Pension advice please/commission charges

dunstonh

May be Im not putting it correctly? We have been told that the percentage is fixed for 6 years and the capital will be in several packages covered by the governments £75k guarantee?

Investment structured products are not covered by the £75k FSCS limit. They are not covered by the FSCS at all (apart from the small window to the investment date.

Deposit structured products are covered by the FSCS limit. However, you wont be getting 8% on those.

Al.

Malthusian wrote: »

Re Al: Advisers cannot receive any commission, and have not been able to since 2012. If they were taking any money out of the structured product investment it would be disclosed upfront. Almost certainly it would be on the application form. There is no difference in this regard between structured products and conventional funds. In either case the IFA may deduct part of your investment before it is invested in accordance with your fee agreement, but this will be fully disclosed upfront.

Agreed, that's why I said <<'commission'>>. If going onto a platform though, into managed basket of funds, there isn't any further remuneration. Given the precarious regulatory nature and the niche appeal and suitability, why would an adviser be incentivised to suggesting these, if there wasn't any financial reward or top cover in the event of a claim? Certainly, when away from a SIPP, it's not even funds under management?

Al.

dunstonh wrote: »

Investment structured products are not covered by the £75k FSCS limit. They are not covered by the FSCS at all (apart from the small window to the investment date.

Deposit structured products are covered by the FSCS limit. However, you wont be getting 8% on those.

Even FTSE plans opened up in the past few months will have taken a knock. Having said that, down 2% today. A strike date in the next week or two might be worth a thought or two in the right amounts for a suitable client. Few and far between though.

Just been flipping through FVC Research. Out of interest of course..! :idea:

Malthusian

There isn't any further remuneration if you go into a structured product either. The platform may deduct an agreed fee prior to investment, or the structured product provider may deduct an agreed fee prior to investment. There's no incentive to use structured products there.

I have long suspected that what attracts certain advisers to them is that they can be made to sound risk-free - "if the FTSE goes down by less than 50% you lose nothing, and for the FTSE to go down by more than 50% - why that's unthinkable." The adviser can therefore take a fee on money that should by rights be left in cash.

If you think about SCARPs for more than one second the logic behind them is bizarre. Who exactly is it that wants to protect themselves against small losses but is happy with the risk of massive ones?

dunstonh

I have long suspected that what attracts certain advisers to them is that they can be made to sound risk-free - "if the FTSE goes down by less than 50% you lose nothing, and for the FTSE to go down by more than 50% - why that's unthinkable." The adviser can therefore take a fee on money that should by rights be left in cash.

Before the credit crunch, the FSCS didnt know how to treat them. Even the providers didnt know they didnt have FSCS protection. Santander got pulled up on that fact when it turned out they said they had FSCS protection in their key features document.

The product was easy to market as it hit the right notes that consumers like to hear. However, it was built in a way that was confusing to all concerned. It is that reason that they are no longer classed as mainstream and are badged as a high risk product from a regulatory point of view.

That does not mean they are unsuitable. Every now and then one with good terms pops up with a strong market counterparty and could be suitable for a relatively small part of your overall portfolio. You have to hit a sweet spot and that sweet spot doesnt happen often.

xylophone

OP, you originally said

My goodness, didnt realise the choices available. Basically he went through options we hadnt even considered and he is preparing several different illustrations.

Then

Well, I think he will go for a fixed term investment of £150000 which the IFA tells us is currently paying 8% per annum?

What other options were explored? What is the reason for rejecting them?
And "he" shouldn't be going for anything - it is for your husband to choose based on clear advice that he understands.

And

I assume therefore that it must high street banks/institutions.

Assume? Neither you nor your husband knows?

And what exactly is the product that is offering 8%?

I am beginning to wonder whether some sort of insurance product/ bond is involved - and if these are tranches of the same investment product, are some riskier than others?

hethmar

Hi, thanks for your info - I actually just popped on to update the fact we were going to an IFA having thought we wouldnt (which is why I started the thread originally)

We dont have all the details yet as we have not received our reports/recommendations from the IFA.

As we were told the capital was covered by the £75k assurance then yes, it must involve retail banking

dunstonh

As we were told the capital was covered by the £75k assurance then yes, it must involve retail banking

That would make it a deposit backed product. Can you name the product please as many of us here would be interested in a deposit based product paying 8% a year.

hethmar

Im now completely uneasy about all this. I cannot believe that we get duff IFA every time we decide to use one. The last one we had advised us to get endowment mortgage "and you will have paid up your loan and have at least £60k in your pocket to do what you want with" - we ended up owing £17k

Now this time I look on recommended IFA lists and this guy comes out very highly recommended and we are now feeling again, what is going on.

And , people questioned why we dont use an IFA

dunstonh

The last one we had advised us to get endowment mortgage

To be fair, the consumers association used to recommend them. Had this site existed back then, it would have had endowment best buys and the media were pro-endowment too.

There were over 200,000 advisers back then. Just over 20,000 now who are higher qualified and should be higher standard.

What is it about this one that you dont like?