Transfer Fees

magd36

Albermarle said:

magd36 said:

A Financial Advisor is suggesting I move my pension from the current provider to their own fund (basically passive managed fund to actively managed fund). There’s no exit fees. As well as ongoing annual fees they are asking for a one of fee of 3% of total fund to transfer. Is this normal? Would they ask for the same if it was a standard investment I was depositing. Why the charge? Thanks

 If you go to a financial advisor, they have to look into all your finances in detail. Then they have to work out your objectives, plans for the future, risk profile etc . Usually it will include your spouse as well ( if you have one) Then because they are highly regulated, there is a lot of paperwork.
Then finally they will make some recommendations on what would be the best way forward. This can include transferring pensions, but can be many other things as well, such as tax efficiency, planning for when you die,  etc.
If they make unsuitable recommendations you can make a claim against them.
So all that is  really what the 3% is for. The actual transfer of the pension and investing it is a minor cost.

I assume you have had only had a general chat with the advisor and they have suggested one option could be to transfer your pension. However they can not offer this as formal financial advice until you have been through the process above.

It is not mandatory to then have ongoing advice ( with a fee) . You should be able to just have the initial advice.

 I never thought about asking the current provider if they can actively manage but I will now. 

Your current provider will NOT actively manage your pension. That would constitute personal financial advice. 
What @Marcon meant was that your current provider may well have some actively managed investment funds available for you to choose from, but that would be your choice which one(s) to pick.

Caveat here is that some pension providers, do have a financial advice arm. However you would have to go through the same process as detailed above and pay for it of course.

I have been through the whole process. They have given me the advice and fee is only required if I want to proceed.

magd36

dunstonh said:

... The amount is best discussed in monetary terms....

The fee is 5.4k

 There is probably around 6 hours work.

That's £900 per hour ... wow.

Amongst others, they said it was for:

-Money Laundering Checks

-Insurances

-FCA Levies

Unbiased doesn't make recommendations.

Sorry, in their words they "matched" me.

If you use unbiased to make an enquiry, rather than viewing list the companies, then unbiased sell your details as a lead.

What you describe in post 1 is not the actions of an IFA but an FA.

That's interesting. The website states "Find qualified, independent and regulated professionals".

However, I have checked and they are independent. Maybe I described it incorrectly, they are managing the money in another groups funds.

Thank You. Appreciated.

magd36

wjr4 said:

magd36 said:

Billxx said:

Walk away.  This does not seem right to me.  As Marcon said, why is their fund better for you and what are the ongoing charges?

I am going to walk away. I was more interested if a one of fee over and above the ongoing costs was normal.

What was the actual reason you looked for a financial adviser in the first place? What are your objectives? 

To move away from a passive Lifestyle Profile as the performance is very poor and now losing a significant portion of growth as I approach retirement.

dunstonh

That's £900 per hour ... wow.
Amongst others, they said it was for:

-Money Laundering Checks

-Insurances

-FCA Levies

It is very expensive to give advice.  Too expensive but around a third of the fee income goes on regulatory and compliance.   And having staff and offices is not cheap either.    However, a £5400 fee is high for what you mention.  Around half is possible.

<br>Sorry, in their words they "matched" me.

So, that means they sold your details to a firm that was willing to buy them.

Albermarle

magd36 said:

Albermarle said:

magd36 said:

A Financial Advisor is suggesting I move my pension from the current provider to their own fund (basically passive managed fund to actively managed fund). There’s no exit fees. As well as ongoing annual fees they are asking for a one of fee of 3% of total fund to transfer. Is this normal? Would they ask for the same if it was a standard investment I was depositing. Why the charge? Thanks

 If you go to a financial advisor, they have to look into all your finances in detail. Then they have to work out your objectives, plans for the future, risk profile etc . Usually it will include your spouse as well ( if you have one) Then because they are highly regulated, there is a lot of paperwork.
Then finally they will make some recommendations on what would be the best way forward. This can include transferring pensions, but can be many other things as well, such as tax efficiency, planning for when you die,  etc.
If they make unsuitable recommendations you can make a claim against them.
So all that is  really what the 3% is for. The actual transfer of the pension and investing it is a minor cost.

I assume you have had only had a general chat with the advisor and they have suggested one option could be to transfer your pension. However they can not offer this as formal financial advice until you have been through the process above.

It is not mandatory to then have ongoing advice ( with a fee) . You should be able to just have the initial advice.

 I never thought about asking the current provider if they can actively manage but I will now. 

Your current provider will NOT actively manage your pension. That would constitute personal financial advice. 
What @Marcon meant was that your current provider may well have some actively managed investment funds available for you to choose from, but that would be your choice which one(s) to pick.

Caveat here is that some pension providers, do have a financial advice arm. However you would have to go through the same process as detailed above and pay for it of course.

I have been through the whole process. They have given me the advice and fee is only required if I want to proceed.

I think that is pretty unusual, as they have spent a lot of time on you but if you do not go ahead they don't get anything for it .

magd36

Albermarle said:

magd36 said:

Albermarle said:

magd36 said:

A Financial Advisor is suggesting I move my pension from the current provider to their own fund (basically passive managed fund to actively managed fund). There’s no exit fees. As well as ongoing annual fees they are asking for a one of fee of 3% of total fund to transfer. Is this normal? Would they ask for the same if it was a standard investment I was depositing. Why the charge? Thanks

 If you go to a financial advisor, they have to look into all your finances in detail. Then they have to work out your objectives, plans for the future, risk profile etc . Usually it will include your spouse as well ( if you have one) Then because they are highly regulated, there is a lot of paperwork.
Then finally they will make some recommendations on what would be the best way forward. This can include transferring pensions, but can be many other things as well, such as tax efficiency, planning for when you die,  etc.
If they make unsuitable recommendations you can make a claim against them.
So all that is  really what the 3% is for. The actual transfer of the pension and investing it is a minor cost.

I assume you have had only had a general chat with the advisor and they have suggested one option could be to transfer your pension. However they can not offer this as formal financial advice until you have been through the process above.

It is not mandatory to then have ongoing advice ( with a fee) . You should be able to just have the initial advice.

 I never thought about asking the current provider if they can actively manage but I will now. 

Your current provider will NOT actively manage your pension. That would constitute personal financial advice. 
What @Marcon meant was that your current provider may well have some actively managed investment funds available for you to choose from, but that would be your choice which one(s) to pick.

Caveat here is that some pension providers, do have a financial advice arm. However you would have to go through the same process as detailed above and pay for it of course.

I have been through the whole process. They have given me the advice and fee is only required if I want to proceed.

I think that is pretty unusual, as they have spent a lot of time on you but if you do not go ahead they don't get anything for it .

I actually don’t think they spent a lot of time on me. I prepared the majority of the information that they regurgitated to me. They only really focused on transferring my pension (no other suggestions). I’d say 2-3 hours work max, including calls. A disappointing experience.

magd36

dunstonh said:

So, that means they sold your details to a firm that was willing to buy them.

That’s disappointing as it’s not clear on the site. Lesson learned and thanks for the advice.

Beddie

magd36 said:

MX5huggy said:

3% if £20k or 3% of £0.5million? 

There’s some work involved, 3% might be acceptable for a small value if there is no advisor charge as well. 

But I would run a mile, there’s no evidence active is better than passive and even less if active starts 3% down. 

3% of somewhere in between the two amounts you mention. I just wasn’t expecting such a high charge over and above the annual fee. As you say it would have to perform at a decent rate just to recover the initial charge never mind the ongoing fees.

3% is a pretty standard fee that IFAs will charge, usually less if it's a very large sum of money. They don't work for free and do have a lot of regulatory costs as others have said, but that doesn't change the fact it's still quite a large amount. I wouldn't pay it, personally, unless I could see it was definitely in my interests to do so. But then most of us on here know enough about investing to make our own decisions, whereas many do not and value the advice.

dunstonh

3% is a pretty standard fee that IFAs will charge, usually less if it's a very large sum of money. 

Recent FCA figures indicate that 1.8% is the average.

magd36

dunstonh said:

3% is a pretty standard fee that IFAs will charge, usually less if it's a very large sum of money. 

Recent FCA figures indicate that 1.8% is the average.

If 1.8% had been the case for me, the monetary value would have matched my expectation.