Reasonable fee for transferring pension plan?

PeterBen2013

I have a pension pot of £319,000 in a small number of funds of a single pension company. My pension adviser tells me that the scheme only allows me to buy an annuity and no other options are allowed.

After research and discussion I agree that it is probably best to transfer this to another provider or providers (Whole of market) and create a more flexible plan.

My adviser is accredited and recommended etc...but wants to charge me just over 4% to carry this out...I feel this is too high and am loathe to pay him just over £13k to do this. Even though this will come out of the units of the pension funds.

I accept there should be a fee - am I being unreasonable is 4%+ a reasonable fee to pay for this service?

xylophone

Are you willing and able to do it yourself? Have you checked options and costs?
http://www.cavendishonline.co.uk/pensions/transfers-and-repensioning/
http://www.hl.co.uk/pensions/sipp
http://www.pensionsnetwork.com/pension_transfers/CompanyPensionMain.html
http://www.hmrc.gov.uk/pensionschemes/transfer.htm

PeterBen2013

To be honest I can understand 70% of the issues involved but accept that I need an expert to do these things for me and to offer ongoing experienced advise on how to manage the balance between growth and safety - for the funds over the next few years.

I accept I need to pay for this expertise it is just the 4% costs or £13k as I simplistically look at it - to make these initial transfers!!

I am putting £300K into other peoples banks and they want to charge me for the privilege!

dunstonh

My adviser is accredited and recommended etc

accredited and recommended by whom?

.but wants to charge me just over 4% to carry this out...I feel this is too high and am loathe to pay him just over £13k to do this.

And so you should. Whilst the transaction is a higher risk one and that normally means it is more expensive, you should be looking at more like 1/4 to 1/3 of that.

Makes you wonder how they could be recommended when charging an amount like that.

I am putting £300K into other peoples banks and they want to charge me for the privilege!

No you are not putting £300k into anyone's bank. That isnt what happens or isnt even close to what is happening. Firstly you are paying of the advice, administration and set up and consumer protection that goes with it (DIY has very little consumer protection). The cost is the service effectively. It is far too high in this case but it has nothing to do with bank accounts.

PeterBen2013

Sorry - I accept that I am not putting £300K into the advisers bank - and accept I am paying them for their professional expertise and the guarantees that come with their FSA regulation etc...

The ongoing fee for professional guidance twice yearly reviews and online facilities is 1% and this seems to be a norm.

I do not think they are overly charging me for that service - the 4% for the transfer fee is the deal breaker.

A fee of 1 - 2% would seem to be of greater value.

jem16

PeterBen2013 wrote: »

The ongoing fee for professional guidance twice yearly reviews and online facilities is 1% and this seems to be a norm.

With £319k, I would say 0.5% is the norm.

I do not think they are overly charging me for that service - the 4% for the transfer fee is the deal breaker.

A fee of 1 - 2% would seem to be of greater value.

Which is what dunstonh said.

See another IFA or tell this one that the fee is too high.

mania112

Scandalously high.

I would have trouble seeing an IFA charge even half that.

dunstonh

The ongoing fee for professional guidance twice yearly reviews and online facilities is 1% and this seems to be a norm.

0.5% is the norm. 1% is typically used for smaller investments (sub 100k)

I do not think they are overly charging me for that service - the 4% for the transfer fee is the deal breaker.

Both are high.

PeterBen2013

Thanks for your feedback....I have started to look elsewhere as a fall-back position if my negotiations with my current adviser cannot bring the charges down to nearer the figures you have quoted.

marathonic

Maybe it's just me - but if someone chances their arm with a high price like that, I tend to NOT give them the opportunity to match the better price that I've found elsewhere.

I want an advisor that I can trust and that doesn't appear to be the case here!

Aegis

That fee is shamefully high! I can't think of a single excuse for charging 4% for a pension or investment case, especially not one the size you're talking about.

Look around and aim for an initial fee of 1% at most. You should be able to find that without too much trouble, even if you're in a city location.