IFA trail commission

Kesi

Hello. I have recently retired aged 60 due to ill health. I engaged a local IFA to advise me and the result was my works money purchase pension was recently moved to a Sipp. IFA took 3% and 1.5% pa. I have now been informed that he and his partner have sold their bussiness. I am not keen on going with a new unknown IFA so what is my position with regard to the Sipp provider costs if I prefer to get future advise from my own IFA choice -paying up front re new legislation as I believe this could be a better choice and possibly a cheaper option than paying trail commission. Thanking you in advance

mania112

To be clear, there are 3 people that are taking ongoing charges from your pension.

1) The IFA is taking 1.5% pa
2) The SIPP provider will be taking a nominal amount each year and costs for fundswitches and things
3) The actual investment has its own cost paid to the fund manager (an AMC).

Now the IFA has packed up, you will need to call the SIPP provider yourself and make sure the trail commission will no longer be paid, you want to 'remove XXXX as being the servicing agent on your pension'. This likely will happen automatically, but don't bank on it.

Incidentally, 1.5% pa is common, but very much on the high end - not one that IFA's I know would dream of charging. If you do take the service of another IFA in the future, do not allow them to charge that much 0.5% - 1% is acceptable (in my opinion).

If you do want to take an IFA recommendation in the future, they will always offer you the chance to pay them upfront, costs of which will vary but perhaps £100-£200 per hour sounds about right (and I couldnt begin to tell you how long it will take because there are so many different ways that can be tackled).

Kesi

Thank you for this info. Yes this IFA was also charging £250 an hour for advise and I am still getting over the shock of fees comming away from the account and not quite sure what they are for-I am for one glad charges are to be more open in future. With regard to the review in 3 years re GAD? will this happen auto or will that be an IFA job. I am not taking income at present to allow the fund to get going and hopefully recoupe some of the charges. Again thank you.

jem16

Kesi wrote: »

Thank you for this info. Yes this IFA was also charging £250 an hour for advise and I am still getting over the shock of fees comming away from the account and not quite sure what they are for

If you are paying £250 per hour for advice, then the 1.5% you talk about is likely to be the fund annual management charge.

Were you also receiving fund rebates as that 1.5% normally contains a 0.5% trail commission paid directly to the IFA. As you are paying a fee you should have seen a rebate of any commission.

Kesi

Ah sorry to confuse but I did not pay his hourly rate fee. I had contacted the Sipp provider to enquire to the fees being taken but was told to contact my IFA which I did but then got the sold bussiness letter. I will be contacting provider asap. thanks

dunstonh

IFA took 3% and 1.5% pa.

Are you sure the 1.5% is what the IFA is getting and not the bottom line including SIPP provider and investment? IFAs typically take 0.5% to 1.0% depending on the amount involved.

You can appoint a new IFA at your convenience. The new IFA can then get you to sign an agency transfer form which tells the provider to put the plan on the new IFAs agency and allows them to obtain the info etc that the servicing agent would normally have. The new IFA will agree their fees with you and fill in a fee agreement to that effect. No change of contract is required. No new account number etc. It is a behind the scenes change.

Kesi

Reading through the jargon again it appears the 'whole of market services' is 1.5% only covers the cost of their advise and additional charges -'Whole of Market Analysis report' at £1000 applies but the option I have ended up with is 'a certain provider' which is 1.5% pa re advice and annual admin charges. Possibly the extra taken off is 'hourly charge for work done to implement the contract.' I am sure the new IFA will be in touch soon but it's good to know I can shop around and compare-I am not obliged to go with them. Thanks

dunstonh

So, it sounds like the 1.5% is the bottom line and not the IFA.

Kesi

Hello again. Just contacted our Sipp provider to inform them that our local IFA has sold bussiness and it appears we now have the providers 'Private Wealth' on my record as our Financial planners. Not sure if this is a good or bad thing. I am waiting for them to contact me with costs etc so as to compare with a Local IFA. Opinions and sugestions welcomed. Feel at the moment that we have been gently manovered into this position over some months.

dunstonh

Kesi wrote: »

Hello again. Just contacted our Sipp provider to inform them that our local IFA has sold bussiness and it appears we now have the providers 'Private Wealth' on my record as our Financial planners. Not sure if this is a good or bad thing. I am waiting for them to contact me with costs etc so as to compare with a Local IFA. Opinions and sugestions welcomed. Feel at the moment that we have been gently manovered into this position over some months.

Until you speak with them you wont know. When a business sells us to another, this is an unfortunate situation. I had the same with my accountant when he sold up. I didnt like the regional firm he sold to and I went elsewhere.

katkits

It may well be that the SIPP youhave is good and does not require changing. The 1.5% may not be trail butrather the annual management charge, which is payable to the fund managers.1.5% would be high if it is trail. If it is Trail then the SIPP company couldprobably stop deducting it if requested by you to do so. You would need todiscuss the benefits of trail with your new adviser. The existing SIPP caneasily be changed to a new adviser. For no cost. The adviser may charge a smallfee to review the plan and make any recommendations. If this has just been setup you would hope the plan is good, and that it would only be the funds thatneeded monitoring. For more specific advice your new advisor should be able tohelp. Like us they are unlikely to charge for a phone call about generic info.