Standard Life Pension Review

as of 08/12/2020 at 12:55 pm

Our View

A big name almost synonymous with pensions – solid and reliable. Not the best digital experience but from the pack of traditional players they are amongst the best. No gimmicks, few frills, but solid. This doesn’t compete with other investment providers in terms of info and research for the more enthusiastic investor. Where it comes into its own is for those who feel less certain and want a simple offer from a big name.

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We score each provider on about 20 different criteria including cost, service, website, functionality, customer feedback and our experience of the service. All overseen by our PhD gonk!

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Recommended For

Beginner Investor

In a nutshell

Big, secure company

Easy option funds available

Easy to use website

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What to Expect

Mobile & Apps
Behind the scenes

As Standard Life do not offer a general investment account online without an ISA, we have been unable to test their app.

It does appear to have the ability to research and purchase new investments and add money to existing investments.

Obviously Standard Life is a major player and this will give comfort to some in terms of security and service.

The MyFolio range of pre-packaged investments is mostly well regarded by the industry and financial advisers, and does have a credible pedigree.

Investment Choice

Products

Stocks and Shares ISA

Junior ISA

Investment Account

Pension

Investments available

Own brand funds

Funds from other groups

Investment help

Robo advice / ready-made portfolios

Includes a shortlist of investments

Pick your own funds

Drawdown

Convenience and reasonable fees come top for reasons for choosing Standard Life for drawdown. Despite a lot of admin initially, overall it’s easy to set up. Some highlight that their systems can be a bit clunky, but for the most part meets their needs.

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The 'Geeky' Details

Provider details

Standard Life is a big brand player with a relatively simple service to get less confident savers up and running. Standard Life offers a Self-Invested Personal Pension (SIPP) with access to hundreds of pension funds from leading fund managers, as well as thousands of mutual funds and stocks & shares. Lots of different investment options to choose from! You do have to commit to contributing a minimum of £240 a month into your SIPP however. They also offer a free income report (in 5 minutes) for those who are thinking of retiring soon.

Charges vary depending on the “level” of investment that you choose. There are three different levels ranging from keeping things simple (the cheapest) to a wider range of investment options, suited to more experience investors. Obviously, Level 3 comes with higher charges.

When it comes to drawdown options and costs there is a yearly charge of £158 applied to those in Level 3.

In summary, a solid and respected service that lacks the pizzazz of its more contemporary counterparts.

Visit Standard Life

Important Facts & Figures

Provider Size:	Large firm: manages £bns on behalf of investors and financial advisers
Minimum amounts:	£2400 minimum initial amount, unless contributing monthly £240 minimum monthly amount

Your Questions

"My husband and I are in our mid-30s and are completely new to investing. We have over £100,000 split between our two cash ISAs. As we are intending on purchasing a house in the next 5 years, the majority of our savings will be used for a deposit. However, we would like to make a long term investment (minimum 10 years), so are intending on putting £10,000 each in a Stocks and Shares ISA, as well as an ongoing £500 each a month. We're happy with some risk i.e. 6-7/10. Whilst we know this might be a tad trickier, we're really keen on investing in ESG funds/companies only. As we'll have a Stocks and Shares ISA each, we're not sure how best to 'diversify' and whether that's even possible given we want to make ethical investments? Would it be better if one of us uses a robo-adviser and the other a traditional platform? For one to go for an active and the other a passive approach (although I'm not sure if there is an ethical index)? Should one go higher risk than the other? Any guidance would be appreciated, Emma"

Emma, Herefordshire

13/06/2019

Your question

My husband and I are in our mid-30s and are completely new to investing. We have over £100,000 split between our two cash ISAs. As we are intending on purchasing a house in the next 5 years, the majority of our savings will be used for a deposit. However, we would like to make a long term investment (minimum 10 years), so are intending on putting £10,000 each in a Stocks and Shares ISA, as well as an ongoing £500 each a month. We're happy with some risk i.e. 6-7/10. Whilst we know this might be a tad trickier, we're really keen on investing in ESG funds/companies only. As we'll have a Stocks and Shares ISA each, we're not sure how best to 'diversify' and whether that's even possible given we want to make ethical investments? Would it be better if one of us uses a robo-adviser and the other a traditional platform? For one to go for an active and the other a passive approach (although I'm not sure if there is an ethical index)? Should one go higher risk than the other? Any guidance would be appreciated, Emma

Emma, Herefordshire

13/06/2019

Simon Bullock says

First of all...

Although I don’t know your specific circumstances, so cannot give you advice, your proposed approach of clear differentiation between cash set side for a house purchase, and long-term investment monies strikes me as very sensible.

It is also worth noting, on the risk point you mention, that you could consider a slightly higher risk approach for the £500 per month than for any lump sums, even if those lump sums are invested on 10+ year timescale. The £500 per month will de facto get drip-fed into the markets.

You’ll need to be careful, of course:

As and when you get within five years of potentially wanting to access the monies. At that point, you might want to go the other way, and start steadily reducing the risk profile on both your regular investments and the capital you’ve built up.

Robo vs Traditional

Regarding your thought process around robo-adviser vs. traditional platform - it’s worth differentiating financial planning on the one hand, with access to underlying investment funds/portfolios on the other.

Both might be provided/mimicked by a robo-adviser proposition, but traditional platforms such as AJ Bell Youinvest and Hargreaves Lansdown (I assume that’s the sort of thing you are referring to as 'traditional') tend to only offer options around self-directed/’DIY’ investment selection, not financial planning (though that is perhaps starting to change).

Whatever you decide on these two discrete areas, it’s hard to see why you and your husband would take different approaches, but I may have missed something.

Investing ethically

On the question of ethical/ESG investing, there are a number of options you could explore and it’s important to understand that different ‘green’ investment approaches vary widely.

Looking at ‘negative screening’ (the exclusion from a fund or portfolio of certain sectors, companies or practices based on specific ethical criteria), as one example, some funds screen out as much at 70% of their listed shares, whereas in contrast others screen out nearer to 20%. What ‘ethical investment’ means and the criteria defining it, can differ a lot between companies.

One of my clients was surprised to find a charity that is invested in an ethical fund but nevertheless holds shares in Shell!

The point being, it’s worth checking the policy of any fund/portfolio you’re considering and seeing if they match your priorities.

For some people, their version of ethical investing is focused on animal testing, others big oil, still others gender balance on the board, it varies widely from person to person. A few of the many managers with offerings in this place you might want to take a look at include Kames Capital and Standard Life Aberdeen, there is some good research online offered by sites such as www.hl.co.uk.

Finally

A passive vs. active choice is, in principle, no different to whether you want an ESG/ethical screen or not.

Assuming that by ‘active’ you mean ‘stock picking’ - i.e. a manager trying to ‘beat the market’ and/or reduce risk by favouring one share over another (regardless of any ‘automatic ESG screens’ that may or may not apply) - then, simplistically speaking, the active vs. passive choice comes down to whether you believe you can select an active manager who will add more value, than their additional cost.

As for your question about an ethical index, the two most well known and credible ethical investment indices for UK companies are the FTSE4Good and the Dow Jones Sustainability Index (DJSI).

I’m not aware of there being as many passive options in ESG investing though, compared to the wider market, so that might be a consideration.

Good luck on your journey, if you want a helpful guide on your broader financial plan, I recommend One Page Financial Plan by my pal Carl Richards – if you email us at equiries@mulberrybow.com, we’ll send you a free copy.

Best,

Simon

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.

"Hello Holly, I retired in December 2018. Just before that time, I attended the free Pension Wise meeting and also a Standard Life 'introduction to retirement' seminar. Both were very worthwhile and informative. My initial thoughts were to consolidate my pensions into the Standard Life Active Retirement pension for income drawdown which looked simple and straightforward, but it meant handing over management of the investments. However, after viewing the performance of the funds they invest in, I hesitated. I have since spoken to a number of financial advisers, but have received mixed feedback about what I should do at retirement. More recently I spoke to an advisers aligned to the investment philosophy of Albion Strategic Consulting headed by Tim Hale. I found them transparent, but as the investment philosophy is towards indexing funds, I have been scared off once again by the messages regarding DIY investor dealing with re-balancing, sequencing, and lack of ability to stress test without the correct professional financial software, in addition to the high costs. With fees of around 1.6% per annum plus the initial one off fee. Over a 25-30 year lifespan, the costs would be more than 50% of our initial investment value. Is this logical for what is an indexing strategy? In addition, looking at another of the fifty or so boutique advisers who also promote the Albion strategy towards total Wealth Management, and low cost indexing funds. The particular company concerned state on their website/in their brochure that 90% of independent or tied advisers are still working with a broken system. I really don't know what they mean by such a statement. This makes me more concerned about handing over the control, although I know retirement can be a complex time regarding finances. Each of these IFA's are Chartered Financial Advisers whom have studied to high standards, and whilst I respect their knowledge and capability, I cannot see how these kinds of costs can be recouped with a passive strategy over time. The industry is sending out very unbalanced messages to basic investors such as myself. I understand the basics, but am now totally unsettled as to the direction I should take and if, at such a critical stage, I should invest in an IFA on a regular basis. I have started to read Tim Hales book "Smarter Investing". I also understand Vanguard are introducing a drawdown pension in the coming months. For your information, I have approx. £600k in total pensions with Aviva and Standard Life, plus £300,000 in ISAs with Hargreaves Lansdown, in one of their multi manager portfolios which again have the higher charges attached due to their structure (I do think HL are a great company though). We also own our own property at approx. £600k. Our basic overhead costs in retirement are covered by current final salary pensions, and state pensions. I appreciate you cannot give me direct financial advise but I am finding the whole event very disconcerting, when I thought I had the basic acumen to manage the transition. Would appreciate your feedback. A great website by the way, Holly."

Rob, Hertfordshire

20/03/2019

Your question

Hello Holly, I retired in December 2018. Just before that time, I attended the free Pension Wise meeting and also a Standard Life 'introduction to retirement' seminar. Both were very worthwhile and informative. My initial thoughts were to consolidate my pensions into the Standard Life Active Retirement pension for income drawdown which looked simple and straightforward, but it meant handing over management of the investments. However, after viewing the performance of the funds they invest in, I hesitated. I have since spoken to a number of financial advisers, but have received mixed feedback about what I should do at retirement. More recently I spoke to an advisers aligned to the investment philosophy of Albion Strategic Consulting headed by Tim Hale. I found them transparent, but as the investment philosophy is towards indexing funds, I have been scared off once again by the messages regarding DIY investor dealing with re-balancing, sequencing, and lack of ability to stress test without the correct professional financial software, in addition to the high costs. With fees of around 1.6% per annum plus the initial one off fee. Over a 25-30 year lifespan, the costs would be more than 50% of our initial investment value. Is this logical for what is an indexing strategy? In addition, looking at another of the fifty or so boutique advisers who also promote the Albion strategy towards total Wealth Management, and low cost indexing funds. The particular company concerned state on their website/in their brochure that 90% of independent or tied advisers are still working with a broken system. I really don't know what they mean by such a statement. This makes me more concerned about handing over the control, although I know retirement can be a complex time regarding finances. Each of these IFA's are Chartered Financial Advisers whom have studied to high standards, and whilst I respect their knowledge and capability, I cannot see how these kinds of costs can be recouped with a passive strategy over time. The industry is sending out very unbalanced messages to basic investors such as myself. I understand the basics, but am now totally unsettled as to the direction I should take and if, at such a critical stage, I should invest in an IFA on a regular basis. I have started to read Tim Hales book "Smarter Investing". I also understand Vanguard are introducing a drawdown pension in the coming months. For your information, I have approx. £600k in total pensions with Aviva and Standard Life, plus £300,000 in ISAs with Hargreaves Lansdown, in one of their multi manager portfolios which again have the higher charges attached due to their structure (I do think HL are a great company though). We also own our own property at approx. £600k. Our basic overhead costs in retirement are covered by current final salary pensions, and state pensions. I appreciate you cannot give me direct financial advise but I am finding the whole event very disconcerting, when I thought I had the basic acumen to manage the transition. Would appreciate your feedback. A great website by the way, Holly.

Rob, Hertfordshire

20/03/2019

Holly Mackay says

A few observations I’d make.

Please remember that I can't give you personal recommendations or regulated financial advice. So this is food for thought only.

You retired in December 2018 after a hideous 3 months for stock markets. So don’t be surprised if any short-term performance numbers looked ugly.

Indexing or Passive Investing

Indexing or passive investing is a low-cost way to get – by definition – average returns.

You don’t believe you can pay smart people to pick winners, or back a particular region or investment type.

It’s been a while since I read his stuff, but I think Tim Hale is smart and credible. However academics will argue till the cows come home about active versus passive. You can make arguments for both so you need to make this decision.

Managing a portfolio in drawdown

Managing a portfolio of assets in drawdown isn’t the easiest thing to do. You need to be clear on what your goals and targets are, and make sure you don’t run out of money and/or you don’t end up scrimping and not spending enough, ending up with more left over than you need at the end of your life.

I think you are confusing the two skill sets of financial planning and investment management. A good financial planner will help walk you through the right place for your money, how to budget and make your money last, make sure you don’t pay too much in tax, etc. etc.

A DIY platform won't help you with any of this but will give you exposure to the stock market.

In terms of the 1.6% per annum fee you mention, that does seem a bit expensive for a passive portfolio and advice so maybe question that.

You are in the fortunate position of not needing to move quickly - your final salary scheme and state pensions are paying the bills.

There’s a lot of money in different pots, and I think you would benefit from some advice to give you peace of mind that you’re not doing something daft in the structuring of your retirement.

Maybe separate the initial advice and structuring from the ongoing management of this in your head?

The first phase could be finding an adviser and agreeing a fixed fee for them to walk through the structure of things first. To talk you through some cashflow modelling? This exercise would probably cost you £2k - £3k. As a % of the money you have, this is not huge. And it will give you peace of mind.

Once you have a plan and have answered the how much/what/why questions, then I think you can turn your mind to the how and where.

At which stage you may decide to DIY and manage the agreed strategy alone. Or you may have sufficient trust with an advisory firm, to decide that you can make an informed decision about them adding sufficient value to warrant an ongoing fee?

Hope that helps, and sorry I cannot be more specific to your particular needs.

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.

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Investing ethically

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Managing a portfolio in drawdown

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Your question

First of all...

You’ll need to be careful, of course:

Robo vs Traditional

Investing ethically

Finally

Just be aware...

Your question

Indexing or Passive Investing

Managing a portfolio in drawdown

Just be aware...

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