Adviser charges for a Group Personal Pension Plan

Pasty77

Hi

I am wondering if anyone can tell me if there is a legal responsibility or way in which an adviser should declare his fees or charges?

My employer has used an adviser to set up a GPP and I received a letter this morning with an information pack and individual illustration. It was a complete shock to read he is charging 50% of contributions in the first year.

This has never been pointed out by either him or my employer. He visited me at home pre set up and my wife asked about charges and he only stated the Scottish Life management charge.

I was left with a key facts document for Scottish Life but nothing for him or his company. Should he not have left me with some documentation outlining his charge?

I know this is an above board way to charge but I am extremely annoyed I wasn't informed of it in advance.

mania112

The fee should be disclosed, that's a fact - those are the rules.

But the amount is not extraordinary, even though it may seem high.

dunstonh

I am wondering if anyone can tell me if there is a legal responsibility or way in which an adviser should declare his fees or charges?

Yes there is. They must be disclosed. That is the requirement. There are no rules on amounts or methods of payment. There are only a handful of rules in general.

My employer has used an adviser to set up a GPP and I received a letter this morning with an information pack and individual illustration. It was a complete shock to read he is charging 50% of contributions in the first year.

The amount is not untypical of a group scheme. Or indeed, many regular contribution schemes that are priced on explicit charging rather than factored commission. The AMC of Scot life is typically low because there is no commission. So, 50% of year one is still frequently cheaper than nil initial plans where they up the AMC over 30-40 years.

This has never been pointed out by either him or my employer. He visited me at home pre set up and my wife asked about charges and he only stated the Scottish Life management charge.

The illustration is the document that discloses it.

Should he not have left me with some documentation outlining his charge?

No. The illustration is the document that discloses it. You need access to a printer to generate it. Typically you generate the illustration and personalised docs when you get back to the office and issue on second visit or in the post.

sandsy

Is it an adviser charge or a consultancy charge?
It sounds like it's a consultancy charge for advice to the employer.
If it is an adviser charge for personal advice, it should have been disclosed prior to the illustration.

SallyG

http://www.ifaonline.co.uk/ifaonline/news/2260823/ban-consultancy-charging-to-give-ae-savers-a-fair-deal-which

dunstonh

The silly bit about that argument is that the Scot Life pension with explicit charges is cheaper than the ones that dont have explicit charges but pay commission. People need to be careful what they wish for as arguing for higher implicit charges at the expense of lower explicit charges is counterproductive.