A pensioner whose drawdown plan had been put into a discretionary managed fund within a self-invested personal pension has lost more than £21,000 in charges, IFA Trystan Lewis has said.
After taking on a new client, the director of Chester-based Griffin Wealth Management, said that, five years ago, the pensioner had £180,000 in savings.
The client had been placed in a bespoke Sipp to use the DFM but, as a result of high charges and taking some income, his pot was now worth £137,000.
Mr Lewis said: “Charges consisted of a DFM, run by his previous adviser, at 1.5 per cent plus VAT, and underlying fund charges of 0.6 per cent. Sipp charges equated to 0.8 per cent, leading to 3.2 per cent overall.
“This amounted to £4,380 a year in charges – equating to £21,900 over the five-year period.”
Mr Lewis said: “He needed his pot to be sustainable for next 20 years, an issue as more people enter drawdown arrangements. The charges were not too bad apart from the Sipp and, for him, a bespoke Sipp was an expensive proposition.”
Following a review, Mr Lewis was able to put him in a personal pension and reduced the charges to 0.95 per cent.