Fees - Financial Advisors

cfw1994

LCS8079 said:

I have just inherited a pension pot of £400k the ifa I have spoken to wants £20k in fees and an annual fee of £9.5k. I am 40 and these fees seem exorbitant. What are my options? I have no idea what to do with it. Its such a life changing amount I don't want to make a mistake. Please any advice would be appreciated, even if its to tell me that is a normal fee. Its with SJP but will to transfer it with no penalty if there is a better solution. Thanks. 

Another unusual first post here.
Did the SJP advisor tell you they were an IFA?  Did they really describe themselves as "Independent"?
Do what bowlhead suggests, then do please return to tell us more......

dunstonh

LCS8079 said:

I have just inherited a pension pot of £400k the ifa I have spoken to wants £20k in fees and an annual fee of £9.5k. I am 40 and these fees seem exorbitant. What are my options? I have no idea what to do with it. Its such a life changing amount I don't want to make a mistake. Please any advice would be appreciated, even if its to tell me that is a normal fee. Its with SJP but will to transfer it with no penalty if there is a better solution. Thanks. 

SJP are not IFAs.   They are sales reps overring their own product range.      We had a similar case against SJP last year where our charge was £2,500 and SJP wanted to charge £25,000.  That tells you the scale of the differences you can get.     You should either use an IFA or DIY.  Not an FA/sales rep.
Do you understand what an IFA is?
Did the SJP sales rep give you the impression they were independent?

fred246

SJP are normally superior to IFAs in ripping you off but there is nothing stopping IFAs charging you the same or more than SJP.

Albermarle

Assuming everything is straightforward then something like a set up fee of 1 % and an ongoing of 0.7%/0.5% pa could be reasonable. 
Also the charges for the new pension may well be less than the current one .

Mickey666

sandsy said:

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.

As I understand things, the law requires people to get advice but there is no requirement to actually follow that advice.
And quite right too!

fred246

The history of IFAs has been scam after scam. Each time a scam has been stopped they have moved onto another one. The regulators have done a good job but the last scam is fees that they obviously don't want to get involved in. So people are charged thousands of pounds for someone to fill a few forms in. It always intrigues me what the government actually wants. I have always wondered if IFAs charged reasonable prices more people would use them. But do the government want the ordinary citizens being told how to avoid paying taxes? At the moment IFAs as are just parasites on the rich. They help the rich get richer while stuffing their own faces.

cfw1994

Mickey666 said:

sandsy said:

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.

As I understand things, the law requires people to get advice but there is no requirement to actually follow that advice.
And quite right too!

Just beware that not all providers will accept an "insistent" client.....

BritishInvestor

Marcon said:

BritishInvestor said:

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?

If you're buying or selling a property you'd probably shop around for quote to do the conveyancing, and pick your adviser based on a combination of factors which would almost certainly include price. Ditto other service providers. Most professional firms are keen to expand their client base and will, in many cases, be willing to reduce fees within reason if they know the opposition are undercutting them. What's different/so special about an IFA being similarly commercially aware - surely that's exactly what you're looking for? 

"What's different/so special about an IFA being similarly commercially aware - surely that's exactly what you're looking for?"
Agree with this (see point #2), but....

1. Buying a property is a transactional-based undertaking and one could argue is also commoditized, so price is a big factor.
2. There's a difference between being continually undercut by the local "opposition" (in which case fees may need to be looked at) vs reducing fee because someone tries to haggle. 
3. IMO (proper) financial advice (one that involved more than just setting up investments) isn't commoditised (yet) and there is a wide range of service on offer. So while price is important, I think really understanding what you are getting for your money is so much more important.
4. I'm not sure how often people shop around when looking for an adviser (rightly or wrongly) or really understand the fees they are paying (I frequently see people paying >2.5%pa on pretty large investments for someone to visit once a year and discuss fund performance).
5. The established firms that offer a decent service tend to find they are more than busy enough and don't need to discount (or at least that's what they say publicly )

Albermarle

vs reducing fee because someone tries to haggle. 

Some people like to haggle( and MSE encourages it ) and assume the seller ( IFA or other ) has always something in their back pocket to give away if necessary . So despite your logical arguments , some clients will never be happy if you have non negotiable pricing .

BritishInvestor

Albermarle said:

vs reducing fee because someone tries to haggle. 

Some people like to haggle( and MSE encourages it ) and assume the seller ( IFA or other ) has always something in their back pocket to give away if necessary . So despite your logical arguments , some clients will never be happy if you have non negotiable pricing .

Yep, accept that, but it seems a bit used car sales to me