Fleeced by Financial Advisor? Pensions

missile

I would suggest you ask for a written confirmation of the administration charges.
I recall my last employee scheme, the advisor was less than forthcoming about the charges. He took all of the employer's contribution for the first year.

CROOKS IN SUITS

cryschuchimac

Frugalmacdu - you are not so frugal if you don't mind passing a grand in a year unnecessarily...

dmelife wrote: »

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, thanks for that. I really think that's what he's trying to do (take us on as individuals). It's really not clear. This is so so unfair to the first timers who don't have a clue what's going on. The advice we have had is little more than a risk questionnaire and we have been given a fund list. I'm relatively comfortable with that as my IFA is happy to assist in my selection on that (for no fee on that).

I've found the companys FA's (not independent) ongoing (optional) fee, beyond the first year, is 0.5% and that is for "review of performance and attitude to risk" - no mention of fund selection). It's still unclear what this 20% is. I've had no formal regulated advice so I guess it is the set up cost. Do you happen to know if there is any actual/formal guidance on this and whether it CAN be passed on to the employer? I'm sure the company have paid him a fee to set this up. I'm struggling to find anything official... most of what I find relates to Nest.

I should be grateful that my employer is setting up a more generous scheme... but they may as well be paying less contributions and getting it set up properly.

AnotherJoe

It's not good but you are still better off I think.
Nest you put in 4% employer 1%= total 5%

Employer scheme, you put in 4% employer 4% = 8%. FA takes 20% of that. = 6.4% total left.

cryschuchimac

dunstonh wrote: »

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.

- our staging date was august... so 2 paychecks have had money taken out but this isnt yet sorted so the money is being held somewhere. Im assuming the auto enrollment scheme is nest.... i have selected Aviva instead but only since my 3rd meeting with this guy, has this charge come to light. Not impressive.

missile wrote: »

I recall my last employee scheme, the advisor was less than forthcoming about the charges. He took all of the employer's contribution for the first year.

Awful :-( sorry to hear that

Alexland

NEST and Aviva are both high quality pension providers and although the NEST employer contribution is set to rise from 1% to 3% in the next 2 years (alongside increases to the employee contribution up to 5%) the 4% employer offer looks better if you are planning to stay for a few years? Your employer could pay more into the NEST if they wanted to.

Aviva will have a flatter fee structure circa 0.6% pa (unless the advisor us taking an ongoing cut) than NEST who charge a high 1.8% of any contributions but a low 0.3% ongoing so the average fee over the lifetime of an investment will be around 0.4%.

Once you have put money in NEST it is unlikely you will want to transfer it out in future due to the low ongoing fee.

Once you have a NEST account if you have any other pension pots you can transfer these in without paying the initial fee to get access to the low ongoing fee.

It's important you have a pension you are happy with as hopefully you will make additional contributions to get into proper double digit percentages of your salary to have a chance of a half decent retirement. It's also a key tool in tax planning.

Alex

wjr4

I think that the adviser taking such a charge is disgraceful to be honest!! Whether it's 80p or £800. The employer should be paying - not the employee. They are not receiving personalised advice so no need to pay the charge.

atush

The advisor should only be charging you on your contributions, not the employers.

Dispute this point.

Charge seems high, but better than the nest scheme. Is it for the firs year only? Or does it carry on?

Consider joining it, and in a few years when employers is up to 3% with nest, reassess.

dunstonh

Is it for the firs year only? Or does it carry on?

Advisers are not allowed to collect their pre-agreed fee for a period longer than 24 months (it was 12 months after the RDR but extended to 2 years a couple of years back - although most still use 12 months or less - for instance, I often use 10 months as it provides a rounder figure in many cases). So, the initial charge should not last indefinitely. If it did, then it is a breach.

The strange thing here is that the employer is being generous on the contributions but being tight on the cost of setting up. Although, this way does reward long term employees compared to the employer paying it and reducing the amount they put into the pension.

bostonerimus

Whatever the cost and contributions of each pension I would be very dubious of any pension where the advisor was a friend of the managing director.....

sandsy

You can't be charged adviser fees unless you explicitly agree to them. Have you signed an advisory agreement?

At outset, advice should result in a personal recommendation on the product provider and the funds. For ongoing advice, you are entitled to know exactly what service you are getting and you have the right to turn it off at any point, as should be detailed in the advisory agreement.

If these are product set-up fees then they should be labelled as product charges (not advisory fees) and should be clearly presented in the product documentation.