Should I go for a low cost pension or trust my IFA?

23 June 2021

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Question by Angela

I have an IFA that is charging me 1%/year for switching my pension funds every 3 months. I have a platform charge & fund charges on top of this so it works out nearly 2%. I want to transfer to a life strategy fund at Vanguard but am getting confused by the numbers. When I did a like for like, year on year comparison, Vanguard beat my current pension performance by 2% yearly on average. But when I just logged in to my current provider, it said my performance the last year is over 15%. Just wondering whether I should just go for a low cost pension or trust my IFA, despite the high charges. Many thanks, Angela


Answered by Mark Russel

Hello Angela

Thank you very much for your question which hopefully I can help you with.

You are quite right to pay attention to the costs you are paying as they unlike future fund performance can be controlled and anticipated. You should take into consideration the overall 'value' your IFA is adding to your financial planning in terms of the advice, support and guidance they are giving you each year. Value can take many forms from tax efficient planning, promoting good behaviour when it comes to your money/pension, guidance and trust and not just the investment returns you are getting each year.

If you are going to compare Vanguards Life strategy fund against your current pension fund(s), then look over as long a time period as possible rather than just the last 12 months.

More importantly you should review your long term goals when it comes to your pension in relation to at what age you would ideally like to achieve 'financial independence' (retire) and are you on track to achieve this?

I hope that the above helps but if you require any further guidance, please do not hesitate to come back to me.

Kind regards

Mark Russel
Chartered Financial Planner



Answered by

Mark Russel

Chartered Independent Financial Planner

I have 22 years’ experience as an Independent Financial Planner, with 8 working for the award-winning firm, True Bearing Chartered Financial Planners. I became a financial planner to help improve the lives of my clients and ensure that by working alongside them that they can achieve their goals and aspirations in life.