DB Pension transfer - IFA costs

Suemac2a

We are retired and now able to take advantage of the new pension flexibility and are currently doing due diligence on possible transfers for 2 db pensions.

We have done our planning calculations, have received (substantial) transfer value quotes and have a compelling case. We pretty much know where we want to transfer to and how we would like to manage this pot efficiently moving forward.

We know it is mandatory to get proof of receiving professional advice and we are happy to have an expert eye cast over our calculations and assumptions and presumably achieve the necessary certification. We understand that we can shortlist qualified IFAs and meet them to find a good fit. But most seem to charge substantial fees wrapped in additional advice and ongoing management services. Obviously we've read the justifications around professional indemnity. But I can certainly see how eye-watering fees could negate the upside of transferring out, and this is actually now the main 'unknown' issue deterring this course of action.

My question is straightforward. We are absolutely happy to pay a fair price for professional services as required. BUT If we have put the effort in to pull together a responsible, robust, researched financial plan and assumptions and an inarguable case for transfer, what is a reasonable fee for this to be critically reviewed by an IFA for the purposes of this mandatory rubber stamp? I.e. a fee based on hourly rate only? And has anyone here managed to achieve that? It seems reasonable to ask here for direct experience, before we start meeting with IFAs rather than after. Thanks in advance.

Dazed_and_confused

I think you are looking at this from the wrong perspective. The IFA's job isn't to look at or vet your calculations, it is to do their own analysis of your overall situation, no doubt taking account of your take on things, and provide a recommendation.

What you want is totally different to what is required (rightly or wrongly) in this situation.

If you think the fees are excessive there is a very simple answer. Don't pay them and leave your DB pensions where they are.

xylophone

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-transfers-conversions/

This thread may be of interest

https://forums.moneysavingexpert.com/discussion/6032686/dont-use-hargreaves-lansdown&page=2

Albermarle

The IFA 'pensions transfer specialist ' has to go through a process , regardless of what you have done yourself.
He/she could be held responsible if in 10 years a client takes them to court because a transfer was recommended and now there is no money left . So he/she has to follow the designated process and have all the paperwork to prove they have followed the rules to the letter and offered the right advice in the circumstances .

MarkCarnage

What you want is totally different to what is needed (rightly or wrongly) in this situation.

Nail hit on head there....

I transferred two small DB pensions in 2016. The specialist IFA was an acquaintance, and I wrote a detailed analysis of the situation, including my circumstances and other assets. This was based on working as a fund manager and then institutional pension fund manager for well over 20 years. I knew exactly why I wanted to transfer, and why it worked for me (I didn't transfer my main DB pension which was over 5 times the size of these combined).

He explained that they still had to go through a prescribed analysis, including comparing it with buying an annuity, which we both knew was bollox, and also explained that he couldn't really reduce the fee because of the work they had to do anyway plus the cost of PI cover. It was cheaper then than it would be now, because the latter has gone up about threefold.

Therefore, I don't think you will get anywhere if you don't accept that your position isn't going to work....

coyrls

As you are retired, have you confirmed that you are still able to transfer your DB pensions? If you have passed your NRA for those pensions, you may not be able to transfer them.

TN1984

The problem in terms of what you want to achieve is that the work you have done in no way reduces the work required by the IFA, nor will it reduce the exposure they have from a PII point of view. In fact, it's worse as you don't really want advice, you just want a sign off to do what you want to do. Any IFA you engage will still have to go through the full information gathering and advice process as usual (and their recommendation might be not to transfer anyway). You've made it harder for them as well as your 3 month guaranteed period is ticking down before you've even been to see them.

I think you might struggle finding a firm to do this on the cheap. If you do, I would suggest treading carefully and doing full due diligence on that firm (Companies House etc), as they probably won't be around for the long term.

happyandcontented

We are currently doing this too and have received several quotes ranging from £18,000 for review and transfer and 0.5% ongoing fees down to £11,000/£12000 plus a review fee.

We really don't have an option but to pay one of them or leave it where it is and we are not sure that is right for us.

MarkCarnage

We really don't have an option but to pay one of them or leave it where it is and we are not sure that is right for us.

I sympathise, but the FCA, the undistinguished child of the Fundamentally Supine Authority, clearly wants to erect sufficient barriers to ensure that it doesn't happen. I had to threaten legal action against them at one point at an advanced stage of my transfer where they suspended my IFAs permissions to act for no good reason. They backed off and allowed all signed off transfers to proceed.

SonOf

happyandcontented wrote: »

We are currently doing this too and have received several quotes ranging from £18,000 for review and transfer and 0.5% ongoing fees down to £11,000/£12000 plus a review fee.

We really don't have an option but to pay one of them or leave it where it is and we are not sure that is right for us.

You shouldnt need to go that high on the fee. £5000 is the sort of area to look at.

Suemac2a

Thanks all for your considered and interesting replies, and links.

We are 55 and receiving transfer values, so yes we can transfer.
I take the point about the 3 month ticking clock. We requested transfer value as belts and braces approach with no expectation that it would be a compelling sum. But it is double the industry estimate which changed everything. Hence this post.


So....I must hastily say that I do understand the specific analysis work undertaken by the IFA is not diminished or circumvented by our own due diligence efforts. My comments on our own work done were intended to stress that the process should be straightforward and - as far as our input required - time-efficient, and that no ongoing or additional management services would be required. Apologies that I phrased this badly.

Importantly at no point did I say we were looking to do things 'on the cheap'. I am trying to understanding what is a FAIR rate and is actually being paid by individuals for this service without the additional management services that seem to be wrapped in the published fee structures.

If I took these commission % fee quotes at face value we could be talking £50k and ongoing fees which is a big, big surprise tbh, and a large enough sum to negate the benefit of transfer itself. An important factor to ideally consider before we waste an IFAs time.

Happy, thanks for answering my question on your actual experience of fees, that is really helpful.