Zurich Pension Charges

gm0

The trick is that advice doesn't have to be better on "potential upside" and "cost" simultaneously.  Potential for improved outcomes from a better portfolio can be traded off against moving you from "cheaper" (where no fees would be generated) to "more expensive" where conveniently they are


For the adviser the recommended portfolio on the new platform needs to fit the goals/risk stuff and helpfully not be available cheaper on the existing platfom where they make nothing.  The fact that quite or very similar things could perhaps be done on the existing platform at a lower cost to you and no fee to them does not matter provided the paperwork is done right.  The selection for future portfolio being defensible to your category - assets and risk is what matters.  Some advisers are genuine and client focused and some aren't.  Best case they won't sell you something you shouldn't buy.  Others will take the caveat emptor line.

Possible jam tomorrow can reasonably trump increased cost and packaged in the form of "suitable advice" be audited against your goals and risk attitude to do this

Customer subjective opinions vary wildly on this from - it was great - it helpfully improved my portfolio and I am optimistic about the future - right across to "Now I understand I realise that they made out like bandits at my expense".

gm0

Let us pick apart the example

Annual charge 0.20% (fine - platform fee not atypical - nothing much wrong here)

Advisor charge ongoing of 1% (High if pot reasonably large and especailly high given a DFM is used) - 0.5% more typical)

Discretionary Fund manager charge of 0.36% (Most don't need or want one of these - extra layer of charges for what exactly ?).  Crucially if the DFM does part of the advisors work why do you pay for it twice.

Advisor charge Initial of 1.5% (In the zone whether or not you think it's reasonable)

Plus various Investment Manager Charges quoted as well. (Underlying fund charges are ever present regardless of how you get to hold them - anything from ~0.05% - ~1.5% depending upon what it is).

Through an MSE benchmarking lens - overcharging by about *0.86% pa. Call it what you like. 

*Now the "product" offered with the DFM is "different" so it's NOT all strictly overcharging unless that difference turns out to not to be meaningful to you and your investment performance.  A pre-sales net fees backtest comparison of performance (for you) with simpler options would help with that.  Strangely people are often reluctant to produce these comparisons - you would think with the "superior performance" of the more sophisticated product they would be all over it. But no.

The adviser outsourcing the work to the DFM and still picking up 1% is less defensible. But it's just a price and you accept it or you don't.

So to be scrupulously fair - somewhere between 0.5% and 0.86% too much annually.

Why did they do this.  Were you offered "rack rates" because your case didn't really interest them unless you paid top dollar.  Or was it just meat and potatoes premium pricing / highway robbery (to taste).  We shall never know.  ~50k to ~90k extra over a 40 year retirement (on a 500k initial pot)

Bianchiintenso

gm0 said:

Were you offered "rack rates" because your case didn't really interest them unless you paid top dollar.  Or was it just meat and potatoes premium pricing / highway robbery (to taste).  We shall never know.  ~50k to ~90k extra over a 40 year retirement (on a 500k initial pot)

As you say we will never know, but if that's the case why was an IFA steering me in their direction?
hey ho, you live and learn

JohnWinder

Bianchiintenso said:

... but if that's the case why was an IFA steering me in their direction?
hey ho, you live and learn

They're human, like the rest of us, and make mistakes too. And they're not all genius, indeed probably on average only as smart as you or I; and they probably don't have your interests at heart quite as keenly as you do, but then who does?

Bianchiintenso

JohnWinder said:

Bianchiintenso said:

... but if that's the case why was an IFA steering me in their direction?
hey ho, you live and learn

They're human, like the rest of us, and make mistakes too. And they're not all genius, indeed probably on average only as smart as you or I; and they probably don't have your interests at heart quite as keenly as you do, but then who does?

Yes, after reading back through all of the documentation I’m inclined to think the interests of the IFA were taking priority over the client in this instance.

EnD1221

Hello. Came accross this after getting my pension statment today. i to have an old AD pension and still pay into it. tbh i've never done anything of mush with it at all but 50 so assume the time is right to look at. from what i read would i be better of not paying in any more and just letting it run ?? last year paid in 4k5 gross and charges were  fund and transaction cost £850 & regular product charge £600 so 1k4 total so i guess thats not good then ??. but then i would'nt know what was ?? but then mine also says about this annual charge 1% and refund of annual charge 1% so does the £600 go back to me ?? also what is it 1% off again i cant work that out either. Any help or pointers much appriciated. 

Bianchiintenso

Yes I think dunston was helpful in explaining that the 1% Charge is in effect cancelled out, and overall the legacy AD charges are relatively cheap plus performance is reasonable, the main reason to leave Zurich is that they do not allow drawdown on their platform so you will need to move to sipp or another provider when the time comes.