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Cost comparisons for transfers into existing SIPPs

amarshallamarshall Member, Moderator
in Technical stuff
I was wondering how my paraplanning colleagues would deal with the following scenario in a report.

A client has an existing SIPP which has a fixed annual fee.

We are transferring an additional PP into the SIPP and need to do a cost comparison of the two contracts.

How would you show this?
  1. Compare the cost of the PP with the entire SIPP including the new transfer
  2. Compare the cost of the PP with the new investments* in the SIPP only
  3. Compare the cost of the PP with the new investments* in the SIPP and a proportional amount of the fixed annual fee
* those being purchased as a result of the transfer

Each comparison will of course take into account ongoing advisory and platform fees.

I hope this makes sense!

Thanks

Andy
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Comments

  • richallumrichallum Administrator
    2 as the SIPP fixed fee is being paid anyway.

    Paraplanner. F1, Apple, Nutella, ice cream. No trite motivational quotes. Turning a bit northern. 

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  • DanAtkinsonUKDanAtkinsonUK Member
    I would do 2 as well for the same reason. Possibly would give an effective overall for the SIPP with transfer too. 
    Dan Atkinson FPFS CFP APP Chartered FCSI
    Chartered Financial Planner
    Certified Financial Planner
    Head of Technical at Paradigm Norton

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  • amarshallamarshall Member, Moderator
    edited September 2016
    Thanks guys. 2 is what I've done and its good to know that you would do the same.
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  • benjaminfabibenjaminfabi Moderator
    Interesting. I do 3. I accept that there is an argument for 2 but the TV in will be effectively sharing in the fixed costs of the SIPP but method 3 is complete.
    Benjamin Fabi 
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  • Jamie_BarnesJamie_Barnes Member
    I'd do a 'before' and 'after' comparison so line up the current situation versus what it will look like afterwards by converting all charges over to pounds and pence (based on current values), which i think is more akin to 3 but probably still a bit different. Too many ways to skin a cat!
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  • richardgoughrichardgough Member
    I believe 2 is correct.

    You have current cost of SIPP (including all investments) plus current cost of PP.

    The potential new situation is SIPP with current and new investment; therefore the marginal cost of the SIPP is the additional costs incurred for the new investment and it is this marginal cost which needs to be compared with the current PP cost.
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