I had a recent case, where a potential client asked me to look at her pension and give her advice on what she could do with it. It was worth just over £600,000 and so was a sizeable pot, and my recommendation was to put this onto the investment platform that we use with a spread of between 10 and 15 funds. That to me was the logical way to approach things because the best kind of protection you can give a pension pot of this size is NOT to put it all into the one company or the one fund. This client however didn’t take my advice as it cost too much and she was looking for the cheapest option out, which in my opinion was not the best way to look at things.
In this world today – you pay for what you get and you get what you pay for, and in this instance this lady was looking for the cheapest option and logic would go out the window. The cheapest option is usually to transfer the money into one of the big insurers, maybe use a 2 or 3 funds – and invariably it would never get touched at all for the rest of its life. The initial cost would be 1% or 2% and then something like 0.5% or 0.75% a year.
What we would propose at M A P is that this money would go into 12 funds to get a good spread of risks and areas, and we would then monitor the funds ongoing making switches as and when necessary. We have always found that economic conditions change – and so should any investments change at the same time or they can become obsolete. In our opinion to do anything else would be foolish and more importantly when you consider that this pension pot is what you are going to be living on for the next 10 15 20 years – or whatever time span, then you really need to look after this money.
We don’t think that our charges are expensive and we charge 3% initially and then 1.2% a year thereafter, and our track record speaks for itself as current reviews for existing clients all show double digit figures in growth. Yes we will look more expensive than someone charging 1% or 2% but everyone needs to remember that if you don’t pay for a service – then you won’t get one, and to pay 0.5% or even 0.75% a year isn’t getting close.
We offer VALUE FOR MONEY, and I would dearly love to tell people the growth rates that we get for existing clients but current legislation prevents this, but we certainly offer value for money advice and as evidence of that, we don’t have any clients leaving us and going elsewhere.
I would say that if you pay little – you will get little in return. I appreciate that it doesn’t always hold out that if you pay more, then you will definitely get more – but in the vast majority of cases – we do.
When looking to give business to an IFA – LOOK and see what you are getting for your money, and then decide if that is the best course of action for it. Bear in mind that when it is pension money – it NEEDS to last a lifetime – will a cheaper option do that ? You owe it to your pension and future retirement to look after it and not just withdraw from it.
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