Financial advisor cost.

Dave1951

I retired from work 3 years ago and took out a Drawdown pension with Liverpool Victoria. I have had a meeting with my financial advisor and am to change to Prudential with a pot of £360,000. What sort of charge would seem reasonable as it seems only a bit of form filling is required (Having done all the risk assessment when I retired). The charge quoted is £3500, does that seem OK?

PeacefulWaters

Hard to say.

What's the logic behind changing provider?

dunstonh

What sort of charge would seem reasonable as it seems only a bit of form filling is required (Having done all the risk assessment when I retired). The charge quoted is £3500, does that seem OK?

its clearly not only a bit of form filling. There is a lot more to it than that. The adviser has to check suitability and ensure best advice. The form filling is the easy bit at the end.

£3500 is at the upper end of what could be considered suitable. However, if you are paying ongoing servicing, then many advisers would handle platform/provider changes at no initial charge as part of their ongoing servicing. If there is no ongoing servicing being charged, then an initial would be expected.

Dave1951

I was about to take an annuity when I retired and on the day of signing the new drawdaown rules came into place. I made a snap decision to take 1% for 3 years from Liverpool Victoria
. Now I want to go into a Prudential stocks and shares drawdown pension.

Malthusian

Why?

Without knowing the reason for the change of provider it is impossible to know whether the fee for arranging that change and ensuring it is suitable is reasonable.

sandsy

Was the adviser involved 3 years ago?
What's the main differences between the LV drawdown and the Pru drawdown that make this change work better for you? Are they worth £3500?

Dave1951

Yes my advisor was involved 3 years ago and we decided to go for a straight 1% interest rate for 3 years with LV. My advisor thinks that Pudential is a more conservative stocks and shares bet with its smoothing than LV. If I stayed with LV would there be any charge from them to change to a stocks and shares drawdown?

Malthusian

Dave1951 wrote: »

Yes my advisor was involved 3 years ago and we decided to go for a straight 1% interest rate for 3 years with LV. My advisor thinks that Pudential is a more conservative stocks and shares bet with its smoothing than LV.

It doesn't sound like you fully understand what you have with LV. You talk about an "1% interest rate" which suggests a cash arrangement but then say that Prudential (which is apparently a With Profit arrangement) is "more conservative".

To answer your question - if your adviser is moving you into a With Profits arrangement from some other kind of drawdown plan then, under the assumption that this is a good idea, 1% is (as dunstonh says) towards the upper end of but within what is reasonable. Whether it is a good idea is not something I will second-guess.

If you went to a different adviser then assuming they agreed with your current adviser that a change of investment and provider was needed, they would probably charge somewhere between 1% and nil initial fee given a fund of that size, on top of an ongoing fee.

If I stayed with LV would there be any charge from them to change to a stocks and shares drawdown?

We don't know. Ask LV, or your adviser. All charges should be disclosed in his suitability report.

System

There's a big difference between paying for advice over the specific decision of whether to move provider or investment category, and paying an ongoing overseeing fee.
£3,500 may be reasonable as a one-off, but once it's all been changed and finalised then what actually do you want your adviser to do? There's no obligation to have one at all, or you could switch to an agreed hourly-rated charge as and when you need specific advice or action.