IFA Charges

cgzz

Just wondering what other people are experiencing when it comes to IFA charges for private pension transactions.

What would be a "standard" charge for an IFA to :-

1. Transfer to different funds within the same company.
2. Transfer pension to a different company.

Can an IFA do these transfers online? I ask this because I know I can't (I have to fax or post a Fund Switch Form) but if I asked my IFA to do a transfer within the same company could it be done the same day? What does an IFA have to do to transfer to a different company?

Hope someone can advise me.
Thanks.

Neverland

I set up my own self invested SIPP and transferred all old employment related DC schemes into it

I just filled in documents the company running the SIPP provided and sometimes the companies running the employer DC schemes would send me their own forms I had to fill in

The process took a long time because pension companies move slowly and the process was all done by post, but its very easy...

...the total fees I paid were minimal

dunstonh

1. Transfer to different funds within the same company.

If you are employing the adviser on servicing basis then you would not expect a charge as the servicing contract covers that. If it is transactional then you would expect a charge. It can really vary from 0.5% to 3% or fixed fee.

2. Transfer pension to a different company.

More work involved with transfers. The FSA treat it as a new product and all the regulatory requirements that go with it.

Can an IFA do these transfers online?

With some providers yes. With some providers no.

I ask this because I know I can't (I have to fax or post a Fund Switch Form) but if I asked my IFA to do a transfer within the same company could it be done the same day?

You tend to find servicing advisers will aim to use providers with good servicing options and online ability is key to that. Transactional advisers wont be that bothered as you are not employing the adviser on that basis so it doesnt matter in their research (or is at least low priority)

What does an IFA have to do to transfer to a different company?

About 6 hours work approx and it is a higher risk transaction. So, liability is greater than the norm.

cgzz

Thanks for the great replies. I am in a real quandary now. A new IFA (I've been with the same company for years but has a high staff turnover recently) contacted me out of the blue about moving my pensions from Clerical Medical (have been in funds Balanced and UK Growth since they were started in the 90s) to Metlife Retirement Income Portfolio (i.e. the "guaranteed minimum" 4% increase each year regardless of what happens in the Market). Charge would be £1500 reduced to £1000. I thought it might be better to stay with Clerical Medical and protect my pension by moving into Cash or Retirement Protection but IFA was going to charge £400 to do that using the excuse of "research". What is there to research in these sort of funds? Aren't these sort of funds "standard" to all pension providers therefore the IFA shouldn't have needed any "research"? He said I could move these myself and it would cost nothing but gave no help or advice on either. The IFA company has been receiving commission from these pensions for years and I thought it would have been reasonable for the IFA to do the move for me without charging. I contacted Clerical Medical to find out how to transfer funds, filled in the forms and posted them. I then found out last week that my pensions total value had dropped about £3000 thanks to the FTSE drop a week ago, (posting the forms and Clerical Medical actioning them just happened to correspond with this) and the fact that the Retirement Protection fund seems to keep on dropping - why when most other funds are going up?. Should I leave them in Retirement Protection (it seems to go down whilst Balanced and UK Growth rise) or move them back to Balanced and UK Growth? Is "Retirement Protection" badly named as it doesn't seem to do what the name implies?

brasso

I can't advise you on the funds, but it does sound to me as if the charges are a bit high. I appreciate that the IFA has to hit his targets and pay for the running of the business, but that is not your problem.

Like the earlier respondent, I opened a SIPP about 8 years ago and gradually moved all my bits of pension into it. Typically, I made a phone call, was sent a form to sign, and that was it. I did this about 5 times to get all the funds under one roof.

So teh admin was simple but of course after that there is the big question of what to do with the fund. I've done my own research and made my own decisions.

Doing it yourself is very cheap in terms of execution, though of course the IFA will say that their advice is worth a lot if the alternative is you making a bad decision -- and I can't argue strongly one way or the other with that. As it happens I believe IFAs can and do perform a valuable service for people not able or willing to do it themselves, but at the end of the day, and at the beginning and middle of the day, they are commercial enterprises and need to generate profits. If someone calls you up to suggest a change -- and by the way it will cost £1500 (ah, but as I'm in a good mood I'll make that a mere £1000), then it's hard to know if they are doing you a favour or just taking advantage of you.

dunstonh

but IFA was going to charge £400 to do that using the excuse of "research". What is there to research in these sort of funds? Aren't these sort of funds "standard" to all pension providers therefore the IFA shouldn't have needed any "research"?

The IFA has due dillegence to perform on any fund recommendation. Fund switches are treated as advice and liability exists on recommendations to fund switch. If you employ an IFA on a servicing basis then typically that covers the cost of fund switches/rebalancing etc. If you dont employ the adviser on servicing basis then they have no choice but to charge for their advice.

Just because a fund is available on a contract, does not make it standard. There are plenty of funds that fail due diligence.

The IFA company has been receiving commission from these pensions for years and I thought it would have been reasonable for the IFA to do the move for me without charging.

Do you know that or are you guessing that?

I contacted Clerical Medical to find out how to transfer funds, filled in the forms and posted them. I then found out last week that my pensions total value had dropped about £3000 thanks to the FTSE drop a week ago, (posting the forms and Clerical Medical actioning them just happened to correspond with this)

IFAs have an online switching process which is much quicker. Looks like false economy now as it has cost you £3000 because you didnt want to pay £400.

the fact that the Retirement Protection fund seems to keep on dropping - why when most other funds are going up?

Heavy in gilts.

cgzz

Clerical Medical has confirmed to me when and exactly how much commission is paid to the IFA's Company. The amount paid over the years is in the thousands therefore it seems reasonable to me for an IFA to do a simple fund switch without expecting a fee especially since nothing has been done with my pensions since they were created many years ago.

Cash and/or Retirement Protection Funds are there as (supposedly) extremely low risk havens when people want to protect what they have built up. What is there to research?

I simply don't know what basis my IFA is employed. I didn't employ him - he is new and contacted me about Metlife (even though he is affiliated with the Independent Financial Services Company who has been taking commission from my pensions and ISAs for years with nothing in return).

dunstonh

Cash and/or Retirement Protection Funds are there as (supposedly) extremely low risk havens when people want to protect what they have built up. What is there to research?

An IFA cannot rely on provider material. They have to do independent research.

I simply don't know what basis my IFA is employed.

It's probably a good idea to know how you employ your adviser. A transactional IFA is not employed to do servicing. So, if you want servicing then you should employ them on that basis. Using transactional IFAs to provide servicing can be very expensive.

Neverland

cgzz wrote: »

... The amount paid over the years is in the thousands therefore it seems reasonable to me for an IFA to do a simple fund switch without expecting a fee especially since nothing has been done with my pensions since they were created many years ago.

Cash and/or Retirement Protection Funds are there as (supposedly) extremely low risk havens when people want to protect what they have built up. What is there to research?

I simply don't know what basis my IFA is employed. I didn't employ him - he is new and contacted me about Metlife (even though he is affiliated with the Independent Financial Services Company who has been taking commission from my pensions and ISAs for years with nothing in return).

I had the same issue with an IFA firm that a former employer foisted upon its employees in the company scheme

Of course the employees, not the company, had to pay the IFAs fees

Which I'm sure were quite handsome over 000s of people

I just used to transfer my funds out of the scheme regularly and move the money to my self-invested SIPP

I suggest you do the same and break out of their prison, these people will continue to make excuses while robbing you as long as you let them...

...and IFAs on this board will continue to tell you that its your fault you are being robbed

dunstonh

...and IFAs on this board will continue to tell you that its your fault you are being robbed

And trolls like you will just blame IFAs for anything and everything. Did an IFA run off with your wife? Is that why you have such a chip on your shoulder?

property.advert

cgzz wrote: »

Clerical Medical has confirmed to me when and exactly how much commission is paid to the IFA's Company. The amount paid over the years is in the thousands therefore it seems reasonable to me for an IFA to do a simple fund switch without expecting a fee especially since nothing has been done with my pensions since they were created many years ago....

Money for old rope counts as nothing towards any actual work which may need to be done in the here and now. Didn't you know that ?