paying an IFA with regards to pensions

GhIFA

UsernameAlreadyExists wrote: »

Do you think this is ethical? So is the onus on the client to get multiple quotes for the same job from different IFAs and go for the lowest price? This is what happens in other businesses, but people would likely assume that their selected IFA is obliged to give them best advice ... not just fob them off if the job is too petty and won't earn them enough!

As with anything in life, you shop around, and make a decision based on the information you have. An IFA will give appropriate advice, however, they will also have set out the cost before any of the advice is given. The cost in terms of doing the work, risk involved etc can be the same whatever the size of fund so setting this proposing a higher percentage is simply covering the monetary cost. There has to be a commercial consideration for the IFA as well. If the client is happy with the cost involved then they can go ahead, if not they can go to one of the other advisers they have been given details of cost from.

dunstonh

Do you think this is ethical?

Yes. The price is published and if the person then wants to proceed on that basis then they have that choice.

So is the onus on the client to get multiple quotes for the same job from different IFAs and go for the lowest price?

Who is to say lowest price is best? I shop in Waitrose. I know ASDA will be cheaper on more items but I prefer Waitrose. You can buy a TV costing £60 or another costing £6000. You can have two TVs costing £1000 but chances are one is better than the other but they still cost the same.

This is what happens in other businesses, but people would likely assume that their selected IFA is obliged to give them best advice

That would be an incorrect assumption. Best advice has nothing to do with price. However, charging can have an influence on advice. I will give a different recommendation for a servicing client compared to most transactional ones on investment cases.

not just fob them off if the job is too petty and won't earn them enough!

It is a business not a charity. If the transaction costs the IFA £x to follow through then the IFA has to make at least that amount to break even. So, they will price accordingly. The IFA has a business model and if you want that service they tell you the charge. If you want a different service they dont offer they may tell you to go elsewhere but they may tell you what they will charge for it. If you employ a builder that specialises in one area and ask him to do something outside of that area then you would not expect him to offer a competitive price.

quattro2

This is definitely one area where IFA's can lose business by being greedy & not looking after people properly from the outset.
If you were buying most other products or services price & quality, as a consumer, would be the main things to look out for but with financial services, when someone calls to the house & does a review or demonstration people can be quite taken aback & literally blinded by science.
My advice to anyone who feels like this after such an encounter would be to 1/ Step back don't rush into anything 2/ Don't feel pressured because you feel like a novice 3/ Do your own research, by asking lots of questions on a forum like this. That way you will not make any expensive mistakes for advice (as i nearly did) & you will feel happier about the decision you make, wether that be DIY or using an advisor with a competetive & reasonable fee.

mania112

Questioning the legitimacy of an IFA is plain ignorant, especially with introduction of RDR.

Offering Independent Financial Advice is one of the most regulated professions I know.

In comparison, it would be like taking your car to a mechanic for him to change your brakes and him changing the brakes on 10 other cars first to prove the brakes he's offering you are the right one's... and paying DVLA the cost of those 10 cars for the privilege.

You're right. You may be able to do the brakes yourself. But this mechanic has proven he can do it, has paid a fortunate to prove it, he is qualified to prove it and he is insured to prove it.

robmatic

purplejumper wrote: »

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

If there's only a slight advantage to following this guy's recommendations, it sounds like he gains a lot more from this than you do!

What do you get for the 0.5% per year that will be taken from your fund? If I paid for financial advice I'd like it be robust enough not to need reviewing every 12 months...

jem16

robmatic wrote: »

If I paid for financial advice I'd like it be robust enough not to need reviewing every 12 months...

A properly constructed portfolio should be reviewed every 12 months to ensure it stays within your risk profile. With lower fund values this should not be necessary. However over £50k and it begins to make a difference.

atush

So true. Last years winners can be this years losers.

If you don't want to pay for advice, spend the next 12 months free time learning/reading up. That is what I did when I did not want to pay for advice.

But, I have no problem with paying for it when I need or want to and have (for pensions) in the past.

GhIFA

robmatic wrote: »

If there's only a slight advantage to following this guy's recommendations, it sounds like he gains a lot more from this than you do!

What do you get for the 0.5% per year that will be taken from your fund? If I paid for financial advice I'd like it be robust enough not to need reviewing every 12 months...

What a sensible approach - and would you also want the IFA to provide free use of a crystal ball to ensure that he knows all about how your circumstances, or the economic climate might change in the future to ensure that the advice given will remain appropriate in line with these changes???