IFA annual commission on pension pot

[Deleted User]

bowlhead99 wrote: »

Capitalism provides a cool and convenient system that allows advisers to select the work they want to take on and charge whatever fees they agree with their customers.

...while customers have guns to their heads. If they want more control over their hard earned money, their only option is to pay for IFA insurance (and other costs and profits). It’s really a scheme for subsidising IFAs. I wouldn’t blame “capitalism” for this particular regulation

SonOf

It’s really a scheme for subsidising IFAs.

How do you work that out? Less than 1 in 10 IFAs transact in this area. Yet 100% of IFAs have to pay towards the levies that cover the firms that fail.

Mick70

so is it the norm to be paying an IFA annual commission if the pension provider i.e royal london is doing all the investment ? do others still pay for an IFA on top of this ?

wjr4

It isn't commission.. it's an ongoing adviser fee. You pay for ongoing servicing if you require it, you do not have to have ongoing service.

SonOf

Mick70 wrote: »

so is it the norm to be paying an IFA annual commission if the pension provider i.e royal london is doing all the investment ? do others still pay for an IFA on top of this ?

Royal London wont allow a commission to be set up on plan arranged after 2012. As previously mentioned on this thread.

Royal London is only doing the investments on the fund selection that the IFA tells them to use. If a fund becomes unsuitable in the future or new options become available, then it will not be changed unless you have an ongoing adviser fee.

do others still pay for an IFA on top of this ?

Some do. Some don't. Those that don't will usually be recommended a more basic investment option than those that do.

fred246

Imagine going for a haircut and at the end the hairdresser says that will be £2000 and if you just fill in this direct debit for £100 a month ongoing for life please. For just a few minutes of moderately skilled work you pay a fortune and you give them an income for life. That's how commission used to work. I bought a pension and then never met my IFA again. It was only when I read the small print that I realised how it worked. So after meeting a few clients the IFA could retire to the golf course happy that his clients were all paying him for doing absolutely nothing. Imagine their fury when the government banned commission. So they invented adviser fees which is basically the same but the adviser has to pretend to do something useful once a year. You can see how nasty they get when they think you are refusing to pay it. "We'll have to give you some rubbish investments if you won't pay our annual fees."

MEM62

Deleted_User wrote: »

Isn’t it a cool system that th e customer gets to pay extra because the advisor might be incompetent?

Many professions require indemnity insurance. (For example surveyors also have it) This is not for the IFA's benefit - it is for the client's benefit. The insurance covers the client if the professional if found to have made a mistake and the client has lot out as a result. In areas where the advice or service offered is high-risk then the premiums are higher to reflect that. All DB transfers are considered high risk.

bowlhead99

fred246 wrote: »

. Imagine their fury when the government banned commission. So they invented adviser fees which is basically the same but the adviser has to pretend to do something useful once a year. You can see how nasty they get when they think you are refusing to pay it. "We'll have to give you some rubbish investments if you won't pay our annual fees."

I suppose that's a bit like going for a haircut, if you have said you never plan on coming back ever again and if they think you'll go and wash it badly and screw it up by hacking it to bits with your kitchen cutlery while trying to fix it, they may give you something that is less fancy and easier to maintain yourself. Whereas if you seem like you would be happy to come back and let them review and maintain it and discuss it with you from time to time, they are happy to give you a product that needs some ongoing TLC, but charge you for that ongoing service.

Linton

bowlhead99 wrote: »

I suppose that's a bit like going for a haircut, if you have said you never plan on coming back ever again and if they think you'll go and wash it badly and screw it up by hacking it to bits with your kitchen cutlery while trying to fix it and then give them a bad review on Trustpilot, they may give you something that is less fancy and easier to maintain yourself. Whereas if you seem like you would be happy to come back and let them review and maintain it and discuss it with you from time to time, they are happy to give you a product that needs some ongoing TLC, but charge you for that ongoing service.

A relevent (hopefully) helpful addition.

Mick70

I have read through my royal london booklet - they already charge 0.41% p.a management charge, for providing and managing the plan, it is a "balanced lifestyle strategy" where risk/allocations etc are based on how close to retirement age , you can amend the plan if need be.

this is why i wasnt sure why need an IFA annual fee also ?