Clueless pension newb - Is Unbiased the only way to find an IFA?

PirateSwan

Hi experts
I have a question about finding an IFA.
I have some smallish pension pots from when I was self employed and am now thinking of consolidating them, possibly into my current workplace pension.

I haven't the confidence / appetite to go it alone so definitely need an IFA. The IFA I just spoke to was put into contact with me by Unbiased and they only offered me one person so I couldn't compare quotes. The IFA I spoke to said I would be charged 3% of my total pension pot for the advice. Does this sound about right to you?

I did some research online and couldn't really find an answer as to whether 3% is a reasonable fee or not. I also couldn't seem to find any other Unbiased type sites that would put me in touch with alternative IFAs so I could compare what they had to offer.

Is it just a case of ringing random local IFAs and asking them the same questions, or is there an IFA comparison function on MSE maybe? For example MSE recommends London and Country as a mortgage broker so do they recommend any firm for financial services such as pension transfers?

Would appreciate any advice I can be given and I am no spring chicken (am in my 50s) and really need to get this sorted.

Thanks for any advice you can give me

Best wishes

PirateSwan

xylophone

You could try

https://adviserbook.co.uk/

Tick "confirmed independent" and such other specialisms required when the menu comes up on the list.

https://www.moneysavingexpert.com/savings/best-financial-advisers/

eskbanker

PirateSwan said:

I have some smallish pension pots from when I was self employed and am now thinking of consolidating them, possibly into my current workplace pension.

Out of curiosity, what led you to consider this?  I appreciate that you haven't reached a conclusion and are looking for guidance, but even just posting more detail on here might help you towards a decision, e.g. what size are these pensions, what are they invested in and with whom, what are the charges, etc, and the same for your workplace one.

In general, retaining small pots can offer future flexibility but would typically entail a bit more admin, but there may be a range of other factors....

PirateSwan

@eskbanker I figured that if the small pension pots were added to my workplace pension then they would help it "grow" more effectively due to compound interest (the way a savings account does?). Not sure how it works on that respect. Two of the small pensions have about £35k in them (one is a stakeholder pension and the other is a personal pension), and another very small one has £8k. I figured the money would work harder if it was all put into the same pot as my workplace pension. I understood that workplace pension costs were better as they have lower charges due to economies of scale?

Albermarle

You might be able to save on charges by consolidating in one with lower charges, and sometimes there are discounts the more you have in a pension. However investment growth will be unaffected by consolidation per se , although as presumably not all the pensions contain the same investments , then it will depend on the investment(s) that are no longer relevant in the empty pensions and the investment(s) in the pension that you have consolidated into. 
Always be clear it is the investments in the pensions that perform , the pension itself is just an administrative entity.

3% initial fee for an IFA is pretty normal especially as you are talking about relatively small pensions . Normally IFA's are not that interested in anything below £50K or more. 

eskbanker

PirateSwan said:

@eskbanker I figured that if the small pension pots were added to my workplace pension then they would help it "grow" more effectively due to compound interest (the way a savings account does?). Not sure how it works on that respect. Two of the small pensions have about £35k in them (one is a stakeholder pension and the other is a personal pension), and another very small one has £8k. I figured the money would work harder if it was all put into the same pot as my workplace pension.

Combining pots won't deliver more compounding, in terms of the maths, so that's not really a valid rationale - the same would apply to savings accounts, i.e. if you had two £10K accounts both earning 1% interest, the total return would be identical to one £20K account earning 1%!

PirateSwan said:

I understood that workplace pension costs were better as they have lower charges due to economies of scale?

Rather than a generalisation about relative costs, have you validated if this actually applies to the pensions you're looking at?

dunstonh

 Is Unbiased the only way to find an IFA?

Its amongst the worst ways nowadays.

The IFA I spoke to said I would be charged 3% of my total pension pot for the advice. Does this sound about right to you?

What is that in monetary terms?  A lot of firms will have a cap and collar on their charge. Or a tiering of their charges (reducing the percentage with larger amounts).

3% could be expensive or cheap depending on the amount.

Is it just a case of ringing random local IFAs and asking them the same questions, or is there an IFA comparison function on MSE maybe? For example MSE recommends London and Country as a mortgage broker so do they recommend any firm for financial services such as pension transfers?

MSE recommends L&C as a mortgage broker because it has the capacity to handle the business MSE generates for it.  A small broker would not.   That doesn't mean L&C is the best option.  Indeed, a read of the mortgage forum on posts about them may make you wonder.

The vast majority of IFA firms are small local firms with 1-5 advisers with very little internet coverage.    The large ones operate mainly on a restricted basis and/or salesforce basis.   So, you dont really want a large company.

 I understood that workplace pension costs were better as they have lower charges due to economies of scale?

An IFA can do a pension at around 0.28%-0.33% p.a.  Workplace pensions are capped at 0.75%.  If you have a workplace pension at 0.3% then its better in terms of cost but if you have one at 0.5% or 0.75% then it is not.

quantum

dunstonh said:

 Is Unbiased the only way to find an IFA?

Its amongst the worst ways nowadays.

The IFA I spoke to said I would be charged 3% of my total pension pot for the advice. Does this sound about right to you?

What is that in monetary terms?  A lot of firms will have a cap and collar on their charge. Or a tiering of their charges (reducing the percentage with larger amounts).

3% could be expensive or cheap depending on the amount.

Is it just a case of ringing random local IFAs and asking them the same questions, or is there an IFA comparison function on MSE maybe? For example MSE recommends London and Country as a mortgage broker so do they recommend any firm for financial services such as pension transfers?

MSE recommends L&C as a mortgage broker because it has the capacity to handle the business MSE generates for it.  A small broker would not.   That doesn't mean L&C is the best option.  Indeed, a read of the mortgage forum on posts about them may make you wonder.

The vast majority of IFA firms are small local firms with 1-5 advisers with very little internet coverage.    The large ones operate mainly on a restricted basis and/or salesforce basis.   So, you dont really want a large company.

 I understood that workplace pension costs were better as they have lower charges due to economies of scale?

An IFA can do a pension at around 0.28%-0.33% p.a.  Workplace pensions are capped at 0.75%.  If you have a workplace pension at 0.3% then its better in terms of cost but if you have one at 0.5% or 0.75% then it is not.

What makes you say that it's amongst the worst ways nowadays?

Marcon

quantum said:

dunstonh said:

 Is Unbiased the only way to find an IFA?

Its amongst the worst ways nowadays.

The IFA I spoke to said I would be charged 3% of my total pension pot for the advice. Does this sound about right to you?

What is that in monetary terms?  A lot of firms will have a cap and collar on their charge. Or a tiering of their charges (reducing the percentage with larger amounts).

3% could be expensive or cheap depending on the amount.

Is it just a case of ringing random local IFAs and asking them the same questions, or is there an IFA comparison function on MSE maybe? For example MSE recommends London and Country as a mortgage broker so do they recommend any firm for financial services such as pension transfers?

MSE recommends L&C as a mortgage broker because it has the capacity to handle the business MSE generates for it.  A small broker would not.   That doesn't mean L&C is the best option.  Indeed, a read of the mortgage forum on posts about them may make you wonder.

The vast majority of IFA firms are small local firms with 1-5 advisers with very little internet coverage.    The large ones operate mainly on a restricted basis and/or salesforce basis.   So, you dont really want a large company.

 I understood that workplace pension costs were better as they have lower charges due to economies of scale?

An IFA can do a pension at around 0.28%-0.33% p.a.  Workplace pensions are capped at 0.75%.  If you have a workplace pension at 0.3% then its better in terms of cost but if you have one at 0.5% or 0.75% then it is not.

What makes you say that it's amongst the worst ways nowadays?

See https://forums.moneysavingexpert.com/discussion/6572520/a-not-fully-independent-financial-adviser/p1 especially dunstonh's post of 3 December.