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Do I need an advisor to look after my pension?

shamilt1
Posts: 87 Forumite
Hi. I started my pension when I was 18- I'm now 44. It is with the Pru but was set up by a financial services company ( Corville)I have had little/ no contact with this company since it was set up, but they rang me and said they wanted to to meet. Well it seems like my pension is doing okay, but Corville now want to take .5% per year from my fund. While I understand that this is normal practice do I actually need them at all? I know very little about pensions and have been emailing them with questions. It's probably easier for you guys to form your opinions if I show you the emails we have been sending each other - Please scroll to the bottom for the first email and work your way back up the page-
Hi Steve
You are right in that although the new plan would have lower charges once you add our adviser charge and assuming both grew at 7% then at retirement the pot might be worth £5,000 less. The illustrations are just a projection of benefits if the fund grew at 7% per annum, this is not something that is guaranteed and the idea is that moving to a newer style plan with more fund choice alomng the way should give the fund more potential for a higher growth.
Most old style pensions were set up with an on-going trail commission for advisers which unfortunately yours wasn’t. Now we are into a new world from January 2013 which means we have to offer an on-going service proposition and take a fee for this or give clients to option to ‘opt out’. Opting out means that we cannot offer on-going advice until a fee is paid, so for example it could be a one off fee for a piece of work, such as a valuation or at retirement help. Most clients prefer to have any fee taken from the contract rather than paying for it separately and it means we can continue to see clients and review their plans without having to get a payment by cheque or set up an standing order.
Option 1: Stay in the old style plan – you actually have around 5 different plans within the one plan number and each plan has different fund choices that you could move into if the managed fund you are in wasn’t performing. The fund choice ranges from 15-20 funds. To stay in this plan we cannot take out on-going fee and so we could not offer any on-going advice, so you would need to deal with the Prudential direct.
Option 2: Move to the new plan – this new plan has around 200 funds and the charges are lower. To have this new plan you would be receiving advice and so we would take 0.5% per annum from the contract, which ensures you have the plan reviewed and also means if you needed to move funds we could do this and have much more choices to move to.
I know you just want what is best for you we wouldn’t be able to move your plan from one to another if it wasn’t good advice, but in this new world we have to charge for the advice.
Have a think and let me know if you want to ‘opt out’ of the on-going advice and I will close the file.
Regards
Debbie
Hi Debbie
Your last email didn't cause any confusion. I believe you mentioned switching from the Pru when you came up to see me? You showed me some performance graphs which outperformed the Pru ( but these were at Risk 7 I think) and it was this that I was referring to.
I was interested in the figures you quoted me - 'I did some projections of your fund to age 60 and if you leave it as it and it grow at 7% it would be worth £187,000, if you moved it to the new style with no on-going it would be worth £195,000 and if you moved to the new style with 0.5% on-going it would be worth £182,000'
I don't know if I am mistaken but it looks like the advantage of shifting to the newer style Pru is more than swallowed up by the 0.5% on-going - and it is this that concerns me. It makes me wonder whether any money I can make from your management of my pension will be more than negated by the charges. I have never paid a fee for Corville's services so obviously I'm cautious- I want to be sure it's going to be to my advantage in the long run, which is why I'm considering all available options.
If I decide to opt for 'no on-going service' I understand I would no longer be able to contact you for advice- but would Corville still have an interest in my pension, or in future would I have to deal with the Pru directly?
Thank you, regards, Steve.
Hi Stephen
I may have confused things with my last email.
I am not recommending you move away from the Prudential or move funds, I am just suggesting that they do have a lower cost plan that you could move to, which would also mean we could take the normal on-going fees to continue to provide advice. These fee have not been taken in the past even though most other pensions do provide on-going fees for advice, but going forward we would need to take them.
I did some projections of your fund to age 60 and if you leave it as it and it grow at 7% it would be worth £187,000, if you moved it to the new style with no on-going it would be worth £195,000 and if you moved to the new style with 0.5% on-going it would be worth £182,000.
The 0.5% on-going fee is to cover all administrative cost plus a meetings at least every other year.
I can still on this occasion get your form sent to you to increase the amount to £150 per month, which I will do anyway. I held off sending this as if you did want to move to the newer fund it would be worth doing everything at the same time.
I can understand that you haven’t seen the benefit of on-going advice as in the past we have only seen you if you have wanted to, whereas with the new on-going advice structure we would have much more contact.
Regards
Debbie
Hi Debbie
Thank you for the email. I have been considering the propositions you made when you came to see me and also the ones mentioned in your email. After doing the Risk assessment ( I think I came out at 5?) it looks like I'm not the sort of person to go for the higher risk proposition that you showed me and I would like to stay with the Pru- it seems like it's doing quite well for me after all.
I am thinking of opting for the 'no ongoing service' option- I've had little/ no contact from Corville for around 10 years or more, and can't see me having too many questions about my pension. Also, I don't really want to be paying £350+ each year for a review every two years.
If I do opt for this option, could you tell me what Corville's role would be? For example, as you know I want to increase my contributions- would I have to ring the Pru direct or could I still ring Corville?
Please let me know what you think about this. Thank you, kind regards, Stephen Hamilton.
>
> Hi Stephen
>
>
>
> Following our meeting I have been looking into your existing pension with Prudential. Your existing pension is an old style contract which means we cannot take any ongoing adviser charge for our ongoing service.
>
>
>
> I have spoken to the Pru and basically they have a newer style contract with lower charges which I would suggest moving to anyway as when I did the projections to age 60 the amount you get back if it grew @ 7% was higher than leaving it in the old style contract. The funds are still the same and obviously the pension is still with the Pru.
>
>
>
> With the new style contract we can also take 0.5% ongoing adviser fee which would cover our basic service proposition we talked about, meaning access to advice and a meeting every other year.
>
>
>
> I have the forms and also the form to increase to £150 per month net. If you are happy to move to the new contract with our charges being covered then let me know and I will send you the paperwork to send back.
>
>
>
> Regards
Debbie
What do you guys think- would it make financial sense for them to handle it for me, or should I just leave it where it is unmanaged. Thanks- and sorry for the long post!
Hi Steve
You are right in that although the new plan would have lower charges once you add our adviser charge and assuming both grew at 7% then at retirement the pot might be worth £5,000 less. The illustrations are just a projection of benefits if the fund grew at 7% per annum, this is not something that is guaranteed and the idea is that moving to a newer style plan with more fund choice alomng the way should give the fund more potential for a higher growth.
Most old style pensions were set up with an on-going trail commission for advisers which unfortunately yours wasn’t. Now we are into a new world from January 2013 which means we have to offer an on-going service proposition and take a fee for this or give clients to option to ‘opt out’. Opting out means that we cannot offer on-going advice until a fee is paid, so for example it could be a one off fee for a piece of work, such as a valuation or at retirement help. Most clients prefer to have any fee taken from the contract rather than paying for it separately and it means we can continue to see clients and review their plans without having to get a payment by cheque or set up an standing order.
Option 1: Stay in the old style plan – you actually have around 5 different plans within the one plan number and each plan has different fund choices that you could move into if the managed fund you are in wasn’t performing. The fund choice ranges from 15-20 funds. To stay in this plan we cannot take out on-going fee and so we could not offer any on-going advice, so you would need to deal with the Prudential direct.
Option 2: Move to the new plan – this new plan has around 200 funds and the charges are lower. To have this new plan you would be receiving advice and so we would take 0.5% per annum from the contract, which ensures you have the plan reviewed and also means if you needed to move funds we could do this and have much more choices to move to.
I know you just want what is best for you we wouldn’t be able to move your plan from one to another if it wasn’t good advice, but in this new world we have to charge for the advice.
Have a think and let me know if you want to ‘opt out’ of the on-going advice and I will close the file.
Regards
Debbie
Hi Debbie
Your last email didn't cause any confusion. I believe you mentioned switching from the Pru when you came up to see me? You showed me some performance graphs which outperformed the Pru ( but these were at Risk 7 I think) and it was this that I was referring to.
I was interested in the figures you quoted me - 'I did some projections of your fund to age 60 and if you leave it as it and it grow at 7% it would be worth £187,000, if you moved it to the new style with no on-going it would be worth £195,000 and if you moved to the new style with 0.5% on-going it would be worth £182,000'
I don't know if I am mistaken but it looks like the advantage of shifting to the newer style Pru is more than swallowed up by the 0.5% on-going - and it is this that concerns me. It makes me wonder whether any money I can make from your management of my pension will be more than negated by the charges. I have never paid a fee for Corville's services so obviously I'm cautious- I want to be sure it's going to be to my advantage in the long run, which is why I'm considering all available options.
If I decide to opt for 'no on-going service' I understand I would no longer be able to contact you for advice- but would Corville still have an interest in my pension, or in future would I have to deal with the Pru directly?
Thank you, regards, Steve.
Hi Stephen
I may have confused things with my last email.
I am not recommending you move away from the Prudential or move funds, I am just suggesting that they do have a lower cost plan that you could move to, which would also mean we could take the normal on-going fees to continue to provide advice. These fee have not been taken in the past even though most other pensions do provide on-going fees for advice, but going forward we would need to take them.
I did some projections of your fund to age 60 and if you leave it as it and it grow at 7% it would be worth £187,000, if you moved it to the new style with no on-going it would be worth £195,000 and if you moved to the new style with 0.5% on-going it would be worth £182,000.
The 0.5% on-going fee is to cover all administrative cost plus a meetings at least every other year.
I can still on this occasion get your form sent to you to increase the amount to £150 per month, which I will do anyway. I held off sending this as if you did want to move to the newer fund it would be worth doing everything at the same time.
I can understand that you haven’t seen the benefit of on-going advice as in the past we have only seen you if you have wanted to, whereas with the new on-going advice structure we would have much more contact.
Regards
Debbie
Hi Debbie
Thank you for the email. I have been considering the propositions you made when you came to see me and also the ones mentioned in your email. After doing the Risk assessment ( I think I came out at 5?) it looks like I'm not the sort of person to go for the higher risk proposition that you showed me and I would like to stay with the Pru- it seems like it's doing quite well for me after all.
I am thinking of opting for the 'no ongoing service' option- I've had little/ no contact from Corville for around 10 years or more, and can't see me having too many questions about my pension. Also, I don't really want to be paying £350+ each year for a review every two years.
If I do opt for this option, could you tell me what Corville's role would be? For example, as you know I want to increase my contributions- would I have to ring the Pru direct or could I still ring Corville?
Please let me know what you think about this. Thank you, kind regards, Stephen Hamilton.
>
> Hi Stephen
>
>
>
> Following our meeting I have been looking into your existing pension with Prudential. Your existing pension is an old style contract which means we cannot take any ongoing adviser charge for our ongoing service.
>
>
>
> I have spoken to the Pru and basically they have a newer style contract with lower charges which I would suggest moving to anyway as when I did the projections to age 60 the amount you get back if it grew @ 7% was higher than leaving it in the old style contract. The funds are still the same and obviously the pension is still with the Pru.
>
>
>
> With the new style contract we can also take 0.5% ongoing adviser fee which would cover our basic service proposition we talked about, meaning access to advice and a meeting every other year.
>
>
>
> I have the forms and also the form to increase to £150 per month net. If you are happy to move to the new contract with our charges being covered then let me know and I will send you the paperwork to send back.
>
>
>
> Regards
Debbie
What do you guys think- would it make financial sense for them to handle it for me, or should I just leave it where it is unmanaged. Thanks- and sorry for the long post!
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Comments
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I can't, quite frankly, be bothered to read the above. Too long, to inconcise and has possibly privileged information.
Your pension is most likely an expensive old style one. Getting a new one set up could be cheaper going forwards. But you will have to pay for advice, just possibly not from the old firm. You are also possibly paying in the same amt you started with (instead of increasing contributions each time you got a raise).
Consult unbiased.co.uk or consider learning to run your pension yourself by reading about portfolio building and different types of investments/funds. Then look at cavendishonline for some options.
A new IFA will go over the old policy, look at how much you are putting in (and consider your other savings/investments etc) ascertain your risk profile and find you a plan that will cost you less to run, but have wider investment choice.0 -
Do you want to spend a few hours learning about investing and investments? A few days, spread out over a few months? If you don't mind doing that then there's no need to pay them. It's easy enough to transfer most pensions.
Risk in investing is usually referring to volatility, the short term up and down movements. It's a bit like a roller coaster in reverse, an upward trend but lots of ups and downs along the way. Higher risk have greater overall upward movement but also bigger drops. The problem with higher risk is that it can scare people during the drops and cause them to stop investing or sell when they should be buying - a drop is a sale but it's reported as doom and gloom. The main UK stock market has on average over the last hundred years or so gone up by about 5.2% plus inflation a year, about 8-9% without the inflation removed. Along the way it sees drops of perhaps 20% every two or three years and drops of 40-50% once or twice every ten years. Risk rating scales vary but it's probably classed as risk level 6 or 7.0 -
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Do you want to spend a few hours learning about investing and investments? A few days, spread out over a few months? If you don't mind doing that then there's no need to pay them. It's easy enough to transfer most pensions.
Risk in investing is usually referring to volatility, the short term up and down movements. It's a bit like a roller coaster in reverse, an upward trend but lots of ups and downs along the way. Higher risk have greater overall upward movement but also bigger drops. The problem with higher risk is that it can scare people during the drops and cause them to stop investing or sell when they should be buying - a drop is a sale but it's reported as doom and gloom. The main UK stock market has on average over the last hundred years or so gone up by about 5.2% plus inflation a year, about 8-9% without the inflation removed. Along the way it sees drops of perhaps 20% every two or three years and drops of 40-50% once or twice every ten years. Risk rating scales vary but it's probably classed as risk level 6 or 7.
Thank you. From the projections I was given it looks like Corville would take around £13000 out of my 'pot' over the next 16 years ( their .5% fee) if it continues to grow as it has been doing- it seems like a lot of money to me. I suppose what I'm asking is whether this will be worthwhile staying with them and paying this, or just cutting them out and leaving it where it is at the Pru with no annual review or advice. Thanks.0 -
It was a bit long I know- sorry about that. Thank you for your advice (although as you didn't read my post I'm amazed you could give me any) :-)
AS soon as you said how old the pension was, there was advice to give lol! Old ones tend to be expensive, and in places w/o a lot of investment choice. And often people don't uprate their contributions as they got paid more (did you?).
I really don't think you want to leave it where it is, but w/o more details like annual charges, and what it is invested in now, and what other options there are it is hard to say. If you are happy with how it has done, and want to leave it you certainly could.
you really could learn to run your pension yourself as James suggests, if you have the time and inclination. I would not pay your old advisors a penny if they haven't been giving you advice over the years.
If you decide you don't want to, go ahead and see someone new.0 -
Thank you. In the past I haven't paid anything to the financial advisor- (I think this has been reflected in their performance!) they have said that this can no longer be the case. I would have to agree to pay .5% of my pension 'pot' each year and for this I can contact them for advice and get a review of my pension every two years. I did have my contributions index linked at first but once it got up to £125 a month I stopped putting it up. It's been frozen at this for about 10 years now I think and I am wanting to increase it by another £25 a month. The advisor told me that she has found a lower cost plan for me but it was the figures she quoted that got alarm bells ringing -' I did some projections of your fund to age 60 and if you leave it as it and it grows at 7% it would be worth £187,000, if you moved it to the new style with no on-going it would be worth £195,000 and if you moved to the new style with 0.5% on-going it would be worth £182,000'
The gains I could make from the new lower cost plan seems to have been more than swallowed up by the charges. If I just left it where it is and end my involvement with the financial advisor I'd actually be better off..... or am I missing something?0 -
In the past I haven't paid anything to the financial advisor- (I think this has been reflected in their performance!)
Advisers are not responsible for the performance of the pension. They are responsible for the advice and ongoing servicing, should you decide to employ them to provide that ongoing servicing. You were not paying for ongoing servicing and you didnt get ongoing servicing. They may have done occasional bits of work for free but that wont happen going forward.It's been frozen at this for about 10 years now
So, your pension contribution has been going down each year in real terms instead of the ideal going up.The advisor told me that she has found a lower cost plan for me but it was the figures she quoted that got alarm bells ringing -' I did some projections of your fund to age 60 and if you leave it as it and it grows at 7% it would be worth £187,000, if you moved it to the new style with no on-going it would be worth £195,000 and if you moved to the new style with 0.5% on-going it would be worth £182,000'
The gains I could make from the new lower cost plan seems to have been more than swallowed up by the charges. If I just left it where it is and end my involvement with the financial advisor I'd actually be better off..... or am I missing something?
If you use an adviser you are paying for them. If you dont use an adviser you wont pay them. It really depends on the service you are after. Your planning over the last 10 years has been poor. So, maybe you do need ongoing servicing to get more out of you. Whilst the old style insurance agents were criticised in many areas, one thing they were good at was getting people to top up their regular investments and pensions. When they went away, people stopped topping up. With an ongoing service you may well find increased encouragement each year to top up and try and get your pension built up again. £190k at 60 isnt going to go far.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
If you use an adviser you are paying for them. If you dont use an adviser you wont pay them. It really depends on the service you are after. Your planning over the last 10 years has been poor. So, maybe you do need ongoing servicing to get more out of you. Whilst the old style insurance agents were criticised in many areas, one thing they were good at was getting people to top up their regular investments and pensions. When they went away, people stopped topping up. With an ongoing service you may well find increased encouragement each year to top up and try and get your pension built up again. £190k at 60 isnt going to go far.
I thought £190k at 60 would be okay. I only earn £20k a year and at 60 I will have no mortgage and the kids will have left (probably!) As far as I could make out from the figures, if it continued to grow as it has done, that would give me a pension of about £15k a year in days terms which would be terrific!0 -
I thought £190k at 60 would be okay. I only earn £20k a year and at 60 I will have no mortgage and the kids will have left (probably!)
About £7500 a year income there if you dont take any tax free cash.As far as I could make out from the figures, if it continued to grow as it has done, that would give me a pension of about £15k a year in days terms which would be terrific!
£190k would not provide £15k a year in todays terms. That would require an annuity rate around double current levels. I wonder if you are looking at future money terms.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
So if I were to increase my payments to £250 a month from now, then I should come out with around £15000 a year?0
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