Are the IFA fees worth it in this instance?

Maureen43

I have been quoted £600 for an IFA's advice on a pension recently valued at £34k which I stand to receive in a pension sharing order post divorce.

I have two choices - to leave the pension where it is or transfer it elsewhere.

Do people think the fee is justified for a pension of this value?

I would be grateful for opinions before I accept the quote!

magpiecottage

A pensions adviser has to to use some of your money to pay for his premises.

He has to use some of your money to pay for the FSA to sit in Canary Wharf - some of the most expensive real estate in the world - to regulate him.

He has to use some of your money pay towards the cost of the Financial Ombudsman Service also sitting in Canary Wharf.

If somebody complains he may have to pay some more of your money to the Financial Ombudsman Service.

He has to pay some of your money to the Financial Services Compensation Scheme to compensate the customers of firms he had nothing to do with after selling rubbish products he would never dream of recommending.

He has to pay some of your money for the Money Advice Service to take on loads of staff and then give them big redundancy payoffs.

He has to pay some of your money to insure himself against the "selective amnesia" of some clients.

I cannot say how good your IFA is but there are an awful lot of people getting their paws on your £600 before he gets a look in.

diveleader

Magicpiecottage - I understand what you are saying.

But isn't that more of a reason not to add my teat to the long list of feeders all wanting something?

Understanding, that if I make a mistake on my own portfolio, I can only blame myself.

somethingcorporate

magpiecottage wrote: »

A pensions adviser has to to use some of your money to pay for his premises.

He has to use some of your money to pay for the FSA to sit in Canary Wharf - some of the most expensive real estate in the world - to regulate him.

He has to use some of your money pay towards the cost of the Financial Ombudsman Service also sitting in Canary Wharf.

If somebody complains he may have to pay some more of your money to the Financial Ombudsman Service.

He has to pay some of your money to the Financial Services Compensation Scheme to compensate the customers of firms he had nothing to do with after selling rubbish products he would never dream of recommending.

He has to pay some of your money for the Money Advice Service to take on loads of staff and then give them big redundancy payoffs.

He has to pay some of your money to insure himself against the "selective amnesia" of some clients.

I cannot say how good your IFA is but there are an awful lot of people getting their paws on your £600 before he gets a look in.

I have bolded the really important part of this post.

A good IFA will return many times the cost of their advice a bad one won't. Which you get is always a bit of a gamble.

5% of a pot does feel steep but I doubt many IFAs do work on this scale because it has similar time and cost overheads to larger pots but they need to make some money for their time.

GhIFA

You'll get differing opinions on this, but personally, I would say £600 is more than fair on a fund this size, works out at around 1.75%. Given that the process involved in making the recommendation is exactly the same as it would be on a larger fund, I would say that anything up to £1,000 would be acceptable.

atush

Also, you could make one judgement on your own. Is that a transfer amt from a Money purchase/defined contribution pension?

Or a transfer amt for your portion of a FS/defined benefit pension?

if the latter, and it can be let there and put in your name, then save your 600 and leave it there.

Maureen43

atush wrote: »

Also, you could make one judgement on your own. Is that a transfer amt from a Money purchase/defined contribution pension?

Or a transfer amt for your portion of a FS/defined benefit pension?

if the latter, and it can be let there and put in your name, then save your 600 and leave it there.

It is a transfer amount from a Money purchase pension - not final salary.

My options are to start a new pension with my ex's employer or transfer it elsewhere.

Jack_Griffin

Maureen43 wrote: »

It is a transfer amount from a Money purchase pension - not final salary.

My options are to start a new pension with my ex's employer or transfer it elsewhere.

Well you have to collect some figures & work it out.

Fairly important is will the transfer value be less than the new start option?

Also you should find out how the 2 options are invested, will decisions be made for you or do you have to manage it in anyway? And if you have to do that is it a problem for you or will the IFA be wanting more money to do that.. you don't want any extra fees you did not anticipate do you?

You could also make a choice of pension provider yourself, wouldn't do any harm to speak to some major providers informally.

My instinct in these situations is not to be 100% reliant on someone else and if possible use someone who a trusted friend can reccomend.

jamesd

If you know how to do the transfer - probably easy - and also know how to check the charges and compare them to other places to pick the best, and also know how to select appropriate invstments, you don't need to use an IFA.

If you don't know how to select investments and want the IFA to do it or if you need help with the other things, a £600 charge is quite reasonable as IFA charges go.