Cost of setting up and running income drawdown

I have met with a FA and had a very constructive and informative (f.o.c.) consultation followed up with several telephone conversations.
He has recommended transferring my 2 pension pots and opening a SIPP for drawdown with his firm (a merchant bank and wealth management company)
He has quoted me his firm's fee for setting the whole thing up as 1.5%. The onging charges will be 1.1% pa for the investment and management of the scheme, plus 1% pa for his on-going advice.

I wondered if this seems reasonable. The sum involved before their set-up fee will be £150,000. At this stage I have no desire to manage my own investments.

Thank you

Comments

  • dunstonh
    dunstonh Posts: 116,044
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    I wondered if this seems reasonable.

    The costs are not high but there are concerns.

    You say it is an FA and the pension will be with their own firm. This indicates a tied agent and not whole of market. It is rare for anyone to consider tied advice to be a good thing as you wont know how that compares to the market place. Whole of market/IFA advice would consider the marketplace.

    Also, you have £150k. I am not a fan of discretionary management services (which I interpret as the service being offered here - correct me if I am wrong). However, it can have its place and is usually priced effectively at very large portfolios but expensive at lower values. £150k is not really in that sort of range where you would consider discretionary management.

    So, you are going to be paying a bit over the odds for something you probably dont need or could be achieved in more cost effective and mainstream manner.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • mgdavid
    mgdavid Posts: 6,705
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    May I ask how old you are? (if you are at or close to retirement then the investment side of the SIPP may be less important).
    The questions that get the best answers are the questions that give most detail....
  • philwal_2
    philwal_2 Posts: 56 Forumite
    It may be worthwhile shopping around as already mentioned the adviser you saw may be a tied adviser if he is using his own companies products. Getting a costing from another adviser may be worthwhile.
  • SeniorSam
    SeniorSam Posts: 1,670
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    Have a word directly with Hargreaves Lansdown. They are very helpful over the phone and will give you details of all the costs etc. I moved my pensions into a SIPP with them on my own.
    I'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.
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