Cost of moving DB pension fund

AnotherJoe

kwame41 wrote: »

7.5k to manage a transfer!

How much work is involved 3 months worth?

See the post before yours. Its not about the work.

As an analogy, have you insured your car? How much was that, £300? £500? For about 5 minutes work on their part because you had the hard bit to do, answering the questions which they had already prepared. Its Outrageous!

The charge is not for the work, its for the possible compensation the IFAs insurance company will need to pay out.

kwame41

I get the point youve made.


However, that amount of money to cover the possibility of a future claim for bad advice seems barmy to me.


It seems the industry is loading all the risk involved in advice / transfer onto the individual and that doesnt seem fair or reasonable.

Keep_pedalling

number9 wrote: »

Sorry. IFA.

Or maybe you were right the first time, people do call themselves financier service advisors, but not if they really are IFAs.

AnotherJoe

kwame41 wrote: »

I get the point youve made.
However, that amount of money to cover the possibility of a future claim for bad advice seems barmy to me.
It seems the industry is loading all the risk involved in advice / transfer onto the individual and that doesnt seem fair or reasonable.

That risk has a cost. Someone's got to pay it. Should the risk be loaded onto the person who is taking the decision to transfer, or spread across all the advisers clients, or should the adviser take a pay cut ? I'm not seeing another alternative.
P.s. as said there is likely also the point made by someone else, if you really don't want to do something, provide this advice in this case, charging a high fee is another way of saying that. Either the adviser doesn't have to take the risk or if they do they get well paid for it.

Edit; I do think the cost has got out of control due to "nanny stateislm" but that's really a different matter.

[Deleted User]

£7500 to 'advise' somone what to do with their money?



LOL what a joke! :rotfl:

Aegis

kwame41 wrote: »

7.5k to manage a transfer!


How much work is involved 3 months worth?

If it's done right, a lot of work. Typically two meetings of 90 minutes each, followed by between 10 and 20 hours of research, forecasting scenarios, report writing, case checking, plus a whole host of ancillary activities, and that's before the transfer even takes place. Add the amount of work required to the cost of being allowed to do this kind of work (additional regulatory requirements, training, etc) and a surcharge because of the risk involved and you can quickly see how costs rack up.


If it were as simple as just checking a couple of numbers and saying "yep, seems legit" then this fee would be far too high, but it's far more complex than that.


I've seen much lower fees mentioned on here, but when I see this type of work done for, say, £1,500 I cannot believe that the right level of due diligence is being carried out because the charge simply cannot sustain the level of professionalism needed when looking at cases like this.

goRt

I found first equitable to be the lowest cost for me (fixed fee, reduction for multiple DBs...) https://www.first-equitable.co.uk/

I checked with the FCA (on the phone) that he holds the appropriate certification (one for the person, one for the company).

dunstonh

It seems the industry is loading all the risk involved in advice / transfer onto the individual and that doesnt seem fair or reasonable.

it seems entirely reasonable that the person creating the costs is the one that pays for it. Unless you are suggesting other people should be paying for you?

However, that amount of money to cover the possibility of a future claim for bad advice seems barmy to me.

Not possibility. Probability. The FOS is largely a retrospective ombudsman and generally thinks the average consumer is low knowledge and likes guarantees. It upholds the majority of DB transfer complaints. Often put in by people who tell the adviser one thing but then tell the FOS something different.

You also have the FCA who doesnt give much support to advisory firms but acts in a "you do it and we will tell you afterwards whether you are right or not" approach. If you are right, great. If not, we will fine you and shut you down.

PI insurers will be charging advice firms every year for historic transfers made. Long after this window of transfer outs has closed and normality returns.

It's just about the highest risk transaction an adviser can carry out. Hence why it costs more.

kwame41

Just out of interest would there not be a written explanation from an adviser detailing what they regard as best advice to the customer given their in depth knowledge and experience on the subject?



If the customer then decides to make the wrong choice isnt the adviser covered because he or she has a formal record of advice given along with suggested options and potential risks to the customer based on the choice they make?


I agree consumers should take responsibilty for bad choices they make. Equally, financial advisers should expect to be held accountable for providing bad advice.


But dont worry if they do the consumer can pay for it through some form of insurance to cover them.

Aegis

kwame41 wrote: »

Just out of interest would there not be a written explanation from an adviser detailing what they regard as best advice to the customer given their in depth knowledge and experience on the subject?



If the customer then decides to make the wrong choice isnt the adviser covered because he or she has a formal record of advice given along with suggested options and potential risks to the customer based on the choice they make?

No. Explaining the risks is mandatory, explaining that certain outcomes may not occur is also mandatory. Neither exculpates the adviser if the advice is deemed to have been wrong retrospectively at some point in the future. In other words, I can recommend a transfer which requires, say, 3% annual return net of charges and I can give all sorts of risk warnings to the client about how this return might not happen, and if the FOS looks back on the case 10 years from now and determines that I should have seen it as more likely than not that 3% was too much of a return to rely on, I can have a complain upheld against me with no grounds for appeal (barring a full judicial review).



I don't think it's likely that one of my reports could be attacked on those grounds, but if you ask any advisers currently on the receiving end of a number of final salary complaints, they probably didn't either. Being over-prepared also doesn't stop the ambulance chasers who try to persuade anyone who's ever been advised on a pension transfer to sue their adviser (before even checking whether the client is actually better or worse off), and dealing with those complaints takes an enormous amount of time and effort even if the adviser is 100% innocent.


In summary this is the most complex and litigious area of financial planning that most advisers will ever go near, so those that want to stay in business in the long run will price this work accordingly.