We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Financial advisor value vs cost
Options

facelikebambi
Posts: 42 Forumite


In 2013, I had an independent advisor review my private pension plan. It had a transfer value of £50k.
On his advice, it was transferred to an LV Flexible Transitions Account and split 50% between two funds. His fee at the time was £2250 from the pension, and ongoing management and review fee of 0.5%
Since then, I've been making contributions of £150 per month (£187 with tax relief). Not much, I know.
By 2020, the fund valuation was £71k. I get a basic valuation report every year, no changes have been made to the plan or fund allocation.
Now my advisor's employer has been taken over by a different wealth management company, and he tells me he will have to double his fee to 1% to stay on. In return, he has identified a new plan/fund split that "should perform better in the longer term". Interesting that this is his first intervention for 8 years?
So by my simple reckoning, 1% advisor fee will be £700pa on a plan with contributions of £1800pa. That feels steep to me.
I'm considering increasing my contributions to £250 per month, and I'm the first to admit that I'm not investment savvy. Should I be shopping around for another advisor? Any opinions welcomed - thanks!
0
Comments
-
From 31 December 2012 you had the right to remove an ongoing adviser charge (OAC) from your plan by contacting your provider if you were not satisfied with their service.
You have said you get a report once a year, so no face to face meeting to at least discuss investment performance even if the fund choice is not changed.
Complain stating they have not justified 0.5% the new adviser is responsible for the old adviser. If they say no go to FOS.
Consider managing the fund yourself so contact your provider to remove that 0.5% fee.
Advisers are supposed to demonstrate that the OAC is justified and just sending an automated report is insufficient.
Conclusion the 1% fee as you have correctly deduced is daylight robbery. Good luck.1 -
Had you considered transferring the pension to one which you can manage yourself?
https://www.goodreads.com/book/show/35653148-diy-pensions
https://monevator.com/low-cost-index-trackers/
Examples
https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account
https://monevator.com/using-vanguard-lifestrategy-funds-life/
https://www.fidelity.co.uk/pension-overview/fidelity-sipp-affiliates/?utm_source=aw&utm_medium=affiliates&utm_campaign=pi_sipp&utm_content=Jun_19&awc=9993_1614172520_92400188516aa63159d90a84651b0831
Are you a member of your current employer's scheme?2 -
By 2020, the fund valuation was £71k. I get a basic valuation report every year, no changes have been made to the plan or fund allocation.Its a very basic plan that requires little ongoing maintenance. IMO, it's not a very good option but I emphasise that is my opinion.Interesting that this is his first intervention for 8 years?What do you mean by intervention. For plans set up from 2013 onwards, it is mandatory for ongoing servicing to be carried out as per an agreed schedule. From about 3rd Jan 2018, MIFIDII required "at least annually". MIFIDII did not apply to pensions but a later amendment brought pensions in line with MIFIDII. So, for the last few years, on post 2012 business, you should have been getting annual reviews. And prior to that reviews every 1-3 years or thereabouts.
If those reviews have not taken place, then you can ask for a return of fee taken over that period. if the reviews have taken place but were "no change", then you cannot.So by my simple reckoning, 1% advisor fee will be £700pa on a plan with contributions of £1800pa. That feels steep to me.Linking your contributions to a fee based on a fund value isn't a viable comparison. It just tells us that you are not paying in much. The charge is against the value of the fund. Not against the contributions.I'm considering increasing my contributions to £250 per month, and I'm the first to admit that I'm not investment savvy. Should I be shopping around for another advisor?For £70k, a 1% charge is ballpark. It would be my charge on such a small value. Although in reality, I wouldn't offer ongoing servicing on £70k unless you are building up funds quickly. So, there isn't really an issue with the amount. There is a potential issue regarding the value you are getting for it. If the adviser is not controlling the investment strategy and you are not finding their planning service of any use to you then you are not getting good value for money and you should end the ongoing service (which you are free to do at any time). If the adviser was controlling the investment strategy then its different as there is clearly work being done and a potential benefit to you. Or if you rely on the adviser for advice on a regular basis, then its something obtained in return for the fee.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.1 -
I pay 1% annually too, get an annual review to check the investments are right, I can talk to them for advice about changing investments etc. Current pension is a bit over yours and I pay more into it, though I have probably 25 years before I will be able to get any of it to replace a salary!1
-
If the plan the IFA put you on was good quality and met your requirements then I don't see why being taken over by a wealth management company changes that strategy (apart from maybe a way of getting more money out of you).
Personally though I would suggest considering a move to something like Vanguard and select similar/equivalent funds (you don't say what your two finds are). Alternatively you may be able to continue on with the same funds, in the meantime, and just tell the IFA he is no longer needed. Then start learning how best to go DIY. It could save you a significant amount of money.I don't care about your first world problems; I have enough of my own!1 -
HOWEVER
You have to write to the Provider to remove 0.5% OAC if you object to the existing charge.1 -
We all know that when a company has "Wealth" in the title it means it's more expensive for customers!0
-
TVAS said:HOWEVER
You have to write to the Provider to remove 0.5% OAC if you object to the existing charge.
If you only contact the provider, you can still end up liable for a fee which you would have to pay directly.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
facelikebambi; financial adviser value v cost
I'm sorry to say, your financial adviser has treated you with contempt for eight years.
You started with £50k, and you have added £18k (with tax relief) in regular payments. Your financial adviser has added £3k.
During that time, he has provided you with the minimum annual review as described upthread. His new found interest in you no doubt springs from his new employers - as well as doubling his fee, he is probably financially incentivised to move your investment too.
The last eight years have been good ones for investors. Two thirds of the very modest increase in this case has ended up with the financial adviser.
Just get rid of him, he's done enough damage.
Farfetch - you'd be plumb mad to retain your financial adviser on those terms for twenty five years, in my opinion.2 -
From the username I assume the OP is female...
Whether to pay a 1% advisor charge is a big decision, but deciding to DiY implies much more siginificant decisions....
If the OP goes to Vanguard and picks a VLS fund she needs to decide which one of the 5. If you look at the average annual returns over the past 5 years the difference between adjacent VLS funds is very close to 2%/year. So twice as much money is at stake compared with deciding whether to DiY or not with even a very simple investment. However people on this forum seem to regard choosing a VLS as of marginal significance.
If the OP is happy and feels able to do the appropriate research and make such decisions she should DiY. If not, looking at those figures choosing to stay with the current advisor is not foolish though it could be worthwhile looking at other local IFAs to see if there is someone cheaper.1
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 350.9K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.5K Spending & Discounts
- 243.9K Work, Benefits & Business
- 598.8K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards