Whole of market, fee-free, mortgage advisors

redzak

dunstonh wrote: »

A pension and a mortgage are way apart in the food chain of qualification requirements, knowledge and liability & regulation costs. You cant compare the fees for the two. The pension should be more expensive than the mortgage. It shouldnt be that way but its an unfortunate consequence of FSA regulation.

Perhaps, but in my day to day job, I have seen pension schemes set up by an IFA and 30% intitial commission paid by te insurer on a £1m annual premium. There is no way that the work the IFA has done has been equivalent to £300k to set up the scheme. Even ongoing monitoring costs would never cover that. Overall, its not surprising that there are hardly any commission paying insurers left, particulalry as those fees are just uneconomic, let alone the fact they rarely represent value for the member (in my opinion).

All in all, it is an unclear world, pensions (especialy) and mortgages and anything that can be done to clarify things has to be appluaded, although the fees paid to mortgae advisors, from providers, seem very small compared to pensions!

dunstonh

Perhaps, but in my day to day job, I have seen pension schemes set up by an IFA and 30% intitial commission paid by te insurer on a £1m annual premium. There is no way that the work the IFA has done has been equivalent to £300k to set up the scheme.

Very true. However, the person that is employing that IFA has to be totally stupid to be doing it on commission. Commission will always pay over the odds for large cases and typically under the odds for small cases. If the person had gone fee basis then its probably not going to cost any more than £2000.

although the fees paid to mortgae advisors, from providers, seem very small compared to pensions!

as it should be. Mortgage advisers are lower qualified, have lower costs and less liability. That is no disrespect to mortgage advisers but just an observation that goes with most professions as you get higher qualified and into more regulated areas that you should expect the cost/fee to go up

It is a farce that the admin and liability on a £100pm pension is way over the odds compared to say a £5000 personal loan or £100k mortgage. That said, mortgage liability and admin are catching up but then pensions and investments are increasing all the time. The suitability reports are getting ever more detailed and no wonder when you see the sorts of things that complaints get upheld for nowadays (saw one recently at a meeting that looks at complaints coming in so we can see trends etc. The documentation was fine, the charges were fine (no initial commission and 0.8% p.a. fee based with fee agreement in place and evidence of servicing to justify it). Everyone in the room said the complaint in this case would be rejected. However, it wasnt rejected but upheld and the reason was the person was a courier and couldn't be expected to understand unit linked investments as they were too complicated (yet they were just your normal retail unit trust funds - nothing complicated. They said he should have had a basic balanced managed fund rather than a spread of funds in a portfolio - totally crazy).