Independent Financial Advisors & Pensions

jem16

K_P83 wrote: »

When speaking to HR at work, they said that the best option for me would probably be going through their 'advisor' and having the cash taken out of my wage instant.

It can be good if it's an occupational pension and you are a higher rate taxpayer where the pension payments are piad from gross salary before tax as you get instant tax relief and no need to claim back the extra tax relief from HMRC. For a basic rate taxpayer it really makes no difference. Also as it's likely just to be a basic stakeholder they are offering to help you with you would pay that from net salary anyway.

This is one reason i'd be reluctant to go through them as i simply can't TRUST them.

That's one reason. However the main reason is that I suspect it would be a basic stakeholder that's on offer - i.e. less choice of funds. You are probably better with a personal pension with better choice of funds.

If i went elsewhere, which i'm more than likely going to do, can i still have the money taken out of my wage instant, or do i have to make manual payments myself?

A Direct Debit would be set up and you would make a payment net of basic rate tax. So if you wanted to pay £100pm into a pension, the DD would take £80 and the pension provider makes it up to £100 by claiming the tax relief for you. All very easy.

any questions that i should be asking the IFA?

Show that you understand at least the basics of a pension - i.e. the difference between a basic stakeholder with internal funds and fewer choice and a personal pension with both internal and external funds and a greater choice. IFAs have to be aware that their client has sufficient knowledge to understand what they are getting otherwise it's open to complaint about being missold.

There are no particular questions to ask on a first meeting other than charging structure. As you get further into committing ask to see the research as to why a particular reccommendation has been made - basically why that is the the best one for you to have over other products. If they don't want to show you or can't find another IFA.

Above all if you don't understand something ask until you do. Communication is what it's all about and it's 2 sided.

Nine_Lives

Many thanks Jem.

With regards to showing that i understand the difference between A and B ... i can't i'm afraid, as i don't. I'm sure i'm not the only one, but being honest, what others do/don't understand is irrelevant to me ... i don't fully understand the difference between.
It'd be a case of going in, not knowing anything, and looking to be guided totally.

jem16

K_P83 wrote: »

Many thanks Jem.

With regards to showing that i understand the difference between A and B ... i can't i'm afraid, as i don't. I'm sure i'm not the only one, but being honest, what others do/don't understand is irrelevant to me ... i don't fully understand the difference between.

No I understand that and there is nothing wrong in not knowing as people can't be experts in everything.

However there was a thread recently where the OP was asked by an IFA to find out about pensions and come back again and the OP feeling a bit aggrieved as they wanted to use an IFA so they had someone to blame if things went wrong.

It'd be a case of going in, not knowing anything, and looking to be guided totally.

That's certainly what an IFA can do for you provided you are willing to listen and learn. However the IFA may decide to put you in a basic stakeholder if they feel you wouldn't understand and nowadays the basic stakeholder isn't such a good product, especially when you are young and have plenty of time to choose more adventurous funds.

Basic knowledge is that a stakeholder has fewer funds, maybe around 30 at most and are internal funds - i.e. a Scottish Widows stakeholder uses Scottish Widows funds. The charging is capped at 1%amc for the first so many years at least.

The Personal Pension has a choice of many more funds from 200 aup to perhaps 1000 or so on some platforms. They utilise funds from all the major Investment companies so your IFA can build a better portfolio. Modern PP offer the multi charge option where a higher initial fee can lower the amc.

There is also the SIPP but really that's for a more experienced investor with a higher pot to make it worthwhile cost wise so you can probably forget that.

At least if you show you have that basic understanding and a willingness to listen and learn you should do fine. Ask questions if you don't understand. The rest is down to the IFA - ie choosing the best product and the funds.

Nine_Lives

jem16 wrote: »

That's certainly what an IFA can do for you provided you are willing to listen and learn.

I certainly am. It's not just an area i want to know & more importantly - understand, it's an area i NEED to know & understand. Where money is concerned especially, i need to know as many details as possible.

However the IFA may decide to put you in a basic stakeholder if they feel you wouldn't understand

Wouldn't it be their job to manage the pension though? Or am i getting lost in all of this? I thought this is in part what you're paying for - them to manage your pension (& i guess this is where the commission side of things appears)? Or do they just advise you, get the ball rolling (i.e. tell you where to invest, or invest for you) but then the rest of it is ALL down to you?



Thanks for the tips so far.

jem16

K_P83 wrote: »

Wouldn't it be their job to manage the pension though? Or am i getting lost in all of this?

The job of the IFA is to find out what is most suitable for your needs. He/she would first of all do a fact find with you to ascertain your risk profile and work out what will achieve your objectives, be it ISA, pension or nothing.

If a pension is required then the IFA would do the research to find out the most suitable product and recommend that to you in his report. His recommendation would also contain the funds he would use and why. If you are happy then that would be set up for you by the IFA.

I thought this is in part what you're paying for - them to manage your pension (& i guess this is where the commission side of things appears)? Or do they just advise you, get the ball rolling (i.e. tell you where to invest, or invest for you) but then the rest of it is ALL down to you?

That depends on how you employ the IFA. Remember tha transactional and servicing service I told you about earlier? If you want the IFA to monitor the investment you have to employ him/her on a servicing basis by paying a fee - usually around 0.5%.

You may or may not want to wait until your pot gets a little larger so that it warrants a more active role. Something to discuss with the IFA perhaps.

mania112

Yes, an IFA has to (under FSA rules) provide some evidence that the trail commission they're receiving is paying for something.

You should expect to receive fund performance updates and an annual review.

You should also be able to discuss your pension at any time with the IFA and engage a fund switch for free.

- they should never 'dump' you in a Stakeholder because you don't understand much about pensions.

jem16

mania112 wrote: »

they should never 'dump' you in a Stakeholder because you don't understand much about pensions.

Have a read of this thread where something similar was discussed.

https://forums.moneysavingexpert.com/discussion/3338744

It's not about "dumping" the client into a stakeholder - it's about chossing the most suitable product that fits the knowledge and understanding of the client. So going in with a little basic knowledge seems like a good idea.

Nine_Lives

I sent off 2 emails. Thursday last week i think it was (late on) to 2 IFAs shown on the unbiased website. There were 3 listed but one of them, their email link didn't work.

One replied the following morning, the other still hasn't replied by today. Anyway, told the guy who replied that i'd still like to do more reading into the topic first to better understand my options, but i'd like to enquire as to the payment.

They said the first meeting is free, simply because there's so many options that can be thrown up & it's from there that the fee will be decided, once a decision on which road we're/i'm going down has been made.

jem16

K_P83 wrote: »

They said the first meeting is free, simply because there's so many options that can be thrown up & it's from there that the fee will be decided, once a decision on which road we're/i'm going down has been made.

That's normal. They can't charge you until they have informed you of their charging structure.

Although in saying that they should be able to give you a rough idea.

Jegersmart

Whilst I have been investing for almost 2 decades now I must admit to being relatively clueless about SIPP's but more specifically about transferring old pensions into my SIPP. I wonder if someone could let me know if I have understood correctly:

I am a higher rate taxpayer, and am currently in a company pension scheme where I contribute my maximum 6% and the company pays in 10% of my basic income. I am 40 years old. In the past I ahev joined company pension schemes if available in most cases and I have recently been transferring these into a Fidelity SIPP, as I use Fidelity for investing in ISA and non-IAS wrappered holdings and like their platform. One protected rights pension has been transferred and another non-protected defined contribution scheme is due to land next week. I am only interested in investing in cash/mutual fuinds etc for now. All good so far as far as I am concerned.

Recently I learned that I have a defined benefits pension scheme that I also want to transfer. I have been told by Fidelity that what I have now is a Fidelity SIPP whereas what I would need to transfer a defined benefit pension to would be a "Fundsnetwork SIPP". This seems in line with other providers who have "Select" and "Full" SIPP's as far as I can tell. In this case Fidelity has told me that I need an IFA linked to this type of SIPP as I am not qualified to make this decision myself. So my question is that I assume there are quite a few people like me around that have a lot of experience in investing, work in the financial markets and have done for along time who are not really interested in too much advice but want a "Full" SIPP in place to take control of some of the decisions around my own future? If so, what is the best way to go about this? In this particular case would I benefit from paying a flat one-off fee (if possible) to get the SIPP linked to them so I can in fact open one and then the rest is up to me and no further charges would be due or would I always be paying "the man off" until I retire for not a lot of advice (if any). If there are ongoing charges what are they? 1% of total value of pension? How are they paid?

If next year I decide to make a contribution of £25K into my pension I would normally deal with Fidelity directly in the case of an IT or similar - in this case would I need to send the money to the IFA instead?

As you can hear I am little behind the curve on pensions and am getting a little confused. The cynic in me says that because kickbacks are ending then this is a great way to ensure that I *have* to pay for an IFA whether I want one or not. I wish my clients were required by law to deal with me and to spend money with me....:D

Not meaning to cause any offence to IFA's - I am just used to handling things myself and whilst I can always learn somethign new would prefer to actually decide whether to spend money gaining that advice myself, rather than by legal (I presume) requirement.......