Pension and financial planning for >60

F1001

Hi All,
My mum is over 60 and needs to do an pension transfer and the providers she is with require her to get advice from an IFA first before moving (she has to transfer due to a court pension share order). We are thinking because she needs to see an IFA she might as well get comprehensive financial planning advice because she has just retired and needs to set up her whole finances from scratch.
We have been recommended to use a financial planner / IFA from Lloyds and that he/she will likely recommend Scottish widows retirement account for her pension.
Does anyone have any experience with using a Lloyds IFA / financial planner and can provide a view on good / not? Are they still simply Bank product pushers or are they well trained to give good advice (versus a specialist IFA from unbiased.com)
Anyone also have a view on the SW Retirement Account compared to other options?


Thanks, and Merry Christmas!

molerat

Unlikely to be an IFA from Lloyds, the I means independent, so yes, pretty much a salesman with a limited range of products. Get a proper IFA.

TadleyBaggie

Someone working for Lloyds will not be independent in my eyes, since Lloyds sell financial products. Personally I would look for a real IFA.

F1001

Thank you! Yes I raised that with the people who recommended Lloyds and they said that the range of products is still quite large and even IFAs have their "favourite" fund providers?
Also Lloyds works out cheaper in the long run than the others (higher upfront cost but v low annual fees) and can make economy of scale savings on product costs. They said we should avoid high specialist IFA fees that will eat into the return (especially as she will have lower returns due to her age / low risk asset mix - thinking maybe return of 4 or 5% per year?). Have met with some real IFAs who are charging around 2% annual fee

bigadaj

F1001 wrote: »

Thank you! Yes I raised that with the people who recommended Lloyds and they said that the range of products is still quite large and even IFAs have their "favourite" fund providers?
Also Lloyds works out cheaper in the long run than the others (higher upfront cost but v low annual fees) and can make economy of scale savings on product costs. They said we should avoid high specialist IFA fees that will eat into the return (especially as she will have lower returns due to her age / low risk asset mix - thinking maybe return of 4 or 5% per year?). Have met with some real IFAs who are charging around 2% annual fee

I'd hate to see you buying a second hand car, you appear to want to believe everything the salesman with the interest in a sale is going to say!

If you state what sums are involved here you might get some feedback on costs, 2% fee sounds very high unless you are taking about small amounts. Typical ballpark fees would be up to 3% initial and 1% ongoing, though the initial would often be much lower, and sometimes near zero, with ongoing 0.5% for larger amounts.

The ifa can and should also do a full review of your mothers entire finances as money or investments, isas etc held elsewhere should influence the mix within the pension as well.

I don't use an ifa but if you are going to pay someone for a service, whether directly or through charges, you might as well have confidence that you are their only consideration even if it does cost a few quid more.

xylophone

https://www.unbiased.co.uk/

Look for an independent financial adviser with qualifications in pensions.

F1001

Thanks! I tried unbiased and met some qualified IFAs on there - Lloyds and another firm called Saunderson House were two that I was recommended outside of unbiased.
The IFAs from unbiased seemed like young / new / smaller firms lacking infrastructure and I assumed I would end up paying more in product fees as they may not be able to get much of a discount from fund providers etc. But they were very nice and I felt like they genuinely "cared" as they have been hounding us to meet to sign the engagement letter and have spent a lot of "free" time talking with us.
Lloyds charges are 2.5% initial and then 0% ongoing fee! Unless I want to change my plan which will cost £500 or £2000 if involves pensions (I think). So my thinking is that cutting out that 0.5% each year can save a lot - especially as the return for a low risk portfolio is low anyway. And the guy from Lloyds seems nice too.
I also expect that Lloyds would recommend the Scottish Widows Retirement Account for the pensions (and therefore we might get a discount on the product price for that) and heard that it is a good one in the market - any reviews on that account?


Thanks all!

jem16

F1001 wrote: »

The IFAs from unbiased seemed like young / new / smaller firms lacking infrastructure and I assumed I would end up paying more in product fees as they may not be able to get much of a discount from fund providers etc.

You're assuming wrongly there.

To be honest there is going to be very little discount on funds from fund providers nowadays. The IFA industry is very much a cottage industry where a smaller firm is much better for you than a larger firm. The smaller firm where you can work with the owner/director/partner is much better as it's their livelihood that's on the line for advice. Larger firms where advisers are employees mean that costs are usually higher and staff turnover is greater so you don't get as much of a chance to build up a relationship.

Lloyds charges are 2.5% initial and then 0% ongoing fee! Unless I want to change my plan which will cost £500 or £2000 if involves pensions (I think). So my thinking is that cutting out that 0.5% each year can save a lot - especially as the return for a low risk portfolio is low anyway.

You can get that too as what you are describing would be what an IFA working on a transactional basis would provide - ie no ongoing service. You should only be paying fees for an ongoing service if you actually want that.

As to total fees for ongoing, remember that what you are talking about doesn't cut out all ongoing fees as you will still have the fees for the product itself. The Scottish Widows Retirement Account does have fees with its internal funds costing less than external funds.

Any IFA will also be able to offer this but there may be much better available on the whole market. Scottish Widows used to have a good reputation but it hasn't been as good lately.

And the guy from Lloyds seems nice too.

I'm sure they all are. However they are working from a tied product base which limits your choice of what is best.

I also expect that Lloyds would recommend the Scottish Widows Retirement Account for the pensions

They can't do anything else.

(and therefore we might get a discount on the product price for that)

No you won't get any discount as their charges are clearly laid out on the website.

and heard that it is a good one in the market - any reviews on that account?

Used to be good but not so much lately.

saver861

If they are tied to Lloyds then as previous poster mentioned they wont be Independent. That does not make them bad though!!

The thing to do in these situations in my opinion, is to see at least three IFA's., or in your case at least two IFA's and your Lloyds guy. From there you assess the options. As you will know, you get the initial meetings free and while you don't get any advice during those meetings, you will get opportunity to learn a good deal.

At the end of the process, you may even feel you can go it on your own!

One thing, I would double check the 0% ongoing fee. Not usually the case if there is ongoing management of the portfolio.

dunstonh

Thank you! Yes I raised that with the people who recommended Lloyds and they said that the range of products is still quite large and even IFAs have their "favourite" fund providers?

As an IFA, I havent recommended a Scottish Widows product in about 6-7 years. Since Lloyds bought Scottish Widows, they have gone downhill. A once strong brand that is a shadow of its former self. Lloyds also owned Clerical Medical. They actually had a better product selection than Scottish Widows but when Lloyds merged SW and CM, they dumped the SW range as it was not as profitable. SW havent developed their product range and been left behind by other providers in both cost and quality. Their investment funds are some of the worst going. Why would you pay for tied sales advice when using an IFA gives whole of market choice (including Scot Widows products)?

Do you understand the difference between an IFA and a restricted adviser? In some cases, a restriction my be tiny and not an issue. In most cases, it will mean limiting both the products available and the providers available and even restricting the type of advice that can be given.

Anyone also have a view on the SW Retirement Account compared to other options?

Clunky product. Poor administration, lower cost options available. It doesnt win in any one area.

Also Lloyds works out cheaper in the long run than the others (higher upfront cost but v low annual fees) and can make economy of scale savings on product costs.

no it doesnt. And what are these upfront fee product you talk of? There are barely any available that charge like that and havent for many years. Is that another bit of misinformation from your sales rep?

They said we should avoid high specialist IFA fees that will eat into the return (especially as she will have lower returns due to her age / low risk asset mix - thinking maybe return of 4 or 5% per year?).

How much is the sales rep from Lloyds charging?

Have met with some real IFAs who are charging around 2% annual fee

i dont believe that is possible as most providers cap the charge that an adviser can make and that is above that cap. That said, I suspect you are mixing up total charge with adviser charge. The total charge could get into 2% with some.

The IFAs from unbiased seemed like young / new / smaller firms lacking infrastructure and I assumed I would end up paying more in product fees as they may not be able to get much of a discount from fund providers etc. But they were very nice and I felt like they genuinely "cared" as they have been hounding us to meet to sign the engagement letter and have spent a lot of "free" time talking with us.

Your assumption is totally wrong about pricing. IFAs dominate the distribution on retirement products. They have over 70% of the market. Bancassurers are small scale and their distribution channel is far more expensive than a typical IFA. This is why most banks have pulled out of giving advice.

Smaller firms can run at lower costs as they need fewer levels of management and tiers of management. The FCA requires a process that is used by all advisers of a firm that is the same. The larger a firm gets, the more restrictive a process has to become as it has to cater for the lowest common denominator. i.e. the lowest skilled adviser in the firm. Banks have historically been the training channel for advisers who then later move on to being IFAs.

Lloyds charges are 2.5% initial and then 0% ongoing fee!

That is on top of product charges. Lloyds are not giving an ongoing service and that is why you are not paying for it. If you dont want the IFA to give an ongoing service then you dont have to pay for that either. 2.5% needs to be placed in context of the amount. A fixed monetary fee may be better.

I also expect that Lloyds would recommend the Scottish Widows Retirement Account for the pensions (and therefore we might get a discount on the product price for that) and heard that it is a good one in the market - any reviews on that account?

Lloyds often retail the SW products at a higher cost than the IFA version or they retail the product in-house with restrictions that are not present in the IFA version. I have an ex Lloyds Bank (SW) rep on my staff and he has often mentioned the differences in the IFA version of the SW product and the Lloyds version. Usually down to Lloyds placing restrictions on their advice process.

Lloyds have no choice but to recommend that as they are tied agents.

jem16

aleemj wrote: »

The fee is 2.5% on the first 300k and 1.5% after that.

A 2.5% fee on £300k would be considered very expensive, if not greedy if being charged by an IFA. This is why we have asked you to say how much is actually involved here as it's important to know. So how much is involved?

The ongoing charges are zero fees for Lloyds management of the portfolio, and we have been quoted total fees of 1.1% - 1.4%.

As mentioned already there is no ongoing fee for Lloyd's management as they are providing no ongoing management.

@jem16

The IFAs we have been working with have been quoting us ongoing fees in the same range as the *total costs* for Lloyds, to which you would add product costs. IFAs we have spoken to have been very cagey about discussing product costs.

Again the amount involved here is important to see whether or not it's good value. However what you have to clarify is whether or not those ongoing fees include product and platform fees or whether it's just the fee for the IFA. Normally you would expect an IFA to charge 0.5% ongoing on amounts larger than around £100k. If you're saying 1.5% that is either an expensive IFA or, more likely, the ballpark figure for IFA, platform and product - ie 0.5% IFA plus 0.3% platform and 0.7% fund charge.

If the IFA is taking an ongoing fee then the IFA is looking after the investment with a yearly review, rebalancing, fund changes, Bed&ISA if appropriate etc. There's no extra charge for this as it's covered in the ongoing fees.

With Lloyds you are looking at a product charge of 1.5% pa but there is no yearly review and no changes unless you pay another fee to have all of that done. So once it's set up you're on your own.

Where can we find some objective detailed feedback on these products?

I doubt you would find that anywhere but I'd listen to what dunstonh is telling you.