Change to SIPP or not

[rebsamsuz]

Good Morning All

I am torn over a decision whether to move my pension investments from St James Place to a SIPP.

In 2015 St James consolidated my smaller pensions into one with them, the value of the pension at that time was £95000. I had to sign a penalty letter to say that I would leave the investment with them for 5 years, as I was not happy with the performance of the pension, I had decided to move it to a SIPP in April this year (the 5th anniversary) the value of the pension was £105000 just before the carnage of Covid 19. and is now £85000,

My reason for wanting to move from St James = I am 57 years old and would like to retire @60 I would need an income from the pension of £4000 and if left with St James I couldn't see the pension lasting the distance. My thoughts were to move it to a SIPP and buy a mixture of ITs ETF and trackers giving a yield greater than 4%.

With the recent Covid 19 outbreak I have now got very cold feet and would appreciate guidance from this respected community.

I appreciate your thoughts.

Reb

[EverybodyKnows]

If you are thinking of moving just now I would factor into your thinking the potential (positive and negative impact) of any time out of the market. There have been big swings and if you miss a good one it could have quite a big impact.

One option could be to move in increments rather than moving everything in a single move.

[JohnB]

Are you an active of passive investor? If the latter, you can set up a well-run SIPP which charges you 0.1% on the funds (plus up to a capped £200 for the broker), so £300 a year max on £100k. I suspect you are paying rather more to St James Place.

[dealtn]

Good Morning All

I am torn over a decision whether to move my pension investments from St James Place to a SIPP.

My reason for wanting to move from St James = I am 57 years old and would like to retire @60 I would need an income from the pension of £4000 and if left with St James I couldn't see the pension lasting the distance. My thoughts were to move it to a SIPP and buy a mixture of ITs ETF and trackers giving a yield greater than 4%.

You're not giving a lot of information here. Are you simply comparing the current yield of one against the potential of another? If that's the case then its not the only factor.

[Alaric]

You're not giving a lot of information here. Are you simply comparing the current yield of one against the potential of another? If that's the case then its not the only factor.

Key points would be that moving from a St James Place platform to a mainstream SIPP gives a far wider choice of investments at a much lower running cost. What you give up is the advice from St James Place representatives.

[baldchap]

https://uk.trustpilot.com/review/sjpp.co.uk

https://www.which.co.uk/news/2017/07/exclusive-wealth-manager-st-jamess-place-misleading-customers-on-charges/

[dealtn]

You're not giving a lot of information here. Are you simply comparing the current yield of one against the potential of another? If that's the case then its not the only factor.

Key points would be that moving from a St James Place platform to a mainstream SIPP gives a far wider choice of investments at a much lower running cost. What you give up is the advice from St James Place representatives.

Don't disagree.

What's concerning is the apparent "faith" in yield being important, rather than returns.

Consider 2 identical "funds", which in reality are identical savings accounts earning 10%. One pays out a "dividend" of 10% and "yields" 10%, the other only pays out half its earnings thus has a "dividend" of 5% and "yields" 5%. Is the first fund better because it has a 10% yield? Is the second uninvestable because in retirement it "...won't last the distance"?

Now consider 2 (non) identical "funds" which in reality are (non) identical savings accounts, one earns 8%, the other 10%. Both pay out 100% of earnings as "dividends", and "yield" 8% and 10% respectively. Does anyone have a preference for one "fund" over the other?

Now consider the same 2 "funds" but now the latter pays out only half of its earnings as dividends, and thus they now "yield" 8% and 5%. Do you still have a preference for one "fund" over the other, and if so is it the same answer as before, or not?

[xxd09]

This a very volatile time to be “changing horses “ ie changing investment platforms
You could lose a lot of money if the market suddenly falls or rises during your transfer
It might be wise to wait until things calm down in a year or so
You appear to be taking on sole charge of your investments
At 57 this is quite a task
I would use the next year or two to do more asking, reading etc
As a very rough guide £100000,s worth of investments would produce £3000 to £3500 pa
xxd09

[Alaric]

As a very rough guide £100000,s worth of investments would produce £3000 to £3500 pa

The problem is that St James would walk off with most of it.

From
https://www.sjp.co.uk/charges/pensions-charges

Product Charges

There will be an initial product charge of 1.5% of your investment. There will also be an annual product management charge of 1% but this will be waived in the first 6 years for each investment. If you encash within the first 6 years of an investment there will be an early withdrawal charge of 1% of the value of your fund in respect of this investment.

Charges for managing and maintaining underlying investments


In addition to charges for the advice and the product, there are charges for managing and maintaining your underlying investments. These depend on the funds you choose to invest in.

The funds document is at

https://www.sjp.co.uk/~/media/Files/S/S ... 022020.pdf

This discloses that, for example, "Global Equity Income", has 1.97% as "Total Ongoing charges".

[nmdhqbc]

With the recent Covid 19 outbreak I have now got very cold feet and would appreciate guidance from this respected community.

I would not let Covid 19 volatility change your mind but I would perhaps wait until it calms down as some other posters have said. You could quite easily miss any recovery (or big drops I suppose) being out of the market. I assume SJP puts you in their own funds so I presume you can't transfer the funds from them to a platform without being out of the market.

[fca2019]

I know you consolidated your smaller pensions into one, but i would consider setting up a new sipp first. Run it for a bit yourself. I have a Sipp with AJ Bell and contribute into workplace pension and the sipp every month.

Get a feel for returns and charges etc. Then if happy after few months get the new provider to move your St James over. If you change your mind the sipp can be taken in full as cash lump sum if less 10k or moved to SJ.

[onslow]

The return from 95K to 105K over 5 years is very poor, given the entire market has gone up substantially. Even taking into account the impact from Covid, it’s a very poor return from St James

With a SIPP you’ll have to do some work, even if its just putting it into a few funds and “forgetting” about them. I’m about to do the same with my SIPP – 4 or 5 key funds/trusts, let them be and review every 6 months or so.

I’m younger than you (40) so I’m doing all equity funds, however you may wish to look at some fixed income, I’m proposing the following:

Fundsmith Equity – good global brands & companies with competitive moats
Lindsell Train Global Equity - good global brands & companies with competitive moats
Edinburgh Investment Trust – impressed with their recent portfolio re-org under new management, key “steady” blue chips here
Scottish American or Brunner Investment trust – global investment trusts, US focus.

Ongoing costs for the above portfolio almost certainly would be a lot cheaper than continuing with St James, plenty of cheap online brokers

[rebsamsuz]

Thank you to all

I have decided to sit a wait for now.

I am very disappointed at the performance of SJP and will move when the market has settled down.

In my opinion SJP are very expensive and do not offer any benefits for this, they have not given a decent increase over 5 years and have also not protected my investment, I could accept an argument that the reason for the poor performance was to protect the fund but quite clearly that is not the case.

They seem to be only interested in make money from their investors and I will surely not be the only one to see their way to the door.

Again Many Thanks
Reb

[nautical]

My elderly father has had a couple of ISAs with SJP for several decades invested in two of their funds.

According to their recent annual statements (I have Power of Attorney to manage his affairs) the annual fee for these averages about 2%.

Each year a letter also arrives from his local SJP adviser, which I ignore.

The "money for old rope" will end very shortly as they're about to get transferred (sold/reinvested) to a new provider.

[ADrunkenMarcus]

My elderly father has had a couple of ISAs with SJP for several decades invested in two of their funds.

According to their recent annual statements (I have Power of Attorney to manage his affairs) the annual fee for these averages about 2%.

Each year a letter also arrives from his local SJP adviser, which I ignore.

The "money for old rope" will end very shortly as they're about to get transferred (sold/reinvested) to a new provider.

Annual fee of 2%? If they achieved 5% real returns p/a then that wipes out 40% of the gain!

[Joe45]

I was recently asked to assist a relative with her investment portfolio. She had placed £20k into an ISA having been advised by SJP. They charged her an entry fee of 5%, and annual admin/advice charge of 0.35%, and advised her to place her princely sum into no less than 13 different funds.

Guess what: every single fund was managed by SJP, each charging around 1% annually. The final insult is that the funds generally under-performed and there was a 5% early exit charge.

Frankly this is scandalous. On my suggestion my relative moved the whole lot into low-cost tracker funds accessed through iWeb. Total charge around 0.2% per year.

[GrahamPlatt]

SJP as a listed company itself, seems to be doing OK for shareholders (current yield 5.61%)
https://www.sjp.co.uk/shareholders

Someone’s paying for that.

PS in 2015 SJP was trading circa £9.

[Alaric]

SJP as a listed company itself, seems to be doing OK for shareholders (current yield 5.61%)

I think it's on the list of dividend cutters.

To the extent that it relies on face to face meetings with new clients, it may find its supply of people to take fees from will diminish in the current circumstances.

[GrahamPlatt]

I think it's on the list of dividend cutters.

To the extent that it relies on face to face meetings with new clients, it may find its supply of people to take fees from will diminish in the current circumstances.

Yes, you’re right. Must have missed that. But statement on 27th May says you FUM up 1%.

[grumpazoid]

I have also been considering moving out of SJP pension.

I moved some of my ISA from them a few years ago to a platform and have not looked back. I need to move the rest.
Their pension fund actually seems to perform much better than their ISA. It is not good knowing performance is mediocre at best with high fees.

Is the process of transferring to a SIPP similar to an ISA transfer?