Finding an IFA....the unfolding story

dunstonh

Aviva say it is easy and there is no charge when the time comes to do it.

Whilst it is an internal transfer and there is no switching charge, the new contract will have a new set of charges. It isn't a bad contract and can be very good in the accumulation stage. Not sure I would be quite as confident with it in the decumulation stage given the alternatives that are available.

The letter the IFA writes to the providers would ask if they support it on the existing plan. That is the key thing.

Quoting myself, the letter back would state the existing plan does not support drawdown. So, the IFA would need to transfer it. Aviva would fall under their research (As would aegon). So, your earlier concerns over transfer should not be worried about this point.

nocash

Thanks DH, so the fee would cover this and is part of the value the IFA offers together with the review of DB 2 together with savings etc? It makes sense to get this review done but if my maths is correct 3% would be £2,500 which appears to be high for what can't surely be more than a days work in total?

Going forward, if the IFA manages the scheme, is their fee on top of the Provider's fee?

Re your earlier comment about tied agent/restricted advice, is this any advantage in using these people? If not will cancel the appointment I think.

dunstonh

Thanks DH, so the fee would cover this and is part of the value the IFA offers together with the review of DB 2 together with savings etc? It makes sense to get this review done but if my maths is correct 3% would be £2,500 which appears to be high for what can't surely be more than a days work in total?

The fee is high for several reasons. The work is not something you can do in one go. It comes in dribs and drabs. The IFA has to consider all income options. Not just drawdown. So, that means getting annuity quotes even if you don't want annuity. So, detailed medical information required in addition to factfind. It can be time consuming. Last one I did took two days not including meeting. That ended up using part enhanced annuity and part phased-flexi-access drawdown. There were 5 pensions to look at with it. There is also the liability and risk. This is one of the key reasons the cost is high. IFAs carry liability on their advice for life. This issue of liability has actually caused a advice firms to close down. Some of the largest have gone because, in part, their potential liabilities had got so large, they couldn't continue. Finally, you have knowledge. You are paying for knowledge. Not just pressing a few buttons to facilitate. This is a higher risk transaction for an adviser. So, that reflects the cost.

If the transaction includes transfer advice on a DB scheme, then its actually cheap.

Going forward, if the IFA manages the scheme, is their fee on top of the Provider's fee?

Yes. Although do note that the provider charges tend to be quite low. For example, the UK's largest provider of drawdown in the UK is by intermediary only and their fund and product charge in total is 0.45%. Adviser charge of the most common level of 0.5% on top and you are looking at 0.95% p.a. That is not the cheapest option or the most expensive. I used it only as they do the most.

Re your earlier comment about tied agent/restricted advice, is this any advantage in using these people? If not will cancel the appointment I think.

The problem with restricted advice is that it can range from minor restrictions which are not an issue through to very heavy restrictions. A firm that runs an IFA side and a restricted side is doing it for commercial reasons. However, without knowing their restrictions, it is impossible to say. One of the problem with restrictions has been mission creep. A lot of IFAs went restricted some years ago by only restricting on very high risk advice areas that most never dealt with. They remained whole of market for everything else. That sort of restriction is fine. However, the mission creep on restrictions continued and it was funds they could use, providers they could use and it ends up being little more than a panel. A lot of those have gone back to being IFA again.