Need to consult IFA - 1st time in 60 years

reheat

I need to consult an IFA - something I've not done before in nearly 60 years. The subject area is accessing the 25% lump sum now, whilst still leaving the remainder of my fund invested (at least as safely as it currently is - it's in a section 32 buyout plan with Aegon) before converting it to an annuity at 65. A Sipp of some kind is what I've been imagining, until age 65.

But I have no idea how much money an IFA might charge me for this sort of advice. I am really loath to spend loads of money unless I can be reasonably sure beforehand the result will be a positive one. Any help gratefully received.

mania112

Does the scheme you have not allow this by default?

Cost of IFA would likely be between 2-5% of the transfer value. If I remember correctly Section 32 transfers NEED to be completed on an advised basis, so you may not have a choice.

The first step of course would be for the IFA to check the features of your current plan to ensure you're not giving up something you shouldn't.

reheat

mania112 wrote: »

Does the scheme you have not allow this by default?

Note sure - I need to contact them.

Cost of IFA would likely be between 2-5% of the transfer value. If I remember correctly Section 32 transfers NEED to be completed on an advised basis, so you may not have a choice.

That's what I've been told. The fund is about £85K, a fee of £4250 sounds very hefty!

The first step of course would be for the IFA to check the features of your current plan to ensure you're not giving up something you shouldn't.

It would really hurt if I paid out a large chunk of cash, only to find out my best option is to sit tight and do nothing!

See responses above.

mania112

If the recommendation was to do nothing, you wouldn't pay anything like that amount (i would hope).

Maybe a couple of hundred.

westy22

If the recommendation was to do nothing, you wouldn't pay anything like that amount (i would hope).

Maybe a couple of hundred.

and maybe a great deal more! Most IFAs will have a minimum fee of £500 - £800 and even if the advice was to do nothing the IFA would still have to research it, write a report and complete compliance checks etc.

dunstonh

It is unlikely that the section 32 buyout bond would allow capped drawdown.

The transaction is higher risk and I think you would be lucky to find such a transaction being done for under £1000 given its nature. I doubt many would be willing to consider such a transaction on execution only basis given its high risk nature. (execution only doesn't protect the adviser from doing things they know to be wrong)

I can be reasonably sure beforehand the result will be a positive one.

Is there a GMP, GARs?

jamesd

It's entirely possible that Hargreaves Lansdown and a few other providers will be willing to accept a transfer. Before you do it ensure that you have no preserved benefits like guaranteed annuity rates, higher lump sums or anything else that is better than the standard benefits. The reason section 32 schemes generally require advice is that they often contain money with extra benefits above current rules.

mania112

jamesd wrote: »

It's entirely possible that Hargreaves Lansdown and a few other providers will be willing to accept a transfer. Before you do it ensure that you have no preserved benefits like guaranteed annuity rates, higher lump sums or anything else that is better than the standard benefits. The reason section 32 schemes generally require advice is that they often contain money with extra benefits above current rules.

Which is why he needs to see an IFA, not necessarily because a transfer might NEED to be done through an IFA, but because an IFA can flesh out what benefits will be lost on transfer.

It's more often than not recommended not to leave a Section 32.

jamesd

That reasoning is part of why I made a decision a couple of years not to accept a transfer in to a section 32 scheme from a work scheme that was being shut down. I knew that there were no additional benefits at all and that I might be stuck paying an IFA for the service of telling me what I already knew.

We can at least investigate why it's in a section 32 and maybe help with some questions to ask to determine whether anything would be lost.

dunstonh

The FSA position on final salary schemes is clear but with Section 32 buy out bonds I dont believe they would be considered mis-sales unless proven otherwise. Yes, a good number would be wrong to transfer (far more than personal pensions, SIPPs or even RACs) but I dont believe there is an FSA position on this. However, the firm's own PI insurers and internal compliance may or may not make it possible with "some" firms. I cant do execution only on S32s for example. However, xyz down the road may be happy to and pays a different amount to their PI insurer to cover it.

dunstonh

feesarefare wrote: »

Would a provider accept an "execution only" Section 32 transfer, on the assumption that such a thing exists?

I don't know. I havent tried it. Have you?