Fleeced by Financial Advisor? Pensions

cryschuchimac

I'm just joining my company pension scheme but I'm really unsettled by the way its being implemented.

My choices -
1: Join nest and they will put in the minimum contributions
2. Join their company pension scheme with 4% employer contributions

So #2 is a no brainer really... except. It's suddenly come to light that of our 1st year contributions that 20% will be taken by the 'financial advisor'. This advisor has so far taken us through a risk questionairre and given us a fund list with some general spiel on managed funds. If this was my first pension I'd have no clue where to start with the fund list.

Anyway - back to this 20%. Apparently this is a massively discounted rate from the usual 50%, because of his excellent relationship with my MD :think: I do not want or need his advice on selecting funds. I don't think we're getting that anyway.

It seems that this 20% is a set up fee. It's not clear but that's what I interpret from his jumbled response to me. Is this normal?

He's selected Aviva for the company pension, so I appreciate there was some work for him to do to select them. But I would have thought his fee for that would come from my employer at
a flat rate and I'm not sure why he would then need to delve into my pot.

Has anyone come across this? I've spoken to several people, including my financial advisor, and this does not appear to be normal... any thoughts appreciated.

Many thanks

[Deleted User]

Hi,

so employer is putting in 4%, is that on gross wage?

What % are you putting in?

Are you allowed to select your own funds?

If so there will no doubt be an initial fee or dealing fee.

Oh and, 20% of 4% on a £100 contribution is only 80 pence, suppose over 50 years it mounts up.

cryschuchimac

I'm matching my employer. The total monthly contribution total that will go into the fund (which is taken before tax so we can ignore tax) will be around £400/month. So over a year that's £960.

Yes I can select my own funds, and if these have a fee then this would also then be taken off. That is a completely separate issue.

It the fees for the 'financial advisor' who says he's set this up. But essentially he's given me access to a big pensions company for me to select my own funds. I really feel like his fee should be being paid by my employer... and not me...

cryschuchimac

And yes 4% of salary (I believe gross)

cryschuchimac

Hmmm I might have the % contributions wrong - but whatever the case it's £400 roughly going in the pot each month and half of that's coming from me and half from my employer. The financial advisor wants to take 20% of that in the first year... and im not sure for what

[Deleted User]

Hi,

so it's gonna cost you £40, over the year?

Paul_Herring

[Deleted User] wrote:

Hi,

so it's gonna cost you £40, over the year?

£400*12 months * 20% is £960.

And if that's coming from every employee, the "advisor" seems to be on a nice little earner.

[Deleted User]

Hi

Paul_Herring wrote: »

£400*12 months * 20% is £960.

And if that's coming from every employee, the "advisor" seems to be on a nice little earner.

oops, , sorry was working on monthly contribution.

Aye, but, that's only for first year, set up fees I suppose.

dmelife

My personal view is that unless you are all being taken on as private clients of the adviser in question, then there should be no adviser fee. If you are getting formal, regulated advice on an individual basis (eg. a report explaining which funds are recommended for you and why) then by all means an advert fee agreed up front by you is fine.

It looks to me that your employer is passing his set up costs on to you. Not fine, and not how I do it.

dmelife

Should read adviser fee not advert!

dunstonh

And if that's coming from every employee, the "advisor" seems to be on a nice little earner.

Most advisers have been dumping group schemes like hotcakes. They used to be pretty good earners but nowadays there is little in it for the level of work required. Especially in companies with high turnover.

This would suggest it is not an auto-enrolment qualifying scheme. So, the employer is not covering the cost. It may be worth finding out when the auto-enrolment date for the company is.