My own LTA-level SIPP is around 80% bonds, but my ISA and my GIA are 100% stocks. Overall around 60:40, but with the ballast in the SIPP to minimise LTA issues. (Bonds have had a dreadful year so far, so in that respect at least, it's working!)

There is definitely a strong argument for considering your SIPP, ISA and GIA holisticially, so that you locate the different assets types and classes in the most tax-efficient places. Maybe even consider swapping the 10% bonds you have in your ISA with an equivalent amount of stock in your SIPP?

Snakey wrote:The ISA was a [blah blah 10] portfolio and the wording is the same but "only for investors who can tolerate high levels of risk in pursuit of higher growth" and has 70% equities and 10% bonds. I haven't changed the holdings in that either - maybe I should consider that at the same time.

Again, a rather strong UK bias. 43% UK, compared to around 35% non-UK. In addition, a strong tilt towards UK mid and smaller companies. And while not exactly a worry, the GBP hedged all-world stock fund seems a bit ... unusual. The received wisdom is usually that unhedged is preferable for equities, but hedged is preferred for where you hold non-local bonds.

Snakey wrote:My only problem was that it's split into sectors and I just wasn't sure how to do "like for like" because how do I know (for instance) whether "Absolute Alpha" means small cap or emerging market or whatever of the categories on the list, or what "mixed bonds" translates to.

Morningstar classifies BlackRock UK Absolute Alpha as large cap, but neither growth nor value (dividend) oriented. All UK stocks (so emphatically not "emerging markets" ... well, not until the UK slips out of the list of developed countries). Even though I'm generally a fan of BlackRock, personally I'd probably pass on this one and replace it with a simple tracker.

Snakey wrote:Thanks all so much for holding my hand and making me feel like it's easily possible to do this myself!

Advisers seem to like creating both mystique and an air of clairvoyance to portfolio creation. However, on balance most know nothing more than the rest of us about how the future will unfold. Where they do offer value is in cutting through the thicket of tax and regulation, and in helping focus the mind on what matters. I'd say however that you've had that from them already.

It is easily possible to do this yourself. The key is to understand that the aim is not so much to win as it is not to lose. That is, you don't need the optimum (highest returning) portfolio. Rather, you need one that will suffice, and which has a low probability of failure. Some bit of my own portfolio is always a disappointing underperformer relative to the other parts; that's fine, it's how I know I've set it up well!

Snakey wrote:Oh, quick final Q: can I assume that ii will need to do full KYC and to-and-fro with various forms for signature before I can move the money? I only ask because ii appear to have six months free if I open an account before the end of May and £1k cashback for me if I instruct the transfer before the end of June (but I think I need to have sold my holdings in SL by then and I don't know how long that takes). If those dates are realistically unlikely, I'll try to forget I knew about them.

You should be able to open your Interactive Investor (or whoever) SIPP virtually instantly online. There may or may not be some later KYC follow-up, but this would be after account opening, not before. To transfer, you work with your new provider, so Interactive Investor. They will contact SL to arrange the transfer. SL may contact you to confirm that this is a real thing (in which case you simply reply, yes it is).

Selling a holding to cash in SL should take no more than a few days. Funds trade once per day, and there is a cutoff time for trades, usually around 11am or noon; if you miss it, you get tomorrow's. You can usually buy something else on that platform the next day, but you won't be doing that, so settlement to cash that can be moved out will be three days or so. (Except for perhaps some real estate funds, which can have liquidity issues and trading restrictions, as you've discovered.) No need to initiate this until you've set the transfer in motion with Interactive Investor. And possibly no need to initiate it yourself at all, if (as is likely) SL will automatically liquidate everything where you specify "transfer in cash" on the transfer forms.

So you should be able to capture your free months and cashback -- well worth taking. The thing to watch for is slow transfer times. Some transfers can be quick, where both sides use a transfer intermediary such as Origo. Others though can be slow, with money literally moving as a paper cheque through the post between providers. And the ceding platform is sometimes rather too willing to give transfers out their lowest priority possible. For the time this transfer takes, you'll be out of the markets. In a falling market, that's a good thing. In a rising one, it isn't.

Snakey
Lemon Pip
Posts: 73
Joined: January 29th, 2017, 1:31 pm
Has thanked: 97 times
Been thanked: 118 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#509785

Postby Snakey » June 26th, 2022, 3:32 pm

Hello again everyone!

So I requested one transfer (a £50k pot) on the 15th and it's vanished from my SL summary page at some point since the 21st. I requested the other one (~£1.2m) on the 21st so I hope that will follow fairly soon. Zero balance has reached ii yet, but I want to be ready to jump back into the market just as soon as the cash comes through. It's via Origo and they say the entire transfer takes 2-3 weeks in total.

I'm about to look at what to buy*, but in the meantime... is anyone bored and got a few minutes to throw some comments at me?

1. I was thinking I could set it up as a regular trade, because the next date for that is 6 July and fingers crossed at least one - and ideally both - lumps of money will be in there by then (but without having been sitting there for very long). With my Halifax ISA you can use the regular trade mechanism even for a single purchase that won't be repeated, and I assume it's the same here. I can't decide whether that's a really clever idea or a pointless complication and I should trade for a fee in the normal way and have done with. Views?

2. (An ii-specific question) On the screen for choosing the regular investments, the end column says (when you hover over the question mark) "blah blah if you've invested in funds our funds platform fee will also apply" - wait, what? I thought I was only paying a single monthly fee? This may be a stupid question because I'm not totally comfortable yet with all the terminology - the word "fund" seems to me to have different meanings depending on context! - but everything I'm proposing to invest in is a "fund" in this context isn't it?

3. I have some idea in my head that there's a special extra fee (not ii but everywhere) for investing more than a certain amount (£100k?) in a fund in one go. Or did I dream that? If there's a point at which you have to pay more, and if it's significant, I guess it might be worth splitting the investment between a bunch of similar funds?

I appreciate I could probably find out the last two for myself given time, but if somebody just happens to know the answers off the top of their heads it would be great!


*the devil on my shoulder is telling me to stick the whole lot in VLS80 (or whatever I settle on later this afternoon) and make changes at my leisure over the coming months. Of course we all know that if I do that it'll stay in [VLS80/whatever] until the day I die. Would that be so terrible, though?

TedSwippet
Lemon Slice
Posts: 577
Joined: November 4th, 2016, 12:57 pm
Has thanked: 134 times
Been thanked: 299 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#509864

Postby TedSwippet » June 26th, 2022, 10:23 pm

Snakey wrote:1. I was thinking I could set it up as a regular trade, because the next date for that is 6 July and fingers crossed at least one - and ideally both - lumps of money will be in there by then (but without having been sitting there for very long). With my Halifax ISA you can use the regular trade mechanism even for a single purchase that won't be repeated, and I assume it's the same here. I can't decide whether that's a really clever idea or a pointless complication and I should trade for a fee in the normal way and have done with. Views?

Perhaps pointless, at least in my view. The amount you save in trading costs will be minuscule compared to the potential losses (or gains!) from being out of the markets for longer than necessary.

Snakey wrote:3. I have some idea in my head that there's a special extra fee (not ii but everywhere) for investing more than a certain amount (£100k?) in a fund in one go. Or did I dream that? If there's a point at which you have to pay more, and if it's significant, I guess it might be worth splitting the investment between a bunch of similar funds?

Interactive Investor charges £40 for trades of amounts above £100k. Though never in this position myself, I've often wondered whether simply splitting a trade would cut the fee. Say you wanted to trade £180k. Placing two trades, even of the same thing on the same day, ought only cost 2 x £7.99 (better yet, two free trades). Or failing that, on two consecutive days. If these don't work though, I don't think I'd be willing to use different funds just to squeeze that particular lemon. Again, small beer compared to the sums involved.

Snakey wrote:*the devil on my shoulder is telling me to stick the whole lot in VLS80 (or whatever I settle on later this afternoon) and make changes at my leisure over the coming months. Of course we all know that if I do that it'll stay in [VLS80/whatever] until the day I die. Would that be so terrible, though?

There are many, many worse things you could hold long term than VLS80.

Hariseldon58
Lemon Slice
Posts: 834
Joined: November 4th, 2016, 9:42 pm
Has thanked: 124 times
Been thanked: 513 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#510122

Postby Hariseldon58 » June 27th, 2022, 11:00 pm

TedSwippet wrote:
Snakey wrote:1. I was thinking I could set it up as a regular trade, because the next date for that is 6 July and fingers crossed at least one - and ideally both - lumps of money will be in there by then (but without having been sitting there for very long). With my Halifax ISA you can use the regular trade mechanism even for a single purchase that won't be repeated, and I assume it's the same here. I can't decide whether that's a really clever idea or a pointless complication and I should trade for a fee in the normal way and have done with. Views?

Perhaps pointless, at least in my view. The amount you save in trading costs will be minuscule compared to the potential losses (or gains!) from being out of the markets for longer than necessary.

Snakey wrote:3. I have some idea in my head that there's a special extra fee (not ii but everywhere) for investing more than a certain amount (£100k?) in a fund in one go. Or did I dream that? If there's a point at which you have to pay more, and if it's significant, I guess it might be worth splitting the investment between a bunch of similar funds?

Interactive Investor charges £40 for trades of amounts above £100k. Though never in this position myself, I've often wondered whether simply splitting a trade would cut the fee. Say you wanted to trade £180k. Placing two trades, even of the same thing on the same day, ought only cost 2 x £7.99 (better yet, two free trades). Or failing that, on two consecutive days. If these don't work though, I don't think I'd be willing to use different funds just to squeeze that particular lemon. Again, small beer compared to the sums involved.

Snakey wrote:*the devil on my shoulder is telling me to stick the whole lot in VLS80 (or whatever I settle on later this afternoon) and make changes at my leisure over the coming months. Of course we all know that if I do that it'll stay in [VLS80/whatever] until the day I die. Would that be so terrible, though?

There are many, many worse things you could hold long term than VLS80.


I found the £40 fee with ii the hard way, it’s deeply buried… yes you could do two transactions to get them under £100k if it was say £180k.

Note the currency charge halves from 1% to 0.5% ie save a few quid on the transaction fee but lose hundred in the currency charge, ii are very expensive when it comes fx charges.

There’s a lot to like about ii but some aspects are suboptimal.

TedSwippet
Lemon Slice
Posts: 577
Joined: November 4th, 2016, 12:57 pm
Has thanked: 134 times
Been thanked: 299 times

Re: Feeling lazy - is there a cheat's guide to SIPPs?

#510186

Postby TedSwippet » June 28th, 2022, 10:34 am

Hariseldon58 wrote:I found the £40 fee with ii the hard way, it’s deeply buried… yes you could do two transactions to get them under £100k if it was say £180k.

Yeah. Page 2 of the charges document, although same font size as everything else. My main niggle is that much of the rest of the site fails to note this, for example Our Charges; no disclaimer or footnote on the £7.99 trading fee claim.

Hariseldon58 wrote:Note the currency charge halves from 1% to 0.5% ie save a few quid on the transaction fee but lose hundred in the currency charge, ii are very expensive when it comes fx charges.

Youinvest and HL both charge 1%, so while not cheap, not really out of line with the competition it seems. Personally, I use all GBP traded funds and ETFs, so not had to tangle with this. Presumably cheaper options are available elsewhere?

Hariseldon58 wrote:There’s a lot to like about ii but some aspects are suboptimal.

Something else I've just found to like is the recently introduced "Pension Builder" plan. My ISA and trading account are elsewhere, I hold only a SIPP in Interactive Investor, and I trade at most two or three times a year. I'm currently paying £20/month; moving to this will drop to £13/month, saving me a handy perhaps £60-70/year. A couple of years ago I was paying £30/month for my SIPP; Interactive Investor dropped the added £10/month drawdown fee in late 2020.

All in all, and while of course not perfect, it seems to me that Interactive Investor's business model is more aligned with customer interests than Youinvest's, HL's, and so on. Also, I have a fundamental distaste for platforms that play silly games around fees for funds. There really is no excuse for that, and I avoid them on principle.


Return to “Retirement Investing (inc FIRE)”

Who is online

Users browsing this forum: No registered users and 11 guests