Trail commission !!!!!!??

OMG_HowMuch??

Hi all

First time posting here so be kind

I've just got some pensions advice from a IFA that I've used for the first time. He's recommended that I move my pension to Aegon and I'm going to be quids in. Which is fair enough but after reading through the documentation I've noticed that he's going to taking 50% of my premiums for the next 12 months. This means he'll be taking something like £5k in commission for his advice. This seems a lot of money to me. He said that there would be a lot of costs in the first year but I didn't think it would be that much.

Ok so I thought I'll just drop my payments for the first 12 months and top up in year 2 when he can't take half. Apparently it doesn't work that way, he gets 50% of any extra for the first 12 months. What the hell? So then I start reading up about the world of trail commission, it's not good is it?

This is the first time that I've really looked into all this stuff, so I'm a bit shocked by the amount of money that I'm going to end up giving this guy.

Is there any way around this? I've read somewhere that the trail commissions are going to stop in 2013, is that why this guy has gone after this front loaded pension for me?

Any advice is appreciated.

Thanks
M.

dunstonh

Which is fair enough but after reading through the documentation I've noticed that he's going to taking 50% of my premiums for the next 12 months. This means he'll be taking something like £5k in commission for his advice. This seems a lot of money to me. He said that there would be a lot of costs in the first year but I didn't think it would be that much.

The thing with commission is that the amounts are larger on high values and lower on small values. With larger transactions it is better to go on fee basis.

So then I start reading up about the world of trail commission, it's not good is it?

The Aegon pension doesnt pay trail commission. It does allow explicit charging for ongoing servicing but there is no natural trail commission.

Is there any way around this?

Yes. go fee basis and not commission basis.

I've read somewhere that the trail commissions are going to stop in 2013, is that why this guy has gone after this front loaded pension for me?

There is no indication from what you have said that there is any trail commission.

gadgetmind

OMG_HowMuch?? wrote: »

This seems a lot of money to me. He said that there would be a lot of costs in the first year but I didn't think it would be that much.

It seems like a lot of money to me too, but I am notoriously "careful".

You choices are, 1) negotiate it down, 2) learn enough about these matters to proceed on a DIY basis.

On behalf of myself and spouse, I have moved five pensions pots and two ISAs this year, and have started two new SIPPs and two new S&S ISAs. However, before doing this I had to do a whole load of research and reading, and ask a fair few stupid questions here and elsewhere, so don't go thinking that DIY is an easy option.

atush

I agree that 5K is very high (like Gadget I am 'careful'). But you would need to aks to proceed on a fee basis if you sitll want to use the IFA to avoid this.

Most here (inlc the IFAs) say to go fee basis. Apaort from when looking for an annuity where in most cases you should proceed with an IFA as you will pay comission in any case. If you DIY the annuity company will just pocket the commission itself as extra profit.

John28_2

I'd ask dunstonh to recommend an IFA who doesn't charge for advice. I'm sure he will know who to contact. Otherwise avoid them completely and put your money into ISAs because at the end of the day the annuity you'll get won't be worth toilet paper.

gadgetmind

John28 wrote: »

at the end of the day the annuity you'll get won't be worth toilet paper.

What annuity would that be? The one that no-one is forced to buy nowadays?

Pensions have changed a lot over recent decades, mostly for the better,