Fees - Financial Advisors

peopleiknow1

Just had a quote from a financial advisor for moving a frozen pension to a new provider, 4% of total transfer for the initial set up/transfer, then a yearly fee of 1% of the pension value ( paid monthly ).  That’s works out at £4000 & £1000 per year respectively

Question is, are these rates pretty standard across the industry or should I be getting a number of quotes?

any advice much appreciated.

sandsy

Frozen pension pension isn't a very clear term
if it's a defined contribution pension which you're no longer contributing to, but is still invested, 4% is on the high side. But if it's a defined benefit pension, advising on a transfer is highly complex and £4K isn't unreasonable. Be aware that you could be advised not to transfer a DB pension as you'd need to be in a position to show that you don't need the guaranteed income it provides.

JoeCrystal

Just to clarify, is your deferred pension scheme a DB pension scheme and so it is a CETV transfer or a DC pension scheme transfer?

Albermarle

In case your not sure about DC - DB this should help .
https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/workplace-pension-schemes

dunstonh

Just had a quote from a financial advisor for moving a frozen pension to a new provider, 4% of total transfer for the initial set up/transfer, then a yearly fee of 1% of the pension value ( paid monthly ).  That’s works out at £4000 & £1000 per year respectively

If it is genuinely frozen and you are not missing the term "frozen" (which many do) then the charges deem entirely reasonable.

It is more likely it is deferred or preserved or perhaps neither of those if its a defined contribution scheme.

peopleiknow1

Albermarle said:

In case your not sure about DC - DB this should help

Hi, thanks, having checked the link it’s a ‘Defined contribution pension scheme’
It was originally taken out around 30 years ago, however i’ve not paid anything into it for over 10 years now, so thought I would get some advice. I’ve been recommend Royal London, but £5000 in fees in the first year, & £1000 a year thereafter seemed a bit steep?

fred246

I would recommend getting loads more 'free quotes' from IFAs and then seeing if you could play them off against each other.. You should be able to half those fees.

Marcon

peopleiknow1 said:

Albermarle said:

In case your not sure about DC - DB this should help

Hi, thanks, having checked the link it’s a ‘Defined contribution pension scheme’
It was originally taken out around 30 years ago, however i’ve not paid anything into it for over 10 years now, so thought I would get some advice. I’ve been recommend Royal London, but £5000 in fees in the first year, & £1000 a year thereafter seemed a bit steep?

Not so much steep as vertical - unless the pension has some sort of 'safeguarded benefits' (e.g. a Guaranteed Annuity Rate)?

Otherwise why not get some advice based on a time/cost basis, which is likely to work out at a lot less than £4K, depending on the complexity of your situation.

BritishInvestor

fred246 said:

I would recommend getting loads more 'free quotes' from IFAs and then seeing if you could play them off against each other.. You should be able to half those fees.

Would you really want to work with an IFA that provided a discount? Doesn't that imply they were charging too much in the first place?

Albermarle

If it is a straightforward DC to DC transfer , then £4K is a rip off for a £100K pension . £1K pa ongoing is more normal.
OP - Do you have the details of the current pension ? Are there any special guarantees with it ?How it is invested and how the investment has performed over recent years? If it looks OK then maybe just leaving it where it is as one option? The fact you have not contributed recently makes no difference- it is not frozen. 
On the other hand  if it is an old pension you would probably benefit it being moved to a more modern one at some point . Probably lower charges and more options when you come to take the pension plus maybe better on line access etc 
You can do this yourself for zero cost if you want . I am not saying you should DIY but just noting the cost for comparison purposes. 

peopleiknow1

Albermarle said:

If it is a straightforward DC to DC transfer , then £4K is a rip off for a £100K pension . £1K pa ongoing is more normal.
OP - Do you have the details of the current pension ? Are there any special guarantees with it ?How it is invested and how the investment has performed over recent years? If it looks OK then maybe just leaving it where it is as one option? The fact you have not contributed recently makes no difference- it is not frozen. 
On the other hand  if it is an old pension you would probably benefit it being moved to a more modern one at some point . Probably lower charges and more options when you come to take the pension plus maybe better on line access etc 
You can do this yourself for zero cost if you want . I am not saying you should DIY but just noting the cost for comparison purposes. 

Thanks everybody for the advice much appreciated.
If I decide to go down the diy route can you recommend a website etc we’re I get read up on the process?

thanks again