Choosing a Pension or SIPP provider
Choosing a Pension or SIPP Provider
On retirement many of us will have a variety of pensions from different previous employers. Perhaps you will already have started a Self Invested Personal Pension (SIPP) some years before retirement, and many people will also hold a range of other investments and savings, including, but certainly not limited to savings accounts, ISAs, Premium Bonds, etc.
Deciding how to manage it all during your retirement is a crucially important but potentially baffling process, made even more difficult if you have no previous experience of investing. Hopefully we can help!
If you are reading this blog you probably have an interest in effectively managing these investments so that they provide a long term and sustainable revenue. In which case, it probably makes sense to bring all these investments together into a single platform, or bring them under a single adviser or pension company that will allow you to manage them more effectively. This has multiple benefits for those of us managing our own pensions – it allows you to see the performance of all your investments in one place,will almost certainly allow you to manage them online wherever you happen to be, and it will definitely save you time if you plan to actively monitor or manage those investments. If you decide to go down this route and manage your Pension Drawdown yourself you will need to set up a Self-invested Personal Pension (SIPP). We cover SIPPs, ISAs and their relative costs in much greater detail here.
First consider your approach to investing
When it comes to choosing a pension provider or home for our investments we are all different in our levels of financial experience, our circumstances, our objectives, our timelines, our appetite for risk, and a whole bunch of other factors besides. Many investors choose their provider on cost alone, but this should be just one consideration amongst many. Others include:
• How much guidance you need
• The service you want – flexible drawdown, UFPLS, buy and hold
• What you want to invest in – shares, funds, investment trusts or all of them
• How much you have to invest – the size of your total pot
• How hands-on you want to be
• How many different types of assets you want to hold
• Your trading levels – how many trades will you make a year
• Your investment approach
• Your appetite for (or aversion to) risk
• How keen you are on extras such as research reports
Then shortlist some providers that match your approach
Once you have worked out what you need from a provider and have identified a few candidates to look at more closely, you will probably also want to consider:
- Service – what’s it like to deal with the firm?
- Support – is there lots of help available or are you assumed to be fine on your own?
- Size – do you like dealing with big established names, or are you happy with a new kid on the block?
- Product availability – is there a pension or other taxefficient savings available? Junior ISAs?
- Investment availability – funds only? Or shares? Investment trusts? ETFs? And more?
- Online facilities – will you be filling out paper forms or is it mainly online? And is there an app for that?
Categories of Pensions Providers
A whole range of pension providers exist to help you bring together these varied savings and pensions under a single platform and let you monitor and manage the underlying assets in the way that you want. Of course they all charge for this service, and the range of fees and offerings are as varied as the number of providers. We take a look at the myriad of different fees charged and what they all mean, but the Pensions consultancy LangCat reckon that, depending on your circumstances, choosing the cheapest provider over the most expensive can make a difference of up to 50% in the fees you will pay – which, over 25 years would make a significant difference to your returns.
The main categories of providers for your drawdown pension, who we cover in separate posts, are:
- Independent Financial Advisers (IFA)
- DIY, Direct or Self-service SIPP platforms – Hargreaves Lansdown, BestInvest, Fidelity, etc
- Hybrid Investment Platforms (increasingly known as Robo-advisers) – Nutmeg, etc
- Life Insurance and Adfviser based companies – Aviva, Friends Life, etc
Once you have a feel for the type of provider you are interested in then it is time to look at the range of Fees and Charges that you will have to stump up – a sobering experience indeed!