IFA commission on pension

GeoH_2

IFA commission on pension


Could someone please clarify if this is normal.
My wife does not work but we have started a private pension.
She has paid in £2700 that I believe is the most she can invest per year.
The IFA has taken 3% for commission.
A further £761 has been added that I presume is the tax benefit.
But it appears that he has also taken a 3% commission from this also.

Is this normal or is he at it?

George

dunstonh

She has paid in £2700 that I believe is the most she can invest per year.

£3600 gross or 100% of earnings, whichever is higher.

Is this normal or is he at it?

Depends on the pension. Norwich union are paying 7.5% on their stakeholder pension now as a maximum so 3% is low compared to that. If the 3% was commission, then it wouldnt normally be taken from the pension as a lump like that. If it was a fee then it would be.

Is it a stakeholder pension, personal pension or SIPP (full or hybrid)?

GeoH_2

She invested a total of £10K
He took 3% of this and then paid in £7K to an ISA
He then allocated the remaining money towards her pension.
She has had £761 credited of which he has taken a further 3% which I presume is tax and a total of £3419.37 has been invested in Invesco Perpetual Inc (acc)

We did agree on a 3% commission but we presumed that would only be on her original 10K as he stated she would get X amount tax benefit.
Not X amount less my 3%.

Just wondering if this is normal practice, or depends on IFA.
He is new to me and obviously feeling the way.

Ta

George

dunstonh

Ok sounds like a Hybrid/full SIPP in which case 3% is the usual maximum on these things and it is a fee off the investment. The 3% would be against the amount invested (gross amount, not net).

Currently the FSA published figures have the average IFA charging 1.5% on this sort of transaction so yours is at the more expensive end but certainly nothing wrong has taken place.

One thing that does concern me is that you only mention one fund. Inv Perp Income. Whilst it is a very good fund, single fund investing like that is old fashioned and indicates a limited knowledge/experience at investing. £10k would see me utilising 4-5 funds as a minimum but closer to 8 in reality unless this 10k is part of a wider portfolio. The old saying dont put all your eggs in one basket comes to mind and that is what has been done.

GeoH_2

Sorry i might not have expalined it good.

The pension allowance is in Invesco Perpetual Inc (acc)

But the ISA allowance is in
Invesco Cautious Managed Class A (acc)
Jupiter Merlin Balanced (acc)
Norwich Property (inc)

I just did not expect that he would take any % out of the tax allowance
and i was just wanted to get some other views before i challenge him on it.
If it is standard i will just have to accept it i suppose.

thanks

george

dunstonh

Thats a bit more like it on the fund spread. I take it all back.

I just did not expect that he would take any % out of the tax allowance

yes, the percentage always works on the gross amount as that is technically the amount invested.

Hes charged full commission which some will say is a negative point but it still makes him cheaper than using a bank or other tied company for advice. Funds are fine and the products are fine.