I think ive made a big mistake

Fretman12

In brief Ive taken voluntary redundancy at 57years old. My pension pot is 190K (Standard Life) I also have a house I rent out at £400 per month and is worth 100K with no mortgage or on my current house. I have a small NHS pension due at 60 years worth 10K lump sum and £300 per month.

I went to an established IFA to see if I had enough to retire on and the best way to approach it. I dont want to be investing myself but wanted any pot to be in the least riskiest place.

Ive ended up giving them the business at 4% transfer fee and 1% management fee per year. The funds will be placed with the Nucleus platform.

I did sign for this in early April and was told that I would incurr full fees if I decided to cancel.

To be honest I feel uneasy now and think I should keep the funds with stahndard Life. I can use their online service with a charge os 1.5% PA and £1000 one off set up fee.

The funds are still with Standard Life but the IFA is now working towards getting them transferred. Should I stop this? And can they still charge me the full 4% transfer fee anyway as they inferred I would be liable too?

Thanks

coyrls

I think there should be a "cooling off" period mentioned in the paper work that you have signed, if there is and you are within that period, you may be able to pull out without penalty.

Fretman12

I asked for the paperwork and have not seen any cooling of period mentioned in it also its over 30 days. They also said if I cancelled I would be liable for all the fees set out in the agreement. I just question how can I be liable for a transfer fee if nothing had been transferred. Im happy to pay for work completed etc

atush

It is unfortunate that you came here now, instead of before. 4% is high on a 190K pot, as is 1% ongoing. Which should be more like .5%.

Basically you have been overcharged as you didnt shop around. However, that doesnt mean their advice will be poor.

Fretman12

Thats how I am now feeling. I am angry with myself for not shopping around or even haggling. Im not usually so gullible! I must admit I was not firing on all cylinders due to health issues but still I should have shown more due diligence. lessons learnt, albiet too late for me are: dont sign on the day and in the office, take all paperwork home and read through and get a second opinion. Go to another IFA and get a quote from them and play them off. Ask about cooling off periods. One decent thing is they are a well established compnay with good reviews, at least I did look into that side! Thanks for the reply

dunstonh

I did sign for this in early April and was told that I would incurr full fees if I decided to cancel.

That is normal as the cost of advice is a service provided. It is not part of a product bought.

To be honest I feel uneasy now and think I should keep the funds with stahndard Life. I can use their online service with a charge os 1.5% PA and £1000 one off set up fee.

You can do cheaper than that with an IFA. You are not comparing like for like. Std Life do not provide ongoing servicing. You can instruct the IFA to not provide ongoing servicing either and that reduces the annual cost. The funds available to an IFA will be cheaper than those offered by Std Life. If you wanted a set up like Std Life but better value then that is the instruction you should have given the IFA.

The funds are still with Standard Life but the IFA is now working towards getting them transferred. Should I stop this?

You will pay the money for the initial advice regardless of what you do. I think you need to discuss this with the IFA.

And can they still charge me the full 4% transfer fee anyway as they inferred I would be liable too?

Yes as the 4% is the cost of advice. Not the cost of product.

4% on £190k is awful. Indeed, it makes you wonder how they still get away with it. Nowadays, you are looking at £500-£2000 being the typical range.

bigfreddiel

atush wrote: »

It is unfortunate that you came here now, instead of before. 4% is high on a 190K pot, as is 1% ongoing. Which should be more like .5%.

Basically you have been overcharged as you didnt shop around. However, that doesnt mean their advice will be poor.

How can any professional outfit charge so much! It's as bad as a pay day loan company.

These firms should be shut down or forced to follow a code of practice.

But it's finance and they can spot an ill informed person at a thousand metres! Bit like the way a killer shark can detect a drop of blood from. A mile away!

Top tip, if money is involved DO NOT SIGN OR AGREE TO ANYTHING until you have the details in writing and your sitting down at home taking it all in. Take your time. Inform them of your terms and conditions and if they don't like it go elsewhere.

Cheers fj

atush

anyone can charge anything they like in a market economy. Just like payday loans used to.

They thought the payday loans would charge less with competition, but the bad money managing/default rate with such customers is high, and the need it right now mentality meant they in the end started talking about controls.

but with pensions, there should not be such a rush (ie I need the money so I dont get evicted etc) and it would be expected that anyone with nearly 200K would think twice.

But it obv in this case the person did not for whatever reason. Most/many would walk away or ask here or get another quote. The whole point of RDR and the changes in charging for pensions was, for the reason you say. to give people bettter value and to be transparent.

but it did not work, and have made advice MORE expensive. As the big fish paid for the advice of the little fish. Now everyone tends to pay more. And the little guy cant find someone to take on his business.

but the OP in this case, as far as I can see, was truly ripped off.

Name and shame them OP?

HappyHarry

4% on £190k is awful. Indeed, it makes you wonder how they still get away with it. Nowadays, you are looking at £500-£2000 being the typical range.

It depends where you are in the country and what kind of adviser company you are dealing with. We wouldn't be looking to charge as low as £500 to £2000 for a £190k transfer, and I'm not aware of any of our serious competitors in our area that would do so.

The costs of business do vary drastically depending on location and business size. A one-man band working from home may be able to get away with such low fees for a while. However, a business with premises rental costs, support staff, paraplanners and the sort would not be able to afford to do business at this rate.

For any doubters who wonder if we are "ripping off" clients with high fees, you should be aware that we make a profit, but not an excessive one.

I would be surprised if an adviser charging an initial fee of £500 for such work would be around for many annual reviews.

As always, you pay for what you get, but if someone in the south east (expensive part of south east) is under the impression from this board they can get quality advice for £500, then this can only lead to disappointment.

However, 1% ongoing is a very high rate. I wouldn't be surprised to find that the adviser is deliberately setting the price high to deter this business.