Pension switching initial charges

jotpilot

zagfles wrote: »

Why would you want to pay up front for 30 year's worth of advice? What if this IFA is rubbish and you want to switch to a different one? What if they stop trading? Would you pay up front for 30 year's worth of any other service which you haven't yet had any experience of?

Shop around, call a few IFAs if you need advice. Or consider whether you really need to switch at all?

Yes, what you are saying makes a lot of sense. I am certainly having very substantial doubts about this guy.

GhIFA

Tell him to take less upfront and agree an ongoing servicing fee for the years to come. That way he still has to work to justify his fee and you can change to another adviser in the future if you want to without it costing you too much. Although, based on what you have said so far I would be steering clear of him now. In my experience the advisers who take this level of fees are the ones that you never hear from again.

jotpilot

I need some (more) help please.

Normally I am very careful when it comes to all things financial. For various reasons clearly in this instance I have not been.

I am certain if the 8.5% initial charge was mentioned I would have remembered it. I have only found out about it because he sent me some information about the pension very recently (the first piece of information I have had from him on paper).

Unfortunately I signed some papers with him around a month ago. I have just checked my old pension again and discovered it has now been transferred within the last few days.

I understand I probably look pretty stupid here so please go easy.

The latest information I received from him also outlines a right to cancellation within 30 days which I will be taking up, on the proviso that the transfer fee is refunded.

So my question is, will the transfer fee be refunded? The information he sent is not clear on this.

Thanks

mania112

I understand that the IFA doesn't receive the initial commission until after that 30 day cooling off period.

So if you cancel the transfer the whole amount will be returned to the original pension provider.

That being said, the scheme you transferred from is under no obligation to accept the money back - but normally it's not an issue.

mania112

You're better off contacting the pension provider directly, because the IFA will likely stall and try to put you off the cancellation (if he's as dodgy as he sounds).

Going back to the 'the high fee is for 30 years of management' it's worth checking that he's not ALSO charging you an annual fee out of the pot, which is what the ongoing management is designed for.

dunstonh

He is trying to justify it by saying the fee by saying "the high initial charge pays for all the advice now and for the next 30 years."

That is just wrong and the sort of thing RDR is meant to stop. Advice falls under two things. The initial advice which you pay for and ongoing advice/servicing which you pay for on an ongoing basis if you want it.

Yes, what you are saying makes a lot of sense. I am certainly having very substantial doubts about this guy.

Does he have any initials after his name. e.g. DipPFS or CertPFS etc?

My gut feeling is that this is one that wont be here in a few months due to RDR and is making hay whilst he still can.

GhIFA

Jotpilot, you will need to speak to your previous pension provider to check that they are willing to take the transfer back.

What is the paperwork that he has sent you - is it a recommendation report. If so, he should have sent you this before the transfer was effected.

jotpilot

Thanks again all.

What happens if they are not willing to take it back? Does anyone know whether Standard Life would normally take it back?

mania112

Yeah, with Standard Life should that should be fine. Assuming your company pension was a straightforward Group Personal Pension.

I think it becomes a little bit more unpredictable when you're talking about Final Salary, Section 32 or Retirement Annuity Contracts - which would have specific benefits/features that Standard Life would rather get rid of. Your IFA probably shouldnt have recommended out of these types of plans, so we'll assume he's decent enough not to be advising a switch out of those.

You should give Standard Life a call to make sure. Then, give the new provider a call to say you're going to be cancelling, and confirm what forms they need back.

- at this point, I would leave the IFA out of the loop. The providers themselves will be much more helpful, i'd imagine.

The process of cancellation should be pretty painless, Standard Life use the 'origo options' system for streamlined moving of funds between firms (less red tape to go through) and if your new provider are on http://www.origoservices.com/OurServices/OptionsTransfers/Options_Transfers_Customers.aspx it won't take long to get back to where you were.

mania112

EDIT: It's worth saying at this point that, although some of the comments on here are from IFA's, we do not know the whole story or situation.

The only fact is: 8.5% for a pension transfer is high.

Specifically in your situation, you yourself must be happy that cancelling is the right thing to do.