IFA Fee - Abridged + full advice

Globelink55

Hi All, I will 56 next March and had received some sensible advice May this year to transfer a pot and consolidate my position. 3% fee which I’m comfortable with. Roll forward to this month and I believe based on my history I should move a final salary DB (joined 1/1/ 98 - left 1/7/2001). The IFA  carried out considerable work and produced a detailed report in May. The IFA is a large business and are now blaming the FCA a for added cost - the CETV is only around £90k but their fee is a non negotiable £8500. Seems abridged advice comes in at £3100+vat possibly to deliver a no. Could any give sensible feedback I’d this is current market price given that a lot of the groundwork has already been done? Or if there are any recommends please PM when you have time. Any help would be greatly appreciated! Stay well, stay safe  

Dazed_and_C0nfused

Are you not willing to be an "insistent" client and move it to a stakeholder or AJ Bell?

Thrugelmir

More likely has nothing to do with the CETV. Its the potential cost of reinstating the benefits that you forego (for the insurer). As you can never return to the pension scheme. Look up how much a similar benefit would cost on the open market. 

Globelink55

Dazed_and_C0nfused said:

Are you not willing to be an "insistent" client and move it to a stakeholder or AJ Bell?

Certainly a possibility but i thought there might be someone here who could recommended a cost affective alternative IFA. I think the current guy is constrained by the rules of a large business 

Globelink55

Thrugelmir said:

More likely has nothing to do with the CETV. Its the potential cost of reinstating the benefits that you forego (for the insurer). As you can never return to the pension scheme. Look up how much a similar benefit would cost on the open market. 

Many thanks, will do - am I right in my understanding that the abridged advice must now be of much greater cost due to FCA regs. I’m not accusing anyone but just seems another add on charg8ng mechanism. Apologies for my ignorance to any IFA’s out there 

Brynsam

Globelink55 said:

Dazed_and_C0nfused said:

Are you not willing to be an "insistent" client and move it to a stakeholder or AJ Bell?

Certainly a possibility but i thought there might be someone here who could recommended a cost affective alternative IFA. I think the current guy is constrained by the rules of a large business 

No - nothing to do with the 'rules of a large business' and everything to do with the draconian approach adopted by the FCA, not least encouraging people to complain about the advice they've received (see https://www.fca.org.uk/consumers/defined-benefit-pension-transfers/advice-checker ) coupled with the massive hike in PI rates. 

xylophone

https://www.ftadviser.com/pensions/2020/10/01/abridged-advice-launches-to-frosty-reception/

What exactly is the point of "abridged advice"?
You would need full advice (whether positive or negative) before you could transfer out?
https://forums.moneysavingexpert.com/discussion/comment/76183176/#Comment_76183176

sandsy

Abridged advice is a new thing so market pricing isn't settled yet. It can only tell you if not transferring is the best thing for you, or if you need to go through full advice before the adviser can make a determination either way. Abridged advice should be cheaper as the adviser doesn't need to do as much if they can identify early on that you're not likely to be suited to a transfer. If they can't determine it after abridged advice, you can then pay the extra amount for full advice. You'd need to do the full advice process if you want to transfer, even if an adviser told you they didn't think it was right for you.

HappyHarry

xylophone said:

https://www.ftadviser.com/pensions/2020/10/01/abridged-advice-launches-to-frosty-reception/

What exactly is the point of "abridged advice"?
You would need full advice (whether positive or negative) before you could transfer out?
https://forums.moneysavingexpert.com/discussion/comment/76183176/#Comment_76183176

Abridged advice can only recommend two options: 
1.  "do not transfer" or
2. "you should take full advice" 

Neither of these would be sufficient for an adviser to sign paperwork saying they had given full advice on a pension transfer. It is more to help those who are not sure if they should proceed to full advice.

*Edit - Apologies, crossed post with sandsy above.

Globelink55

Everyone’s circumstances are different of course, but this makes the advice space clearer - launched a few days ago. (Couldn’t post the link sorry but Aviva launched a low cost service 3 days ago after further checking)
I’m sure others may come up with similar in the near future. My concern was the initial cost of advice on a small pot  from current advisor when they have already written a huge background report only a few months ago 

jamesd

Starting on 1 October the FCA requirements relating to contingent charging (pay only if transfer) took effect.

Firms can charge different amounts for different service packages, for example:

a. full transfer advice, advice on best place to transfer to and advice on investments to use. May be most expensive.
b. full transfer advice but no advice n receiving scheme or investments. Likely to be cheapest.

You might ask for prices for 1 and 2 and also for what they charge for advice on destination or investments  if you're interested in that after the transfer.

The reason for this is that the new ban on percentage charging only applies to the pension transfer context. With a small pot it's likely to be to your advantage to choose the fixed price that includes the least work.

Different firms can have different prices and your value is so low compared to average that the fixed price might include far more for overheads like insurance than makes sense. Shopping around might get a better price.


Quoting from COBS

"6.1A.18  (1) Where the services to be provided in COBS 6.1A.17R include full pension transfer or conversion advice (other than where the only safeguarded benefit involved is a guaranteed annuity rate), the disclosure required under COBS 6.1A.17R must include a personalised charges communication.

(2) The personalised charges communication in (1) must include the  following: (a) the expected amounts payable (in cash terms) for the full pension transfer or conversion advice, and, where applicable, any advice on investments (whether by the firm or any other firm) in connection with the retail client’s pension transfer or pension conversion; 

...
(3) Where the firm (or any other firm) offers different types of ongoing advice and/or services with different charging structures, the firm must include in the personalised charges communication, the charges for each type of ongoing advice and/or service it offers.

...

19.1A.12 ... (2) A firm that charges a client twice for what is, in essence, the same service is likely to be acting inconsistently with Principle 2, Principle 6 and Principle 8. As a result, a firm will be expected to offset the adviser charges paid by a retail client for the provision of abridged advice from the amount it would have otherwise charged that retail client for the provision of full pension transfer or conversion advice."