Independant Financial Adviser Question

Legacy_user

Hi All

I would like to employ a IFA to manage all my pension affairs as the providers will not 'talk' to the likes of me regarding withdraws, draw-downs etc. I have been kind of using this chap and when I spoke to him today he said that they would like to manage my pension portfolio with regards to investments and future growth. He has indicated a initial cost of £1000 which includes a Recommendation Report, combining the pension pots, etc and then an Annual fee of £500 to manage the multiple pensions and assist me with the draw-down of the Tax Free funds. Is this reasonable cost for the service that they want to provide. I can't get at the Tax Free lump sum without using an IFA as that is what my pension providers have told me.
Many Thanks

bigadaj

Haverp wrote: »

Hi All

I would like to employ a IFA to manage all my pension affairs as the providers will not 'talk' to the likes of me regarding withdraws, draw-downs etc. I have been kind of using this chap and when I spoke to him today he said that they would like to manage my pension portfolio with regards to investments and future growth. He has indicated a initial cost of £1000 which includes a Recommendation Report, combining the pension pots, etc and then an Annual fee of £500 to manage the multiple pensions and assist me with the draw-down of the Tax Free funds. Is this reasonable cost for the service that they want to provide. I can't get at the Tax Free lump sum without using an IFA as that is what my pension providers have told me.
Many Thanks

Costs sound reasonable though it depends on the value of the assets you have.

Why is it that you can't get at pension yourself, is it defined benefit or have guarantees? I can't believe it's the former as the costs for doing that would be much higher.

It could be that the pension you hold has constraints, it might then be possible to transfer it to another provider or arrangement that would allow you to manage it, there are many diy options available.

However if you did you need to know what you're doing, it's not rocket science but requires some research and understanding.

jamesd

What reason have your providers given for not being able to get the tax free lump sum without using an IFA?

There are some rules relating to transfers of pensions with guaranteed benefits worth more than £30,000 (not pot of that size, it's value of benefits which can be bigger than pot size). But the law on those is specific that IFA advice is not required to take the tax free lump sum. Guaranteed benefits means things like a guaranteed annuity rate, guaranteed minimum pension or a defined benefit pension.

First thing to do is to get them to say why they want you to use an IFA, which law or regulation they are using or if it's company policy. If it's company policy ask them if a transfer to another pension would eliminate the requirement.

System

thanks for the reply, Pru told me flat out that I need to use an IFA, the others I haven't contacted yet but will do soon. In my opinion the Management Fee seems a bit high so I think I will leave that alone.

jamesd

When a firm says you have to use an IFA, ask them to tell you why. It might be that they are just mentioning their own products and product rules, not the actual law.

xylophone

You have several pensions from different providers/schemes/employers?

Or you have several policies with the Pru?

Do you have any pensions with safeguarded benefits ( DB/GAR/S32....)

Have you asked the Pru to state in writing why they are insisting that you use an IFA, particularly if you are only wanting to access the 25% lump sum?

dunstonh

Pru told me flat out that I need to use an IFA

Pru only retail their product via intermediaries. Most of the legacy plans do not offer the drawdown option and require a transfer to a different plan. They will also not provide advice (which it sounds like you may have strayed into from what you have said).

Have you asked the Pru to state in writing why they are insisting that you use an IFA, particularly if you are only wanting to access the 25% lump sum?

As per above, if they dont offer drawdown on the existing plan (which most Pru do not) then it requires a new product and Pru use intermediaries for their products. They are not a D2C provider.

xylophone

See also

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

http://www.hoganlovellsukpensions360.com/print-news-item/243