Aviva Review

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Now this is a tricky question to answer, because I don't know exactly what's in your SIPP.

I did look at the charges for the Aviva Pension which you can buy directly online, and the charges start at 0.4% for administration and tier down.

That's that's pretty reasonable, and in line with the market average.

You ask about performance - it's hard to know because I don't know what funds they've actually invested in, or what investments are sitting inside your SIPP.

However, here are just a few things you can do, just to get a sense check of how it's doing:

1. Look at what's in your fund. What you're looking for is the percentage of your fund or your pension, that they've invested in shares or equities. It might be 60%, it could be 100%, or it could be 20%. Try and work that out.
2. See how similar pensions have done. As a proxy for fund performance, go and look at the Vanguard Lifestrategy range which is a low-cost fund. Try to map the percentage you've got in shares or equities to their option, and just see how they've done. This is of course not a perfect science at all, but if you can see that the Vanguard blended fund with 60% in shares has returned 10%, and your Aviva option with the same blend has returned 1%, well then you've got some questions to ask. It's not a perfect science, it's crude but I'm trying to help you with some rough and ready reckoners.
3. Take a look at the FTSE. The other thing I do, is just look at what the FTSE 100 has done over the last year. It's down - global stock markets in general, are lower than they were. So if your fund is invested in global shares and it's down a bit, then this is entirely in line with what I'd expect.

When you're looking at performance, the thing you've got to work out, is what's the split between bonds and shares.

Have a look at a few other investments that have got a similar split, and just check you're not out of line. As long as things haven't fallen off a cliff over the last year, you should be fine. Aviva is a good, solid, reputable household name. It's unlikely that you're paying way above the odds.

As for performance, check out similar examples with a similar split, and just check your performance is around there or thereabouts.

If it's not, you've got some questions to be asking.

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

My first question is why you want to look to set up a pension elsewhere.

There are benefits in having your ISA and pension managed in the same place.

Ring Fencing

Nutmeg and most other investment providers will ring fence client money from their account.

So if anything goes wrong, your money is held by what we call a custodian. They are also covered by the Financial Services Compensation Scheme (FSCS), which covers you for up to £85,000 we hold with any one provider, if they get into troubles. So do have a look at that. 

If you still want to look elsewhere, not so many of the robo advisers have pensions. You could, if you're worried about security, look to stick with a household name such as Aviva, who will let you buy a DIY pension online from them.

Robo advisers

Other options would be to use more of what we call an investment supermarket. Hargreaves Lansdown is the country's biggest. It's a FTSE 100 firm, if you're worried about security. So that might be a good place to look. They can be expensive for much larger accounts, but if you're getting started with the pension and their service is good, then the fees won't be relatively out of line with with the market.

Ready meals

Other places you could look to start a DIY pension, would be AJ Bell Youinvest. Unlike with Nutmeg and Aviva, both of whom offer ready-made pension investment packages, with Hargreaves and AJ Bell Youinvest you will have to pick the investments you actually put into your pension.

If you want the investment equivalent of a ready meal, then have a look at what we call multi asset funds to put inside your pension. Vanguard's Lifestrategy range or BlackRock's Consensus range are two such options. 

Result:

On balance, if you've got a relatively small amount in your ISAs and are starting off with a pension, I think it sounds like it may make sense just to stick with the provider you're with and the service that you know.

Hope this helps,

Holly

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Hi Stephen,

Firstly, what a fantastic amount of money to have accumulated ready to support your retirement. Now is a great time to be considering your options.

You have asked a very worthwhile question. Managing your own finances when you go into retirement is a little tricky, as you need your money to last you potentially for 40 years. If you are determined to leave money to your family, you may also want to consider how you can shelter some of your savings from inheritance tax, and long-term care planning issues that may arise in the future. 

Your attitude to risk should have no bearing on the value that an IFA can bring to the table.

However in my opinion, for you, it is important to differentiate between a financial adviser vs a financial planner.

A typical financial adviser who operates on a ‘assets under management’ model will charge you between 0.75-1% per annum.

It is important to ask them what they provide for the annual fee. If it is just managing the money invested, then I would have a conversation with financial PLANNERS. Financial planners will provide you with a financial forecast to help you to plan out scenarios and manage issues such as tax planning, inheritance tax and safe withdrawal rates. This will ensure that you never run out of money, whatever your tolerance to risk is.

The focus here is on planning and not just managing risk, investment strategies, and financial products. 

In reality, the question you are asking here is "how can I protect my lifestyle, so that I can never run out of money, and I can leave a legacy to my family.”

Financial planning will help you to answer this. Some planners will allow you to work with them on a fixed fee arrangements, and it may well be that you ask them to create a financial plan first, and then decide if their ongoing service is of value to you.

With a pension fund at £1 million, you will need to consider Lifetime allowance limits, as your pot may grow in excess of the allowance, and also other inheritance tax planning strategies for the cash, depending on your spending plans and objectives. 

I hope that helps. 

Catherine 

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.