What else does the IFA do?

diabhal

My partner and I have obtained a free illustration from an IFA for a pension. They've advised a Clerical Medical personal pension plan and have provided a breakdown of the investments and percentages that they would advise for us.

So my question now is why would we now buy this pension via the IFA and pay them a fee, rather than using the information in the illustration and going direct or through Cavendish Online? Other than as a thank you for doing the leg work?

We think we must be missing something about what else the IFA would do for us, either in the organising of the pension or in the future. Being confused about this is stopping us acting and getting it done! Any advice is much appreciated.

Lokolo

Other than the fact its quite mean the IFA could help you in the future if you decide its not the right thing, he will help you make a decision of what to do next.

They will also likely get you a cheaper deal than going straight there (not certain on this).

Wait for a guy called dunstonh to come along and tel you whats what.

dunstonh

So my question now is why would we now buy this pension via the IFA and pay them a fee, rather than using the information in the illustration and going direct or through Cavendish Online? Other than as a thank you for doing the leg work?

1 - is that pension available through Cavendish? Cavendish is a limited panel and providers and products. for example, the factory gate priced Clerical Medical pension is not available with Cavendish. An IFA can take £2500 fee on that and still be cheaper than a clerical medical stakeholder arranged on nil commission.

2 - you will have no FOS protection for suitability of advice.
3 - you will get no ongoing servicing and that IFA wont want to deal with you again.
4 - morals.

Dont make the mistake of thinking that nil commission means it will be cheaper than a commission paying product.

EdInvestor

dunstonh wrote: »

Dont make the mistake of thinking that nil commission means it will be cheaper than a commission paying product.

If people are making "mistakes" over fees and charges, that is because they are expressed in such an opaque and confusing way.

You will be well aware why that is so.

dunstonh

EdInvestor wrote: »

If people are making "mistakes" over fees and charges, that is because they are expressed in such an opaque and confusing way.

You will be well aware why that is so.

Dont think it is the case here though. The OP is trying to get something for nothing and is making assumptions that lower/nil commission means it will be cheaper.

Lokolo

Wooo so I was right

dunstonh

Just to add to that....

When you buy a washing machine do you look at the cost you pay or do you look at the profit margin of the retailer? You could have two retailers. One sells the washing machine at £300 and makes £50 from it. That other sells it for £290 and makes £60 from it. If you look at the cheapest profit margin you would pay more.

Looking at commission is the same as looking at the profit margin of the retailer. You need to look at what you pay.

The fault for this lies with the SIB, PIA and now FSA. The EU actually think the UK position is a breach of EU law and there is pressure to remove the commission disclosure. However, that is unlikely to happen. The FSA still focuses on remuneration and not charges. This is daft as I can sell Scottish Widows products cheaper than LloydsTSB but still be paid more. Therefore my illustrations will have higher commission showing on them than LTSB staff version. If you look at commission and go with the lowest then you would pay higher charges.

purch

What else does the IFA do?

At least 3 rounds of Golf a week, and maybe an expensive Lunch or two :eek:

P.S. Except for dunstonh of course, who works 24 hours a day each and every day

MikeJones_2

Hi diabhal,

Following up on dunstonh's point number 4 - morals.

If most of your own employer's potential customers all acted in the same way as you are considering - i.e. ask for a free quote and then go to a competitor - how long do your think it would be before your job was in jeopardy?

The IFA you went to should have considered much more than just the pension option, having looked at your personal situation first and foremost. The IFA should have looked at your complete circumstances and made a recommendation accordingly, including your attitude to risk, your views on different investments and strategies, your job security, your health, family and dependants. These are just some of the issues that the IFA should have raised with you, and why a good IFA can be worth their own proverbial weight in gold throughout your lifetime.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

TH1878

So Diabhal, what did you decide to do?