Nadeem Umar 15 April 2019
Since the introduction of pension freedoms in April 2015, drawdown’s become a popular choice for those who want to manage their retirement savings. For those willing to accept the additional risks, it lets you keep your pension invested how and where you choose, and make withdrawals whenever you need to.
The problem is the quality of service, costs, investment choice and account features can be very different from one provider to the next. So finding the right one to match your needs can be easier said than done.
The FCA are planning on introducing new rules next year to make comparing drawdown providers easier. But until then here are five important questions to ask to help you choose the best of the bunch.
This is not personal advice. If you are unsure of an investment or course of action for your circumstances, please seek advice.
How much will drawdown really cost?
Some drawdown providers might look cheaper than others, but make sure you check for any hidden costs. Lots of plans will have administration and adviser charges, as well as transfer, set up and withdrawal costs. It’s important to think about the full picture.
In drawdown, we only charge you to hold, buy and sell investments. If you plan to stick to investments like funds and shares, you could significantly cut your costs.
Is the provider regulated?
This one’s really important. Make sure you check your chosen provider is regulated by the FCA. This means you’ll have peace of mind that your hard-earned investments are held safely in line with regulations.
Investment scams are out there – particularly targeting retirement savings. Make sure you check your chosen provider is regulated the Financial Conduct Authority.
Hargreaves Lansdown is regulated by the FCA. You can read more about how we keep your money safe, as well as tips on how to avoid scams, in our dedicated security centre.
Do I have access to a wide range of investments?
Drawdown is designed to give you control over where you invest. It’s important to have a wide enough range of investments to choose from, so you can find those which match your goals and attitude to risk.
If you’re looking for inspiration take a look at our drawdown investment ideas.
If you’d rather let an expert manage and choose investments, we offer a range of ready-made portfolios. All you need to do is choose your investment goal, and the level of risk you’re comfortable with. Even though they’re managed investments you’ll need to keep an eye on them to make sure they still fit your needs.
Remember that all investments fall as well as rise in value, so you could get back less than you invest.
You should also check if your chosen provider offers financial advice if you decide that’s the right route for you.
Do I get anything extra?
When looking for the best drawdown provider make sure you look for added value. Some providers will help you more than others, and will offer you that little bit extra when it comes to support.
They might provide you with fund research and share insight to help you choose your investments. They could even offer you useful tools. Our drawdown calculator could help you understand how different investment growth rates might affect your plan, and work out what withdrawals could be sustainable. It’s worthwhile to check what extras you might get.
Can I manage it all online?
You need to regularly review your investments and income in drawdown, and make changes whenever necessary. We don’t think you should chop-and-change investment too much, but you definitely need to check in every now and again that they are still suitable for your circumstances.
So having the ability to manage your account easily online is a great benefit. It means you can access your account at any time, and spot opportunities when they come up.
Take a look at our award-winning app. All it takes is a few simple clicks to buy and sell your chosen investments.
Before transferring remember to check for loss of guarantees or benefits and excessive exit penalties.