Repensioning. Increase your pensions return without any risk discussion area

sendmeacheque

dunstonh wrote: »

in the same way you buy products from a retailer and they get their profit from it. The advisers in this case are the retailers.

As I said I don't have a problem with people making money - but we're not talking a pittance here. Several thousand pounds for a couple of hours work - seriously that's obscene!

So given that sort of cost doesn't it make sense for individuals to find the same product available with lower costs?

dunstonh wrote: »

Why?

Because the 80k pension was the amalgamation of 4 other pensions that I asked the companies FA to merge, it was only some time later I spotted they'd been paid £1700 for doing it.
I also emailed a query to both my providers asking them about the costs of me simply paying one into the other and specifically queried whether the old advisors would be paid commission on the transfer and was advised that this would be the case.

dunstonh wrote: »

You would be daft to do that. If you go fee basis with an adviser then the product can be arranged with no commission. That would make it cheaper than paying Cavendish after getting advice. Plus, Cavendish offer a limited panel and chances are the product that is best for you is not one they offer.

Which is more what I'm after. I find it annoying that everytime I pay money into my pension someone is taking a decent slice of it and I'm getting no value from them in return.

So from your reply I take it in terms of the actual product there's no difference whether it's paid for upfront or by commission?
What are a reasonable range of fees? Does anyone have any recommendations (I'm in the NW).

Thanks.

atush

try unbiased.co.uk

dunstonh

Several thousand pounds for a couple of hours work - seriously that's obscene!

Thats what can happen when the contract is commission based rather than fee based.

So given that sort of cost doesn't it make sense for individuals to find the same product available with lower costs?

You are unlikely to find the same product as it would likely be a group scheme. However, similar or better is more likely to be found.

Because the 80k pension was the amalgamation of 4 other pensions that I asked the companies FA to merge, it was only some time later I spotted they'd been paid £1700 for doing it.
I also emailed a query to both my providers asking them about the costs of me simply paying one into the other and specifically queried whether the old advisors would be paid commission on the transfer and was advised that this would be the case.

Why not introduce a new scheme into the equation and transfer the lot to that?

So from your reply I take it in terms of the actual product there's no difference whether it's paid for upfront or by commission?

A fee based adviser would set the contract up on nil-commission terms. So, paying an adviser for advice and going to Cavendish and paying £35 or whatever increases you cost over as the fee based adviser would set it up on the same terms as Cavendish (or use a pension that Cavendish dont offer on their panel)

What are a reasonable range of fees? Does anyone have any recommendations (I'm in the NW).

Depends on what type of service you are after. £500-£1500 roughly based on limited information.

sendmeacheque

dunstonh wrote: »

Why not introduce a new scheme into the equation and transfer the lot to that?

That's exactly what I'm trying to do!

dunstonh wrote: »

Depends on what type of service you are after. £500-£1500 roughly based on limited information.

The quotes I've had back are nothing like that... Most want money upfront (refundable) - say £250. 3% of the transfer value (£3k) plus a 3% cut of everything I subsequently pay into the pension and 0.5% a year commission.
Where they'll do commission free transfers they seem to want an even bigger cut.
So going with a ifa they want 3k plus to basically fill in a couple of forms

Fundamentally all I'm after is for someone to go over the pensions I've got now and recommend either sticking with them or transferring them into a new pension (or sticking and simply creating a new pension for all my new payments).
If a new pension is needed then also some advice on which products fit the bill.

I guess I just don't see why it's fair that having paid them a good rate they then take a large dollop of cash out of the pension and continue doing so for ever more...
Its like my accountant doing my books and then getting a cut of my turnover (even when there aren't any profits) every year - even if he does nothing again!

dunstonh

So going with a ifa they want 3k plus to basically fill in a couple of forms

Its not filling in a couple of forms. Its a higher risk transaction with software analysis and a good many hours work.

The quotes I've had back are nothing like that... Most want money upfront (refundable) - say £250. 3% of the transfer value (£3k) plus a 3% cut of everything I subsequently pay into the pension and 0.5% a year commission.

3% sounds like commission not fee. You would expect a fixed charge or an hourly rate of a percentage with a cap and collar. What sort of IFAs are you contacting?

I guess I just don't see why it's fair that having paid them a good rate they then take a large dollop of cash out of the pension and continue doing so for ever more...

They dont take it out forever more unless you employ them on a servicing basis. If you employ them on a transactional basis then it should be a one off hit. However, transactional advisers do tend to be more expensive then servicing.

Its like my accountant doing my books and then getting a cut of my turnover (even when there aren't any profits) every year - even if he does nothing again!

Except it doenst happen like that.

sendmeacheque

dunstonh wrote: »

Its not filling in a couple of forms. Its a higher risk transaction with software analysis and a good many hours work.

Are we crossing wires here?
This cost is what they want to move the money from one pension to the new one.
My understanding of the charges are that there's a fee of £250 to find the product.
Then the 3% is a charge laid on top for moving the money from one pension to the new one - surely that doesn't require any analysis or much work?
(I did query my existing providers at what was required and unless they told fibs they did imply it was just paperwork - but they did point out that the original fa that set up the pension would get a cut anyway and so there was little point in me doing it myself.)

dunstonh wrote: »

What sort of IFAs are you contacting?

I'm basically emailing the various one's I'm finding on the web and asking them what their charges are and how they're applied and whether they do non-commission transfers etc. Biased toward IFA's who are local to me.

dunstonh wrote: »

They dont take it out forever more unless you employ them on a servicing basis. If you employ them on a transactional basis then it should be a one off hit. However, transactional advisers do tend to be more expensive then servicing.

Perhaps I'm simply getting the wrong end of the stick...

it seems to me there are 3 types of charges being applied.
1. A one off fee. Quite small - few hundred quid and usually foregone if you buy a new product through them.
2. The cost of paying money into your scheme. This is the 3% and as far as I can tell applies to all monies paid into the scheme for the life of the product (including transfers from other products).
3. The service(?) cost / commission. This seems to be a percentage levied on the product annually - I *believe* it's simply a percentage of the value of the scheme.

From my pov, cost 1 is immaterial. I'm paying someone to find me the right product.

Cost 2 I don't get. This makes the cost of merging pensions expensive and probably is my main bugbear since the fa will get a cut of every penny paid in - apparently for the products life.

Cost 3 I wouldn't have a problem with *if* I was getting something back for it - an annual check/report or whatever. But it seems to me that having set up the product most fa's simply sit back and let the money flow in. Certainly none of the advisors I've had over the years has ever contacted me beyond the initial 30 minute period which begs the question - what are they doing for that money?

dunstonh

Are we crossing wires here?
This cost is what they want to move the money from one pension to the new one.
My understanding of the charges are that there's a fee of £250 to find the product.
Then the 3% is a charge laid on top for moving the money from one pension to the new one - surely that doesn't require any analysis or much work?
(I did query my existing providers at what was required and unless they told fibs they did imply it was just paperwork - but they did point out that the original fa that set up the pension would get a cut anyway and so there was little point in me doing it myself.)

I dont think we are crossing wires. However, what you think is a quick paperwork task isnt. I do think their cut is expensive but it looks more like commission basis than fee basis.

Your original pension provider wouldnt know what work is required. Most of the call centre staff are on short term rolling contracts without any clue of the admin, liability and FSA rules that need to be followed. The fact that said the original FA gets paid indicates that lack of knowledge as they wouldnt on transfers out.

it seems to me there are 3 types of charges being applied.
1. A one off fee. Quite small - few hundred quid and usually foregone if you buy a new product through them.
2. The cost of paying money into your scheme. This is the 3% and as far as I can tell applies to all monies paid into the scheme for the life of the product (including transfers from other products).
3. The service(?) cost / commission. This seems to be a percentage levied on the product annually - I *believe* it's simply a percentage of the value of the scheme.

1 - Some break their charges down into travel, factfinding, research and implementation. I have seen that type of fee before but its not a common method.
2 - The costs here are usually nil. It is the adviser that decides this to reflect the fee. i.e. if the fee agreed with the adviser is £750 then the adviser can either ask you to write a cheque for £750 and the pension is set up with nil initial charge or they can collect the £750 from the pension with a £750 initial charge. Commission based (i.e not fee) could (and often does) see an initial charge.
3 - dont mix up fees and commission. An investment will have an annual management charge but it doesnt mean the adviser is getting it. Typically the charge can range form 0.2% to 2.5% depending on the types of investment and the type of contract and features you want.

Fee basis is typically an hourly rate, fixed fee or a percentage with cap or collar. So, 6 hours at £150 would be £900 (and 6 hours would be about right)
or a fixed fee of £750 would be £750 (fixed fee is often liked as you know exactly what you are going to pay). A percentage figure should be tapered or capped to prevent excess (although not all do). So, you often see things like 1% of amount with a minimum of £500 and a maximum of £2000.

Any fee basis advice would see the contract put through on nil commission basis.

sendmeacheque

dunstonh wrote: »

The fact that said the original FA gets paid indicates that lack of knowledge as they wouldnt on transfers out.

Sorry - that's the cost of transferring in not out.
My initial thought was that I would look at both my pensions and decide which one to keep and then simply move the money out of one into the other. So my question to both was how do I transfer money in, they told me what was required, suggested I should involve an FA for advice and pointed out that the FA that had set up the account would get a percentage of the monies transferred in anyway.

(I'd already been dealing with them to set up an account so that my company could pay contributions for me).


The figures you give in your answer above seem much better than what I'm being told by the various ifa's I'm contacting... Either I'm misreading what they're saying (although it sounds pretty straightforward) or I'm talking to the wrong people!

dunstonh

My initial thought was that I would look at both my pensions and decide which one to keep and then simply move the money out of one into the other. So my question to both was how do I transfer money in, they told me what was required, suggested I should involve an FA for advice and pointed out that the FA that had set up the account would get a percentage of the monies transferred in anyway.

Keeping one of the existing ones is not likely to be the best option (it could be but unlikely). It also makes it harder for a non-affiliated adviser for those schemes. So, it is possible that the charges you have been quoted could be high on purpose as they are using that level to put you off. (quite common in fee pricing)

Whereas introducing a new modern scheme (and modern as in post RDR compliant - 2013 rules) give the adviser full control of the process, stops the legacy adviser being paid for doing diddly and probably works out better all round.