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Thread: IFA guided drawdown (high fees) vs SIPP (low fees)

  1. #1

    IFA guided drawdown (high fees) vs SIPP (low fees)

    I am retired, have a pension pot of around 300K in an IFA-guided flexible drawdown scheme. In the past the IFA and I have jointly agreed asset allocation and a broad fund selection to produce a fairly well-diversified portfolio.

    A couple of years ago we agreed to switch to a single multi-asset fund - Architas Blended Progressive (about 60% equites, 20% bonds, rest in alternatives and about a 50/50 mix of actives & passives).

    That Architas fund does OK, but is broadly similar to the Vanguard LifeStrategy 60%Equity fund.

    I pay 0.86% Architas fee, 0.36% platform fee and 0.5% IFA fee - a total of 1.72%pa. Given that the Architas fund is so close in tracking the Vanguard 60% fund should I do without my IFA and switch to the Vanguard fund with its low fees (0.67% total on HL Vantage platform)? I could see a saving in fees of around 3,000 pa.

    What do forum readers think?

  2. #2
    I think you answered your own question. In whose pocket should the GBP 3000 rightly be?

  3. #3
    Move it away from Hargreaves Lansdown to Alliance Trust or Interactive Investor and you'll save a lot more.

  4. #4
    I was curious about this so I checked HL's charging for SIPPS:

    For Shares, investment trusts, ETFs, gilts & bonds its 0.45% a year, but this is capped at 200 a year across all holdings in the SIPP account.

    So if you were to invest 300k in Shares, investment trusts, ETFs (like VWRL for example) gilts & bonds, HL would only charge 200 - or 0.07%, which is not bad at all.

    But unfortunately, Vanguard Lifestrategy 60, while made up of underlying ETFs I think, is classed as an OEIC on HL. So if you want to go for that, then it does make sense to switch to a lower cost SIPP provider exactly as Joe & Peter suggested.

    Another way might be to go for real ETFs on HL, including some defensive ones, but then you'd lose the automatic rebalancing in LS60, which kind of defeats the object.

  5. #5
    The Lifestrategy funds tend to be fairly concentrated, so you could simply buy the published top 10 ETFs that make up the fund, which would give you a portfolio matching over 90% of it, and then rebalance from time to time if you felt it necessary. That way you avoid the second tier of fund management charges and on HL you still benefit from the 200 charge cap.

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