ISA charges alert

whiteflag_3

EdInvestor wrote:

This rather confirms Ned Cazalet's recent point about so called "new business" in the life sector actually being old business just recycled round the system.

There's no way the insurers can afford this merry-go-round any more - they are losing money on pensions overall and paying out big commissions on business that gets cancellled before they can make any money.

What else are they supposed to do but claw back the commission?

Something's got to give.The distribution system business model just doesn't work any more. I think they call it "cannibalisation".

Agreed thats what DH and I have been saying for months

However Ed if a pension company offers a plan with a 0.75% amc (half stakeholder) internal and external funds, lifestyling, so called modern with profits , internet access etc etc why on earth should there be a reason to move it again? ( unless they want to go full SIPP)

I have spoken the pension company and their rep was livid( as they deal with the other ifa as well). Unlike me though he knows who the IFA is and can burn his hpuse down if he wishes

I just think the "advisor" in this case is taking the **** out of everyone

dunstonh

whiteflag, it would be interesting to see how the other justified the transfer to Skandia from such a low cost scheme. Past performance by itself is not sufficient justification and this person IS going to be paying more. The suitability letter would have to have some pretty meaty warnings in it. I take it that it is too late or not possible to approach the client in question?

As it happens, I did transfer a pension into Skandia last month However, unlike your case, it was over 75k so avoided the double charging issues and used a number of internal funds bringing the AMC under 1% and I didnt take any initial commission on it, therefore avoiding the 5% initial charge on the plan. Indeed, the allocation become 100.56%. Reduction in yield was under 1% making it good value in this case.

So, in similar fashion to other comments on this thread, it just shows that some options available on a product can really benefit a client or can be used to used to a disadvantage. It is the individual that matters not the product.

whiteflag_3

dunstonh wrote:

whiteflag, it would be interesting to see how the other justified the transfer to Skandia from such a low cost scheme. Past performance by itself is not sufficient justification and this person IS going to be paying more. The suitability letter would have to have some pretty meaty warnings in it. I take it that it is too late or not possible to approach the client in question? No intention she is welcome to this shark!
As it happens, I did transfer a pension into Skandia last month However, unlike your case, it was over 75k so avoided the double charging issues and used a number of internal funds bringing the AMC under 1% and I didnt take any initial commission on it, therefore avoiding the 5% initial charge on the plan. Indeed, the allocation become 100.56%. Reduction in yield was under 1% making it good value in this case.

So, in similar fashion to other comments on this thread, it just shows that some options available on a product can really benefit a client or can be used to used to a disadvantage. It is the individual that matters not the product.

Can you think of any reason to justify such a move? Just been through the file- business was written nov 04

dunstonh

Can you think of any reason to justify such a move? Just been through the file- business was written nov 04

What provider did you use and was it PPP or SHP? Nov 04 would suggest that it would be a pension with a decent fund range and free switching. If there were concerns over the funds held, then switching funds would have been the most cost effective option. Not moving it to what is a potentially more expensive option (assuming that the other one didnt do it on fee basis and took full whack).

EdInvestor

I take it that it is too late or not possible to approach the client in question?

No intention she is welcome to this shark!

It looks you're blaming the client, whiteflag.

Yet she's going to lose more than you, surely, in the end?

It seems very unlikely she would have any idea about the effect of what is going on. History suggests she's probably just helping out the spouse/partner/relative of someone she knows, who's a new IFA starting out, looking for clients by asking everyone he knows in the time-honoured way.

When are you going to start charging fees like normal professionals?

whiteflag_3

dunstonh wrote:

What provider did you use and was it PPP or SHP? Nov 04 would suggest that it would be a pension with a decent fund range and free switching. If there were concerns over the funds held, then switching funds would have been the most cost effective option. Not moving it to what is a potentially more expensive option (assuming that the other one didnt do it on fee basis and took full whack).

It was a PP with Scot Eq enhanced terms with large fund discount.
Client late thirties with realistic attitude to risk. I moved from old NOI scheme with bid offer/ policy fee etc RIY was about 2.6%.

My report stresses how important the effect of charges can be if you are a middle of the road. She was in the UBC which ticks all the boxes as far as im concerned.

Switching would have been the easy option as SE have many external fund links even JP Morgan Natural Resources

My ex didnt want to pay a fee 16 months ago ( was there any need) so I doubt a fee would have been paid this time. Anyway, for a fee wouldnt the bandit/shark/highwayman thieving ******* just recommended a fund switch?!

whiteflag_3

EdInvestor wrote:

I take it that it is too late or not possible to approach the client in question?

No intention she is welcome to this shark!

It looks you're blaming the client, whiteflag.

Yet she's going to lose more than you, surely, in the end?

It seems very unlikely she would have any idea about the effect of what is going on. History suggests she's probably just helping out the spouse/partner/relative of someone she knows, who's a new IFA starting out, looking for clients by asking everyone he knows in the time-honoured way.

When are you going to start charging fees like normal professionals?

Broker consultant cant tell who the IFA is but he did let slip that he is not from a salesforce, it is an established IFA with another local firm, so you can kick your theory into touch>

Ed when are you going to post sensible replys to sensible posts?- How many times do DH and me have to tell you that to be IFA now you have to charge a fee?
SINCE JAN 2005 every client I have seen has been offered a fee option

EdInvestor

You have to offer a fee option alongside a commission option, but you don't have to use it, do you?

And since you're always telling us about your massively high hourly rates, no doubt you tell the clients as well and that scares them off the fee option.

They probably don't stop to figure out that the commission isn't going to be much different from the hourly rate, otherwise you wouldn't go for it, right?

EdInvestor

it is an established IFA with another local firm,

Definitely a cannibal, then. There's no hope for you lot, believe me.You've had it.You've priced yourselves out of the market.

dunstonh

There's no hope for you lot, believe me.You've had it.You've priced yourselves out of the market.

I have never been busier so that theory is flawed.

You have to offer a fee option alongside a commission option, but you don't have to use it, do you?

If the client chooses fees, then you must accept offer the service on fee basis. You cannot pay lip service to it.

And since you're always telling us about your massively high hourly rates, no doubt you tell the clients as well and that scares them off the fee option.

Since when have we done that?

It was a PP with Scot Eq enhanced terms with large fund discount.
Client late thirties with realistic attitude to risk. I moved from old NOI scheme with bid offer/ policy fee etc RIY was about 2.6%.

Scot Eq has decent fund range and all the sectors would be covered within that plan. Most of the main funds are there.

If I was in your position, I would love to find out what funds have been recommended and compare costs.