IFA Fees for Pension managment

wilky27

Hi,

I've decided to start a pension so had a no obligation meeting with an IFA recommended to me by my accountant. After reading through the proposition the fees seem ridiculous. For a monthly contributions it's 50% of the first £250, 30% of the next £500 and 10% of the rest. That means if I pay £500 pm it'll cost me £200 (I think).

Does this seem high? Or have I completely misunderstood what they're actually going to do for me and this is a reasonable figure?

Thanks for any advice,
Wilky.

JoeCrystal

Well, might be better to see another IFA to compare. Find one on http://www.unbiased.co.uk/

In comparison when I set up a private pension scheme few years back, I paid £300 in fees straight away plus 1% of my regular payments forever as as transactional advice (0% on single contribution). It is likely to be different for everyone else. Started with the £4,500 gross lump sum and £216 monthly.

Did it say how long this charge is going to last for? A year?

Cheers,
Joe

redbuzzard

I can't follow that at all. If the adviser can't even explain the fees in a way you can understand, I'd find another one...!

mania112

£200 seems quite reasonable to me.

dunstonh

Does this seem high?

Not on the examples you have mentioned.

If you pay in £500, it will cost you £200 but only for x number of payments. 4 installments is increasingly common as 4 or less payments does not require a consumer credit licence. So, 4x £200 is £800 which is very reasonable. We really need to know the number of installments though.

Aegis

wilky27 wrote: »

Hi,

I've decided to start a pension so had a no obligation meeting with an IFA recommended to me by my accountant. After reading through the proposition the fees seem ridiculous. For a monthly contributions it's 50% of the first £250, 30% of the next £500 and 10% of the rest. That means if I pay £500 pm it'll cost me £200 (I think).

Does this seem high? Or have I completely misunderstood what they're actually going to do for me and this is a reasonable figure?

Thanks for any advice,
Wilky.

It might be worth just asking for a fixed fee that you can understand. That tiered system just strikes me as needlessly complex. If he wants to charge, say, £500 as a one-off fee, then he should just say so and be done with it.

wilky27

dunstonh wrote: »

Not on the examples you have mentioned.

If you pay in £500, it will cost you £200 but only for x number of payments. 4 installments is increasingly common as 4 or less payments does not require a consumer credit licence. So, 4x £200 is £800 which is very reasonable. We really need to know the number of installments though.

Hi,

Proposition just says a maximum of 12 months. Not sure what happens after then. I've sent him an email to clarify the fees.

GhIFA

After that, the full contribution will be allocated to your pension fund. Most providers are offering this as a method of paying adviser fees on regular contributions now. But you should have the option of paying the fees yourself and there then being no deductions from the contributions at all.

grey_gym_sock

though surely it's more tax-efficient to pay the fees from the contributions?

GhIFA

grey_gym_sock wrote: »

though surely it's more tax-efficient to pay the fees from the contributions?

It is, but some people prefer to pay the fees directly up front.