Do You Need Financial Advice? When To Get It, When Not To Get It Discussion Area

dunstonh

I am using a an FSA advisor to move three old private pension schemes into one.

All UK advisers have to be authorised by the FSA. It does not carry any other standard other than the fact they are not breaking the law (it is illegal to trade as an adviser without FSA authorisation). Currently IFAs and tied sales reps carry the same FSA authorisation.

Are these charges reasonable?

Yes. They are cheaper than the maximum and better the typical average.

The SW retirement account is quite a good plan option as for large funds. Its a post "A day" contract so is designed with many of those changes in mind. It allows mixing and matching of unit trust funds and pension/stakeholder funds so you get the best of both worlds. Plus, it is "factory gate priced" which is something you are likely to see more of in future where you are explicitly told who is getting paid what and where. The provider does not set the remuneration with this contracts apart from their own bit.

edit: Just realised that you probably meant IFA not FSA when you used the initials in the first bit.

the.duck_2

Thanks for the advice.

I am not use to dealing with IFAs. The guy I am using seems quite good.

The charges seem high to someone not use to dealing with pensions. But I guess if the IFAs advise is sound then it is money well spent.

One other question..... If for some reason I am not happy with the IFA's performance in a few years time can I stop taking his advise and stop the pension fund paying him the advice charge?

Regards

Philip

dunstonh

One other question..... If for some reason I am not happy with the IFA's performance in a few years time can I stop taking his advise and stop the pension fund paying him the advice charge?

Yes you can. However, you dont get the money, the provider keeps it or you appoint a new adviser, the new one gets it.

The charges seem high to someone not use to dealing with pensions.

The annual charge is very low. The typical fund charge is 1%-1.5% (more funds at 1.5%). A smaller number of more specialist funds may have 1.75% and shouldnt be discounted.

Remember that even with savings accounts the net interest charge is 1-1.5% typically. The only difference there is that you dont see it. With investments you are told exactly what it is.

the.duck_2

Thanks again for your help. It has been really useful. I can sleep easy now.

Philip

MellowS

Hi, I was wondering, we have paid fees to Moneygate who arranged our mortgage, also critical illness and death cover to reduce in line with the mortgage and also fixed life cover. They told us that they were also receiving a commission fee for the mortgage and the policies and we were happy with that.

However we have now split and although we're keeping the mortgage and cover for it going we do not want to keep the fixed amount going as we are no longer together and so we cancelled it.

They are now saying that we owe them money for cancelling the policy as they have to pay back commission. But we already paid them for their time when they initially set it up.

Is this fair and right that they can do this? - They have said we signed something to say that they could charge us, but this was not explained at the time as otherwise we would have not taken out the fixed term as we were thinking about possibily a move abroad at that time that would have invalidated the policy anyway.

thanks:eek:

podge1_2

I have talked my 26-yr-old son into thinking about a pension. Have seen 2 IFAs in our area with what seem good qualifications for pensions. One has quoted a flat fee of £500 with £20-30 per annum for review. The other has said £250 fee or £150 and they will take the balance in commission. Their review charges are £20-30 per month, which seems a lot over a year.

JustJewels

@MellowS

Yes, I've heard of this tactic being used. What happens is that for life and protection policies, the insurance company pay the broker a few years commission up front, and then 'clawback' that commission if the policy is cancelled. The idea being that the broker should be sure that the policy is suitable for their client long term, not just short term.

Its a bit late now to say you should be careful what you sign if you don't know what you're signing, so first thing I would say would be to ask this company for a copy of this document they say you signed. It wouldn't hurt for you also to ask if the adviser/broker has proof that they did indeed explain this to you. They are supposed to keep copious notes on such things, and their compliance department should keep copies for years.

HTH

JJ

dunstonh

One has quoted a flat fee of £500 with £20-30 per annum for review. The other has said £250 fee or £150 and they will take the balance in commission. Their review charges are £20-30 per month, which seems a lot over a year.

Its not that expensive. The first one is obviously cheaper and remember that the product charges will be lower. From 2012, commission wont be available any more and it will all be fee based. Many IFAs have already moving their businesses to that model. So, charges that used to be seen indirectly within the product will be seen outside of it. Although many contracts do allow the charges to be placed within them if you prefer it that way (and with pensions it is tax efficient to pay charges via the pension and not by cheque).

As for which one, well it depends on the service being offered. A rebalance once a year can save hundreds if not thousands of pounds (obviously not in the early years). Being in a structured portfolio can offer greater potential for growth than being in a bog standard balanced managed fund. The FSA dont like IFAs recommending structured portfolios without servicing (as highlighted in a recent report into pensions). That said, if your son wants a basic product with a basic investment with no servicing then that option is still available via a stakeholder pension.

Aegis

podge1 wrote: »

I have talked my 26-yr-old son into thinking about a pension. Have seen 2 IFAs in our area with what seem good qualifications for pensions. One has quoted a flat fee of £500 with £20-30 per annum for review. The other has said £250 fee or £150 and they will take the balance in commission. Their review charges are £20-30 per month, which seems a lot over a year.

How much is he looking to put aside each month, and does he have a pension through his employer?

EdInvestor

the.duck wrote: »

Are these charges reasonable?

To make a judgment we would really need to see the investment strategy (fund choice) he proposes for your money.Simply moving money from one pension to another is easy, you can do it yourself for no cost at all.

The skills come in knowing when money shouldn't be moved (eg if the policy has valuable guarantees attached or severe penalties for transfer which can't be made up easily) and then, if a move is justified, in reinvesting the fund so that it shows better growth potential in the long term.

You haven't given us any details on those issues.