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

SIPP Drawdown Platform Providers.

Including Financial Independence and Retiring Early (FIRE)
billG
Posts: 27
Joined: December 15th, 2016, 7:11 pm
Has thanked: 22 times
Been thanked: 21 times

SIPP Drawdown Platform Providers.

#400202

Postby billG » March 29th, 2021, 10:26 pm

Hello,

I apologise if this has been covered before.

I am about to enter drawdown. I have made optimistic assumptions** about my pension future requirements I have estimated the platform fees for various providers. I have also assumed the use of tracker funds throughout the SIPP’s life.
The default work option is to migrate to Towers Wills and Watson. They have been around in the UK for ages and charge an ad valorem fee structure as do most providers. I believe they are well funded, seem to be efficient and I judge they are probably going to be around for the next 30 years. Relative new kids on the block ii and Vanguard both offer a flat fee structure which can over 30 years offer quite a saving on fees for essentially the same funds (about 10k). The slight advantage of the TWW option is that I can transfer the funds in specie so would not be out the market or suffer any bid offer spread.

Does the forum have any view as to the reliability and longevity of Vanguard and/or ii ?
If I transfer I will be suffer a bid offer spread which could quite easily eat up most of the theoretical savings.
If I am out the market movement (either way) could dwarf the fee savings.
Am I overthinking this? I may not make it for the fully 30 years either by dying or going gaga so in practical terms the 10k is a maximum saving and in the grand scheme of things maybe the perceived reliability of TWW over the unknown of either VG or ii is worth a few grand?

Thoughts?

Thanks,
BillG

** My funds will be drawn down smoothly and completely exhausted after 30 years. I am currently in good health.

Kantwebefriends
Lemon Slice
Posts: 356
Joined: November 5th, 2016, 4:02 pm
Has thanked: 26 times
Been thanked: 102 times

Re: SIPP Drawdown Platform Providers.

#400217

Postby Kantwebefriends » March 29th, 2021, 11:13 pm

Is there any objection to your splitting the funds over two providers? It's an element of diversification I'd find attractive if my DC pension fund were sizeable.

mc2fool
Lemon Half
Posts: 7812
Joined: November 4th, 2016, 11:24 am
Has thanked: 7 times
Been thanked: 3017 times

Re: SIPP Drawdown Platform Providers.

#400233

Postby mc2fool » March 30th, 2021, 2:27 am

Vanguard isn't flat fee; it's ad valorem charging 0.15%pa, but is capped at £375pa, which I guess makes it sort of flat fee at that cost if you've got more than £250K in it. If you accept that, the good thing is that there are no other fees; the £375pa is it.

While Vanguard is relatively new in the UK, it's been around for over 40 years and is unusual in being a mutual; Vanguard is owned by its funds, which means it's owned by the investors. I have no doubt that it'll be around for a long time.

However, he big disadvantage of Vanguard is that you can only hold Vanguard products (ETFs/OEICs) in it. Now, there's nowt wrong with Vanguard ETFs/OEICs per se, I have around half of my SIPP in them, but then I have the other half in other investments.

Interactive Investor isn't a newcomer but has grown massively and quickly recently under its private equity owners. I have a dealing account and an ISA with ii as a result of them taking over TDDI in 2017 and ATS in 2019, both of which I had accounts with (and last year they took over the Share Centre too). With such corporate activity (and private equity owners) I wouldn't be at all surprised if they got sold off at some point, and I've had it on my to-do list to move half of my holdings with ii to another broker, which I'll do as soon as I stop procrastinating. :D

My SIPP is held with IWeb, https://www.iweb-sharedealing.co.uk/our ... nsion.html, which is administered by AJ Bell and run and owned by Halifax Share Dealing, which is part of the Lloyds banking group which, of course, has been around for over 250 years....

I don't see why you say that if you transfer you will suffer a bid offer spread, as I'd have thought most SIPPs would allow in specie transfers in -- unless, of course, your current holdings are all in-house funds offered solely by your current pension provider.

Joe45
Lemon Pip
Posts: 72
Joined: October 22nd, 2019, 3:11 pm
Has thanked: 2 times
Been thanked: 24 times

Re: SIPP Drawdown Platform Providers.

#400362

Postby Joe45 » March 30th, 2021, 4:15 pm

I struggled for some time with a decision on whether to diversify by moving part of my holdings to a second, more "established" platform.

Eventually I had something of an epiphany. I looked at the cost (in the form of higher fees) and asked myself: would I be prepared to pay that amount for an insurance product to protect me from the risk of the platform going bust? The answer was an emphatic "no".

I ended up diversifying, but kept costs to a minimum by using iWeb and ii.

I would be happy to use Vanguard for the reasons stated above. However, I can access cheaper funds through iWeb and ii, and will save a few hundred quid a year, which over 30 years, will add up to a significant sum.

JohnB
Lemon Quarter
Posts: 2497
Joined: January 15th, 2017, 9:20 am
Has thanked: 677 times
Been thanked: 997 times

Re: SIPP Drawdown Platform Providers.

#400406

Postby JohnB » March 30th, 2021, 6:48 pm

I have one platform (HL) for my SIPP/unsheltered ETFs, and a different one (I-web) for ISAs/unsheltered funds, chosen to minimise fees. While your money is strongly ring-fenced from the finances of the platform, there is always the possibility that if it gets into difficulties, you might be unable to access them for a period, so having a year or so's spending elsewhere can be worthwhile. If getting under the £85k limit means lots of platforms, give up, as your brain will explode.

Hariseldon58
Lemon Slice
Posts: 835
Joined: November 4th, 2016, 9:42 pm
Has thanked: 124 times
Been thanked: 513 times

Re: SIPP Drawdown Platform Providers.

#400428

Postby Hariseldon58 » March 30th, 2021, 8:27 pm

Presently I have a SIPP and a SIPP in drawdown with HL, it’s been fine and provide you avoid funds the costs are capped at £200 with no extra charges.

Presently moving it to interactive investor, also competitively priced, only moving because holdings at HL across all accounts have become fairly substantial and some risk mitigation is sensible as the OP suggests.

billG
Posts: 27
Joined: December 15th, 2016, 7:11 pm
Has thanked: 22 times
Been thanked: 21 times

Re: SIPP Drawdown Platform Providers.

#400825

Postby billG » April 1st, 2021, 12:10 pm

Thanks to all for replies.

Thanks to mc2fool for point out Vanguard is a capped fee not flat fee as I stated.
Thanks to Joe45 of framing the problem of disparity in fees as insurance question which, for me, helps put things in perspective. (It as shame the insurance companies not offer insurance cover for platform failure. I suspect it is not mass market product and would be expensive to provide on a retail level. Subject of another post…)

Thanks to Kantwebefriends suggesting slitting the fund in two. Another conundrum: In the past 40 years I have had a collection of disparate investments which made sense at the time, however I now I see value in simplifying things. I guess having a few investments on one platform is an idealised goal but reality gets in the way and it make some sense to split investments between both funds and management platforms. I have a fair sums split between SIPP/ISA/Unwrapped investments and use three difference providers and use slightly different trackers in each platform. Should I now aim to have six platforms (two for each pool of funds)? I think I will stick with three for now. For the record I use ii for funds; HL for IT’s and ETF’s; TWW for my SIPP; and a few ad hoc providers for cash. I guess if I was picking platforms today I may go for Vanguard (SIPP), ii (funds) and HL for IT’s and ETF’s. At some point in the future that of course may change…

Thanks to mc2fool for suggesting the funds could be transferred in specie. My current SIPP is invested in L&G funds and my preferred platform is Vanguard therefore in specie transfer is not an option. Maybe another well-established platform with fixed/capped fee structure is out there that would allow me to transfer funds in specie. I will do some more research….

As mc2fool pointed out platform consolidation may mean efforts to diversify could be frustrated. As stated ii seems to be in an expanding mode and the fees are set to attract a wider client base. However its strategy could change at some point. Personally I would have more faith in Vanguard holding or lowering fees going forward since that is built into their DNA.

Thanks to all.
BillG

mc2fool
Lemon Half
Posts: 7812
Joined: November 4th, 2016, 11:24 am
Has thanked: 7 times
Been thanked: 3017 times

Re: SIPP Drawdown Platform Providers.

#400851

Postby mc2fool » April 1st, 2021, 1:52 pm

billG wrote:My current SIPP is invested in L&G funds and my preferred platform is Vanguard therefore in specie transfer is not an option. Maybe another well-established platform with fixed/capped fee structure is out there that would allow me to transfer funds in specie. I will do some more research….

As I mentioned, my SIPP is with IWeb, which is part of the Lloyds banking group, so well established and is fixed fee.

You can check if they include your L&G funds by going to https://www.markets.iweb-sharedealing.co.uk/funds-centre/, selecting Legal & General for Fund provider and then clicking the Show 126 results button.


Return to “Retirement Investing (inc FIRE)”

Who is online

Users browsing this forum: No registered users and 10 guests