Paying my FA a fixed fee when I wont to topup my pension?

lombrozo

My FA set up a Novia SIPP for me and I have transferred my existing pension across.

I paid a fixed fee for him to do this and he also, of course, makes 1% on the total, annually.

I want to transfer some more money in to the pension, but my FA wants to charge another (not trivial) fixed fee to do this - he says, pbecause the pension is 'regulated', he needs to do a load of paperwork again and 'advise' almost as if he was setting up the pension from scratch again...

Is this normal? It seems a bit ridiculous to me that I can't easily top up the pension myself?

dunstonh

I paid a fixed fee for him to do this and he also, of course, makes 1% on the total, annually.

Why "of course"?   When people select to have ongoing servicing, the most common fee is 0.50%.  1% tends to be the fee level for lower values (broadly, many firms taper the ongoing charge as the value goes through certain tiers).    A lot of people with lower values don't need ongoing servicing.  So, they don't pay for it at all.

That said, Novia is often used by wealth management IFAs and FAs.   They tend to be 1% across the board and are usually the most expensive ways to get advice.

I want to transfer some more money in to the pension, but my FA wants to charge another (not trivial) fixed fee to do this - he says, pbecause the pension is 'regulated', he needs to do a load of paperwork again and 'advise' almost as if he was setting up the pension from scratch again...

Is this normal? It seems a bit ridiculous to me that I can't easily top up the pension myself?

If the transfer was a DB pension, then yes it would be normal.  it is not a routine transaction.  If the transfer is from a money purchase pension with no safeguarded benefits then it would not be normal.   If it's just a routine cash top up and not a transfer then again, no charge when you have ongoing servicing.     Most firms with ongoing servicing do tops with no initial charge.   It's one of the key reasons for having ongoing servicing.

The FA is being disingenuous if it is a cash top-up (and not a transfer). The FA  doesn't have to do anywhere near the sale level of work as they would from scratch.  A pension top-up to a pension already advised by the adviser and is current (i.e. not a legacy one from 20 years ago but one still available for new business) and you being an ongoing servicing client (so understanding of your situation will already be on file and may only need a few updates on any changes) can be turned around in about 60-90 minutes.

Charging you for basic routine transactions when you are paying for ongoing servicing is greedy.   And if your fund is large, then 1% is also greedy.

Albermarle

I want to transfer some more money in to the pension, but my FA wants to charge another (not trivial) fixed fee to do this 

Was this potential charge made clear when you signed the agreement with the FA ?

jimjames

Paying 1% for a service that isn't doing much for you seems a very big drag on your retirement funds. Can you go elsewhere for this pension transfer to avoid the costs from this adviser? Or if no longer needed can you cancel the ongoing arrangement?

lombrozo

dunstonh said:

I paid a fixed fee for him to do this and he also, of course, makes 1% on the total, annually.

Why "of course"?   When people select to have ongoing servicing, the most common fee is 0.50%.  1% tends to be the fee level for lower values (broadly, many firms taper the ongoing charge as the value goes through certain tiers).    A lot of people with lower values don't need ongoing servicing.  So, they don't pay for it at all.

That said, Novia is often used by wealth management IFAs and FAs.   They tend to be 1% across the board and are usually the most expensive ways to get advice.

I want to transfer some more money in to the pension, but my FA wants to charge another (not trivial) fixed fee to do this - he says, pbecause the pension is 'regulated', he needs to do a load of paperwork again and 'advise' almost as if he was setting up the pension from scratch again...

Is this normal? It seems a bit ridiculous to me that I can't easily top up the pension myself?

If the transfer was a DB pension, then yes it would be normal.  it is not a routine transaction.  If the transfer is from a money purchase pension with no safeguarded benefits then it would not be normal.   If it's just a routine cash top up and not a transfer then again, no charge when you have ongoing servicing.     Most firms with ongoing servicing do tops with no initial charge.   It's one of the key reasons for having ongoing servicing.

The FA is being disingenuous if it is a cash top-up (and not a transfer). The FA  doesn't have to do anywhere near the sale level of work as they would from scratch.  A pension top-up to a pension already advised by the adviser and is current (i.e. not a legacy one from 20 years ago but one still available for new business) and you being an ongoing servicing client (so understanding of your situation will already be on file and may only need a few updates on any changes) can be turned around in about 60-90 minutes.

Charging you for basic routine transactions when you are paying for ongoing servicing is greedy.   And if your fund is large, then 1% is also greedy.

Thanks for your helpful reply!

What's a DB pension? Also, what do you mean by 'transfer' and 'cash top-up'?

I guess I'm not disputing the initial fixed fee for transfer of my original pension to Novia (I checked with another FA and the fixed fee was similar, if not slightly less...). It's the additional fixed fee he's charging for top-ups that I find odd.

The 1% - my fund isn't particularly large and I chcked elsewhere and the 1% is similar also...

I still have my original Aviva pension account, albeit pretty much emoty now. I checked and they're not charging anything for me to top it up...

dunstonh

What's a DB pension? Also, what do you mean by 'transfer' and 'cash top-up'?

DB pensions are defined benefit.    That type of pension requires specialist permissions and involves significantly more work and risk than a DC (defined contribution) pension.      You mentioned transfer.  In pension terms a transfer is moving one pension to another.     Whereas a top up from cash (e.g. current account) is not a transfer.   

 guess I'm not disputing the initial fixed fee for transfer of my original pension to Novia (I checked with another FA and the fixed fee was similar, if not slightly less...). It's the additional fixed fee he's charging for top-ups that I find odd.

You shouldnt be looking at FAs.  You should be looking at IFAs.   FAs and wealth managers are typically more expensive (some IFAs operate a wealth manager model as well).   

The 1% - my fund isn't particularly large and I chcked elsewhere and the 1% is similar also...

Checking one or two alternatives is not enough.  Especially if you are picking FAs to get pricing from rather than IFAs.  If you have upto approx £200k then 1% is ballpark.  If you have say £500k then 0.5 would be more typical.

I still have my original Aviva pension account, albeit pretty much emoty now. I checked and they're not charging anything for me to top it up...

Most providers have no initial charges on their modern contracts.   On their legacy contracts, they may be hidden (e.g. bid/offer spreads).

bostonerimus

lombrozo said:

My FA set up a Novia SIPP for me and I have transferred my existing pension across.

I paid a fixed fee for him to do this and he also, of course, makes 1% on the total, annually.

I want to transfer some more money in to the pension, but my FA wants to charge another (not trivial) fixed fee to do this - he says, pbecause the pension is 'regulated', he needs to do a load of paperwork again and 'advise' almost as if he was setting up the pension from scratch again...

Is this normal? It seems a bit ridiculous to me that I can't easily top up the pension myself?

This sort of behaviour give IFAs a bad name. Your IFA really is squeezing you. Why can't you do the deposit to the SIPP yourself. If the IFA has set thing up so you can't I would move your money asap and find another IFA. 

lombrozo

dunstonh said:

DB pensions are defined benefit.    That type of pension requires specialist permissions and involves significantly more work and risk than a DC (defined contribution) pension.      You mentioned transfer.  In pension terms a transfer is moving one pension to another.     Whereas a top up from cash (e.g. current account) is not a transfer.   

You shouldnt be looking at FAs.  You should be looking at IFAs.   FAs and wealth managers are typically more expensive (some IFAs operate a wealth manager model as well).   

Checking one or two alternatives is not enough.  Especially if you are picking FAs to get pricing from rather than IFAs.  If you have upto approx £200k then 1% is ballpark.  If you have say £500k then 0.5 would be more typical.

Most providers have no initial charges on their modern contracts.   On their legacy contracts, they may be hidden (e.g. bid/offer spreads).

Thanks again!

My guess is it's NOT a DB pension then.

Yeh I'm talking about topping up with cash.

Yeh the pension is less than £200k, so 1% is right I guess (though Novia charge their own fees which equate to an additional 1.1% BTW).

I don't know if he's a FA or an IFA - how do I tell?

dunstonh

Yeh the pension is less than £200k, so 1% is right I guess (though Novia charge their own fees which equate to an additional 1.1% BTW).

Novia's platform charge is not 1.1%.   
The charges are normally broken down by 
Platform charge  (Novia in this case)
Investment fund charges
DFM charge (if a DFM is used - wealth management companies tend to use a DFM.  However, adviser firms do not)
FA or IFA charge
add them up and you have your bottom line.

I don't know if he's a FA or an IFA - how do I tell?

IFAs will make a point of highlighting their independence and ability to use the whole of market.  FAs will usually try and brush it under the carpet and move on quickly.   Some will use other words to make it sound like they are independent without saying that they are.

Yeh I'm talking about topping up with cash.

That would be a top up then.   And if the adviser is not doing top ups under their ongoing servicing agreement then you are wasting your money with that advice firm.  Time to move on to another.   They are taking the P.

numbersrule

My FA charges 2% fixed fee for cash additions and the total annual fee for the DIM type management is about 1.5%.
However, when you consider that the 2% is a one off, then my pension will live on into retirement for say 20 years, so 2% divided by 20 is only 0.1% extra equivalent on the annual fee.
When you also consider that the mix of funds I gain access to via this FA is typically resulting in growth of about 2.25% more than 'average equity growth based on comparisons with well known stock indices, this means that I am saving money compared with the riskier option of trying to DIY it via the 'popular' online platforms.

Grumpy_chap

lombrozo said:

My FA set up a Novia SIPP for me and I have transferred my existing pension across.

I paid a fixed fee for him to do this and he also, of course, makes 1% on the total, annually.

I want to transfer some more money in to the pension, but my FA wants to charge another (not trivial) fixed fee to do this - he says, pbecause the pension is 'regulated', he needs to do a load of paperwork again and 'advise' almost as if he was setting up the pension from scratch again...

Is this normal? It seems a bit ridiculous to me that I can't easily top up the pension myself?

I also have a NOVIA SIPP and, earlier this year, through a thread on this site, I learned that the fees I was paying were higher than they needed to be. 

I was driven by my FA refusing (ridiculously pricing out) a task I needed which then got me talking to Novia directly who said the task was a "two-clicks process" and would take moments.  Following challenging the IFA, Novia actually then suggested just changing IFA to one that would give better service.

This was a big learning curve for me, as the fee is not just whatever percent the IFA charges, but there are several elements:

• Novia fee
• DFM (Discretionary Fund Manager) fee
• IFA fee

In my case, all of these before were shrouded in mystery.

I have now changed to a different IFA, so I have clear demonstration of what each of the fees are.  The Novia fee with the new IFA is actually lower and the DFM plus IFA fee is structured differently, but lower in total.  Overall a big win for me in terms of fees, plus all fees are now structured to tier down as the fund value increases.

The new IFA moved me to a different investment fund which has (historically) out-performed the previous fund - together with an explanation that the previous fund was more suited to a higher value portfolio than I have.  The new IFA was very keen to secure my business so did the "onboarding advice" (including reviewing my risk appetite) without charging a fee.  Finally, I now have online access to my Novia account so can check things immediately without needing to bother the IFA (better for me and him).

My old IFA was very labourious in everything, always by hard copy wet-signature paperwork through the post, and never on e-mail or any kind of online functionality.  Possibly creating extra work to justify their extra fees, making it look harder than it really is.  The new IFA makes everything all so much easier and takes instructions over the phone, online portal or e-mail.  Anything is confirmed back to me before action, just a short e-mail confirmation.  I also assume there would be limits on what the IFA would act based on e-mail (i.e. anything out-of-the-ordinary would be double-checked) - indeed, on a couple of occasions, the IFA has called to check that my e-mail request has been understood correctly.

The first thing the OP needs to do is to understand the charges and fees for the current arrangements and then assess whether a change of IFA can deliver better outcome without necessarily changing the SIPP-administrator (unless switching from Novia is the most appropriate route for the OP's scenario).

Good luck OP.