paying an IFA with regards to pensions

purplejumper

Hi, I have two private pension funds which total about £55,000, on which an IFA has advised I will get lower charges if I add them together. He has sourced a new provider, AEGON - and has said that his firm will charge 3% for the transfer to the new fund and then propose a 0.5 % fee each year for financial advice. He is correct in that Aegon will charge a lower fee (0.6%) and looking at projections there is some slight advantage in moving. however, I am not a big earner and the rest of my pension pot is with the NHS where I work part time.

I am wondering whether people just try and sort it out themselves at this point or not. Or whether this is a good move?
thanks

UsernameAlreadyExists

3% for the transfer? - that's £1650! Sorry I am mildly shocked by this at that seems quite outrageous. I'd personally would expect lose precisely £0 of my surrender value when transferring providers.

I shall bite my tongue for the moment as I expect others might steer you towards seeking a different FA.

dunstonh

I am wondering whether people just try and sort it out themselves at this point or not. Or whether this is a good move?

Most people have the ethics to not employ someone to do work and then pull out to DIY. However, your morals are your own and if that is what you want then that is your choice.

3% for the transfer? - that's £1650!

Seems reasonable.

Sorry I am mildly shocked by this at that seems quite outrageous.

why?

UsernameAlreadyExists

dunstonh wrote: »

why?

£1650 one off fee for filling in a few forms, to open the account, and kick off the transfers? Nice work if you can get it!

You could do it yourself with by opening a SIPP and get a £100 or so incentive kickback on ~£50K. I am looking at it myself with HL.

I looked at the Aegon site to see if you could open your own account but clearly you can't as you get pushed out to find a FA in your local area. My own company pension scheme is with them so I do have a login, and once you're in, you can switch funds yourself freely.

Lokolo

UsernameAlreadyExists wrote: »

£1650 one off fee for filling in a few forms, to open the account, and kick off the transfers? Nice work if you can get it!

You could do it yourself with by opening a SIPP and get a £100 or so incentive kickback on ~£50K. I am looking at it myself with HL.

I looked at the Aegon site to see if you could open your own account but clearly you can't as you get pushed out to find a FA in your local area. My own company pension scheme is with them so I do have a login, and once you're in, you can switch funds yourself freely.

The IFA will be doing a fact find, providing a list of advised investments, paying staff and maybe paying a platform fee.

You say you are looking with HL with a SIPP, HL are pretty expensive currently.

jem16

UsernameAlreadyExists wrote: »

£1650 one off fee for filling in a few forms, to open the account, and kick off the transfers? Nice work if you can get it!

There is rather more involved in an IFA's recommendation than just filling in a few forms. A factfind has to be gathered then various hours of research to ensure that the recommendation is correct.

This will involve contacting the 2 pension schemes that the OP is currently in, gathering information about any guarantees involved, charges etc, etc.

This then has to be compared to alternative possibilities to see if a transfer is the most suitable thing to do. If anything goes wrong, the IFA is ultimately responsible and the consumer has that protection.

You could do it yourself with by opening a SIPP and get a £100 or so incentive kickback on ~£50K. I am looking at it myself with HL.

That's fine if you have the knowledge to DIY and are prepared that if something goes wrong, it's your responsibility. HL's SIPP is more expensive than what the IFA has found.

UsernameAlreadyExists

Lokolo wrote: »

The IFA will be doing a fact find, providing a list of advised investments, paying staff and maybe paying a platform fee.

jem16 wrote:

There is rather more involved in an IFA's recommendation than just filling in a few forms. A factfind has to be gathered then various hours of research to ensure that the recommendation is correct.

This will involve contacting the 2 pension schemes that the OP is currently in, gathering information about any guarantees involved, charges etc, etc.

So ... if the pension fund had been 100K ... this is suddenly worth £3000?
Or ... if the fund was a mere 10K, then it's £300?

It's the same task in both cases.

jem16

UsernameAlreadyExists wrote: »

So ... if the pension fund had been 100K ... this is suddenly worth £3000?
Or ... if the fund was a mere 10K, then it's £300?

It's the same task in both cases.

A higher fund value would normally attract a lower percentage fee because, as you say, the amount of work is the same.

dunstonh

UsernameAlreadyExists wrote: »

So ... if the pension fund had been 100K ... this is suddenly worth £3000?
Or ... if the fund was a mere 10K, then it's £300?

It's the same task in both cases.

Percentage based fees involve an element of cross subsidy but typically you find the more you have, the lower the percentage rate becomes or a cap is applied.

£1650 one off fee for filling in a few forms, to open the account, and kick off the transfers? Nice work if you can get it!

If only that were the case.

BLB53

I am wondering whether people just try and sort it out themselves at this point or not. Or whether this is a good move?

Why not take a little time to learn a bit more about pensions and investments. There's lots of freely available info on the internet - www.monevator.com , www.fool.co.uk , miserlyinvestor.com , retirementinvestingtoday.com to name but a few.

If it was my pension, I would transfer to Sippdeal (free) and invest in several low cost trackers eg Vanguard and/or several investment trusts.

A little time and research could save you £1,650 (+ vat?) transfer fee and also save you £275 pa (+ vat) IFA retainer fee.

You would be MUCH better off come retirement imho.

mania112

UsernameAlreadyExists wrote: »

You could do it yourself with by opening a SIPP and get a £100 or so incentive kickback on ~£50K. I am looking at it myself with HL.

I looked at the Aegon site to see if you could open your own account but clearly you can't as you get pushed out to find a FA in your local area. My own company pension scheme is with them so I do have a login, and once you're in, you can switch funds yourself freely.

What qualifies you to know a SIPP with HL or an Aegon fund switch is the right thing to do?

You assume you're doing the right thing, but you have no idea.

Most other members of the public use common sense and hire a professional to advise them on the right moves to make with their money.

The paperwork is an added bonus.