What are my options for a low-cost drawdown?
03 March 2021
Question by James
I am 72 but - apart from the tax-free content - have not yet drawn down on my SIPP.
My current adviser charges 2% per annum which will be a noticeable chunk of my future income so I am thinking of transferring to a lower-cost provider.
It seems the robo-investors don't accept SIPPs in drawdown and I don't want to advise myself.
Are there low-cost providers who accept SIPPs in drawdown?
Answered by Boring Money
I’ll give you some general points to consider but I would suggest you get in contact with someone who can give you personalised financial advice based on your overall circumstances and objectives.
Generally speaking, 2% per annum is market average for financial advice if this includes the adviser charges, platform costs (if applicable) and underlying fund charges. If you are paying 2% per annum just to your financial adviser, this is higher than other advisers in the market. I would suggest you speak to your current adviser to get a breakdown of the charges.
Ultimately, you can lower fees by choosing a different adviser or looking at passive investment options. There are a number of SIPP providers, such as Seven Investment Management or AJ Bell Investcentre who will accept SIPPs in drawdown. However, my advice to you would be to consider the value of advice you are receiving. Cheaper is not always better. Equally, paying higher charges is only justifiable if you get more from it - be that higher growth or an additional level of service.
If your plan is to draw from your SIPP at some point in the future, having a trusted financial adviser to help manage this with you is really important. Your adviser can manage the sustainability of the fund, keep an active eye on the underlying investments and adapt the pension with your potentially changing circumstances. If you don’t particularly like or trust your current adviser, it might be worth speaking to some others to compare the service on offer and associated charges.