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How much is too much?

harryschild
harryschild Posts: 4 Newbie
in Pensions, annuities & retirement planning
Does £400 plus VAT sound a lot for an IFA's fee to sort out helping me take 25% of a £26,000 pension pot? I happen to think it is...
«13

Comments

  • jem16
    jem16 Posts: 19,724 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    harryschild wrote: »
    Does £400 plus VAT sound a lot for an IFA's fee to sort out helping me take 25% of a £26,000 pension pot? I happen to think it is...

    No I don't think it is too much for an IFA's fee - in fact it is good value for advice.

    However you no doubt could have saved money by going DIY so why didn't you?
  • TH1878
    TH1878 Posts: 458 Forumite
    harryschild wrote: »
    Does £400 plus VAT sound a lot for an IFA's fee to sort out helping me take 25% of a £26,000 pension pot? I happen to think it is...

    Absolute bargain.
  • dunstonh
    dunstonh Posts: 120,158 Forumite
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    harryschild wrote: »
    Does £400 plus VAT sound a lot for an IFA's fee to sort out helping me take 25% of a £26,000 pension pot? I happen to think it is...

    Bargain. Cheaper than I would do it.

    You may happen to think it is but then you don't know the risks and processes required. So, your perception is one without knowledge of the workload and risks.

    If your existing pension provider does not facilitate drawdown and involves the transfer of the pension to a provider that does then VAT should not be charged. If the existing provider can do drawdown then VAT should be charged.
    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.
  • bigfreddiel
    bigfreddiel Posts: 4,263 Forumite
    harryschild wrote: »
    Does £400 plus VAT sound a lot for an IFA's fee to sort out helping me take 25% of a £26,000 pension pot? I happen to think it is...

    I think it's expensive. Your lump sum is £6,500 so the IFA is taking 6.2% of that as his fee - far too much.

    Cheers fj
  • dunstonh
    dunstonh Posts: 120,158 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    bigfreddiel wrote: »
    I think it's expensive. Your lump sum is £6,500 so the IFA is taking 6.2% of that as his fee - far too much.

    Cheers fj

    The pension pot is £26k. So, it is 1.5% of the value of the pension.

    However, it doesnt matter. The point of fixed fees is that they are the same irrespective of the amount. You are also in no position to state whether the fee is too much or not as you have no clue to the workload or risks.
    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.
  • gadgetmind
    gadgetmind Posts: 11,130 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    It sounds cheap but it's also something that most people do directly with the relevant pension company. The big question is what's happening to the other 75% as that's where there are decisions to be made.
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    To simply get the 25% tax free then it sounds expensive.

    To engage an ifa to crystallise a pension, arrange an annuity or drawdown, with appropriate planning and insurance cover then it sounds very cheap.
  • TheTracker
    TheTracker Posts: 1,223 Forumite
    1,000 Posts Combo Breaker
    Is it cheap compared with what other IFAs would charge? The IFAs above, who circle this forum likes sharks around a seal, have attested it does appear so.

    But your real question is probably is it value? Is it worth £400+ to get access to £6k+? Can you DIY for less money and less hassle? That's the question. And probably one that only you can answer.
  • dunstonh
    dunstonh Posts: 120,158 Forumite
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    It sounds cheap but it's also something that most people do directly with the relevant pension company.

    Although most legacy pensions dont offer drawdown. That would require a transfer. If it does offer it then there is no point asking an IFA. If the OP is against paying for it and can DIY then they can DIY.
    To simply get the 25% tax free then it sounds expensive.

    The transaction will require either
    1 - putting the pension into income drawdown. A transaction that is expensive from a PI insurance point of view and still considered higher risk by the FCA.
    2 - Transferring the pension to another provider to allow the faciliation of income drawdown. An extra layer of work and research and liability.

    The cost is the risk and if it does require a transfer than its a lot of work.
    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.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper
    dunstonh wrote: »
    Although most legacy pensions dont offer drawdown. That would require a transfer. If it does offer it then there is no point asking an IFA. If the OP is against paying for it and can DIY then they can DIY.



    The transaction will require either
    1 - putting the pension into income drawdown. A transaction that is expensive from a PI insurance point of view and still considered higher risk by the FCA.
    2 - Transferring the pension to another provider to allow the faciliation of income drawdown. An extra layer of work and research and liability.

    The cost is the risk and if it does require a transfer than its a lot of work.

    But we don't know it's gone into drawdown, that's the problem here the OP has provided little information and everyone is speculating. We don't know whether there was a transfer or not or whether it is in drawdown.

    It could be that the £400 has been more than recouped by the arrangements that the ifa has organised, could be drawdown or could be an annuity.
This discussion has been closed.
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