IFA locking me in to ongoing fees

segovia

I agreed a fixed fee for a pension review and transfer of my pensions to a SIP provider and an investment fund advised by the IFA. There was a 0.6% ongoing charge which I initially agreed to but on reflection, I decided against the ongoing fee. I did verify with the IFA that the ongoing fees are discretionary.

Quote

"the ongoing fee is entirely discretionary, however, it pays for valuable services you will benefit from. So much so I purposely do not contact you into it."

I have advised going ahead with the transfer to the SIPP to the selected fund but politely declined the ongoing. He now says it greatly compromises his charging model and he can't do the transfer without me agreeing to the ongoing charges. I suspect he will still want to be paid for the work done so far which includes the transfer.

He has made a revised offer of 2.5% of the fund on a fixed fee basis which is £10,000.00 for the same work he has already quoted £2,600.00. In effect, the work is four times more expensive to do if I don't agree to ongoing.

Is this offer bordering on professional misconduct?

J

Aegis

segovia wrote: »

I agreed a fixed fee for a pension review and transfer of my pensions to a SIP provider and an investment fund advised by the IFA. There was a 0.6% ongoing charge which I initially agreed to but on reflection, I decided against the ongoing fee. I did verify with the IFA that the ongoing fees are discretionary.

Quote

"the ongoing fee is entirely discretionary, however, it pays for valuable services you will benefit from. So much so I purposely do not contact you into it."

I have advised going ahead with the transfer to the SIPP to the selected fund but politely declined the ongoing. He now says it greatly compromises his charging model and he can't do the transfer without me agreeing to the ongoing charges. I suspect he will still want to be paid for the work done so far which includes the transfer.

He has made a revised offer of 2.5% of the fund on a fixed fee basis which is £10,000.00 for the same work he has already quoted £2,600.00. In effect, the work is four times more expensive to do if I don't agree to ongoing.

Is this offer bordering on professional misconduct?

J

If it was me, I'd be thanking him and moving on. Changing the fees because you declined an optional charge just isn't right.

JoeCrystal

Wow, considering it is not even that it is not that high a risk compared to transferring out from a DB pension scheme, £10,000 is very high. I would have made it very clear that I do not want an ongoing servicing but proceeding on a transactional basis only from the start.

I would double check the terms and conditions signed to make sure that you are not bound to pay for the works already done and find another IFA!

segovia

Aegis wrote: »

If it was me, I'd be thanking him and moving on. Changing the fees because you declined an optional charge just isn't right.

I think I am stuck with the fixed fee whether I proceed or not as I did agree to it; However, at no time was it mentioned that it was conditional on me taking the ongoing advice for any period of time, on the contrary, the ongoing was always discretional.

He is now saying the "low" fixed initial fee was based me taking the ongoing advice and he can't proceed unless I agree to a 400% increase in advice fees.


J

segovia

JoeCrystal wrote: »

Wow, considering it is not even that it is not that high a risk compared to transferring out from a DB pension scheme, £10,000 is very high. I would have made it very clear that I do not want an ongoing servicing but proceeding on a transactional basis only from the start.

I would double check the terms and conditions signed to make sure that you are not bound to pay for the works already done and find another IFA!

Nothing signed, just email transcripts.

JoeCrystal

segovia wrote: »

He is now saying the "low" fixed initial fee was based me taking the ongoing advice and he can't proceed unless I agree to a 400% increase in advice fees.
J

Maybe you can agree to the lower fees and then cancel the ongoing servicing with the pension company as soon everything is transferred (I think you can do it with the pension provider rather than the IFA)?

segovia wrote: »

Nothing signed, just email transcripts.

Oh good! I was under the impression you had a free consultation meeting with the IFA or something already and already asked for the report. In this case, turn it down and walk away; ideally, you should be checking other IFAs as well at the very first stage.

I was surprised to hear that you already got recommended advice for the pension and the fund at this point as you highlighted it at your other thread.

Aegis

segovia wrote: »

I think I am stuck with the fixed fee whether I proceed or not as I did agree to it; However, at no time was it mentioned that it was conditional on me taking the ongoing advice for any period of time, on the contrary, the ongoing was always discretional.

He is now saying the "low" fixed initial fee was based me taking the ongoing advice and he can't proceed unless I agree to a 400% increase in advice fees.


J

Probably best to say "thanks, but no thanks" at this point and walk. Clearly you don't trust the guy any more!

segovia

JoeCrystal wrote: »

Maybe you can agree to the lower fees and then cancel the ongoing servicing with the pension company as soon everything is transferred (I think you can do it with the pension provider rather than the IFA)?



Oh good! I was under the impression you had a free consultation meeting with the IFA or something already and already asked for the report. In this case, turn it down and walk away; ideally, you should be checking other IFAs as well at the very first stage.

I was surprised to hear that you already got recommended advice for the pension and the fund at this point as you highlighted it at your other thread.

I believe the ongoing of 0.6% is paid by the fund manager of the DMF, I intend to discuss the ongoing with the fund manager to check if I can cancel at any time.

Dox

segovia wrote: »

He now says it greatly compromises his charging model and he can't do the transfer without me agreeing to the ongoing charges.

Tough. That's his problem, not yours. I'd make a formal complaint to the firm concerned.

fred246

Dox wrote: »

I'd make a formal complaint to the firm concerned.

The firm will say to the IFA "Don't worry, you're doing a good job. It is important to make sure that you try to lock every customer into an ongoing fee arrangement. You will get difficult customers from time to time."

Clive_Woody

Regardless of whatever compromise he might now suggest I would be walking (running) away from this IFA. You need to feel comfortable with the person you entrust with managing your pension, clearly this IFA sees a discretionary service as one that you have to agree to in order for them to honour the price for the transfer.

Unless your finances are considerably complex, then £10,000 to transfer a DC pension pot to a SIPP is insane. IMHO