DB Pension transfer - IFA costs

Daniel54

In terms of ongoing fees,are you able to demonstrate that you are experienced medium to high risk equity investors ? IFAs are more likely to insist on managing your transferred portfolio if you do not have this knowledge and experience ( part of their duty of care ).

Suemac2a

Good point Daniel. I have a long history of direct trading in medium and high risk equities in and out of ISA wrappers so hopefully that will suffice. Its another important factor in trying to find an IFA which meets our requirements. It is evident there are many barriers to a good and smooth outcome even where a transfer value really stacks up.

wjr4

How did you get to £50k fees?! Also, commission isn’t paid anymore. How much investment experience do you have?

wjr4

There are ‘barriers’ for a reason as most of the time, it’s not in your best interests to transfer.

[Deleted User]

Suemac2a wrote: »

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.

https://citywire.co.uk/new-model-adviser/news/fca-db-transfer-advice-shouldnt-cost-more-than-3500/a1254565

I'm not sure the advice you are forced to buy is worth anything at all.
But that advice is not only compulsory but the least of your worries.
There is a very good chance that the advice given by your FA will reflect his interest, rather than yours.
And do not accept ongoing fees.

TN1984

Suemac2a wrote: »

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.

Fair enough. I don't know what your transfer values are and the fees will be relative to the CETV, but £50k does seem rather high for most cases. The vast majority of IFAs are going to want to keep an ongoing relationship in most cases though, as the risk is higher to them if they knowingly transfer a DB pension for someone to go off and do their own thing. For all they know you might go and put the whole lot in a single share your mate at the pub recommended and lose it all. Extreme example, but the point is there have been claims made against firms upheld by the Ombudsman where they facilitated a transfer that put the individual in the position to make bad decisions, even if the firm itself didn't actually recommend those bad decisions.

You might be better off with a DB specialist firm, as they will be more geared for the transactional nature of what you want. I don't know which of these firms are still about though to be honest as I think a quite a few left the market.

Incidentally, if a 3% adviser fee (for example - you really shouldn't be paying more than that) is going to make you think it is no longer worth doing, I would suggest the decision might not be as clear cut as you first thought.

I don't think you've got anything to lose finding a couple of local firms with good reputations and going for a free initial chat.

[Deleted User]

wjr4 wrote: »

There are ‘barriers’ for a reason as most of the time, it’s not in your best interests to transfer.

But the reason many DB pension transfers are against the best interest of the client is because many transfers are contingent on unjustified ongoing adviser fees.

In its cost/benefit analysis, the regulator noted that a typical ongoing charge of between 0.5% and 0.75% meant that a person who completed a DB transfer worth the average £350,000 transfer value would pay an annual charge between £1,750 and £2,625.

The FCA said this did not usually reflect value for money for consumers after the transfer. The FCA allude to the problem here:

‘Retirement for many can last 20 to 30 years. Apart from a decumulation decision and a possible later decision to purchase an annuity, many consumers will just need a sense check on their current retirement strategy and readjustment of their portfolio in some circumstances. Unless their circumstances have significantly changed, this should be a relatively straightforward task.

https://citywire.co.uk/new-model-adviser/news/fca-db-transfer-advice-shouldnt-cost-more-than-3500/a1254565

Daniel54

Suemac2a wrote: »

Good point Daniel. I have a long history of direct trading in medium and high risk equities in and out of ISA wrappers so hopefully that will suffice. Its another important factor in trying to find an IFA which meets our requirements. It is evident there are many barriers to a good and smooth outcome even where a transfer value really stacks up.

So,out of interest,where are you planning to put it and what are your return assumptions ?

I'm a bit biased on this because my DB pensions are increasing by more than CPI and I can therefore increase my risk profile on other investments,which has served me very well.

I can see the attraction of inheritability,but that can be changed at a stroke by any Government.

[Deleted User]

Suemac2a wrote: »

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.

Just go for the cheapest , contingent on a positive recommendation.

Once transferred, you can shed them.

Thrugelmir

Suemac2a wrote: »

We pretty much know where we want to transfer to and how we would like to manage this pot efficiently moving forward.

And if your assumptions proved wildly inaccurate. Would you seek redress for the decisions you subsequently make.