Advice on my pensions advice

BowerBadgers

I need advice on my financial adviser's advice. I have five pensions including my employer one, and asked an FCA-registered IFA to look at them and advise whether I should consolidate them and/or do anything else with them. They carried out an in-depth review of them for £1,500, concluding there was some overlap but they weren't too bad. But they recommended overall that I should switch everything into funds managed by a company they work with - which would involve four charges (platform fee, fund fees, investment manager fee and the IFA fee) - a lot higher than I currently pay. It didn't feel I was getting truly independent advice.

I carried on asking questions about their fees for non-pensions advice, and after about 10 emails, they then said they would charge me another £400 for their time in follow-up queries! I negotiated this down to £225 and will write it off. But I will have paid £1,725 and I'm no further forward in knowing what to do with my pensions. I'm now looking at PensionBee.

Is it standard for an IFA to recommend switching to companies and platforms they work with? Was I naive to hope an IFA would advise switching one or two pensions into one of my others? Is there any adviser who for a small fee would take a superficial look and advise me on a switch?
Thanks in anticipation.

 

DE_612183

Have you contacted Pensionwise? They are free an government backed - not sure how much detail they will give you, but will help you avoid being scammed.

Somebody

When my previous employer was bought out, the new owners used an IFA to advise on a new Group Scheme.  Having set up the scheme (with Royal London), they then had individual consultations with all employees in order to advise on the funds to invest in, rather than default life-styling funds.  

Stemming from this I asked the advisor to look into whether it was worth my while to transfer 2 previous dormant employers schemes into this new scheme, for which they charged £250 each when I did transfer, after doing analysis reports on how the old schemes did vs the new.  The £500 came out of the funds transferred.

eskbanker

BowerBadgers said:

But they recommended overall that I should switch everything into funds managed by a company they work with - which would involve four charges (platform fee, fund fees, investment manager fee and the IFA fee) - a lot higher than I currently pay. It didn't feel I was getting truly independent advice. 

Are you assuming that higher cost equates to a less desirable solution, i.e. you're looking for 'cheap' rather than 'suitable for your objectives'?  Obviously nobody on here knows what those objectives are (or any details of your existing pensions, or wider financial circumstances, etc), but if your rationale for unease with the recommendation is a cost increase then that seems superficial.

I'm not defending the IFA here though, and it's not impossible that they're not acting in the client's best interests, but just pointing out that there isn't actually any evidence of that from what's been posted so far....

BowerBadgers said:

Was I naive to hope an IFA would advise switching one or two pensions into one of my others? 

If you felt that doing this would be sensible, did you put that forward for consideration, or at least ask why the recommended action was considered better?

dunstonh

 which would involve four charges (platform fee, fund fees, investment manager fee and the IFA fee) - a lot higher than I currently pay. It didn't feel I was getting truly independent advice.

You would expect to see platform, fund, discretionary (where being used) and IFA fees split out.   Cost of that doesn't impact on independent status.

I carried on asking questions about their fees for non-pensions advice, and after about 10 emails, they then said they would charge me another £400 for their time in follow-up queries! 

If you have yet to employ them or you are asking fore hours in time then that doesn't sound unreasonable.    

But I will have paid £1,725 and I'm no further forward in knowing what to do with my pensions. I'm now looking at PensionBee.

Pensionsbee is more expensive than an IFA-arranged solution on a similar basis.  It is also more limited than a platform-based solution.

Costs are a secondary concern. Not primary.  Suitability is primary.    Low cost doesn't make it most suitable.

Is it standard for an IFA to recommend switching to companies and platforms they work with? 

I suspect are using an IFA but are misunderstanding the relationship of an IFA and the companies they recommend

Yes, it is normal and expected for whole of market solutions to be used when using an IFA.   Those providers and platforms supply their data in a way that meets FCA regulations for distribution via advisers.  Providers that do not offer their product via the whole of market do not supply data that meets advice requirements.

However, any pension transfer should be justified.  It cannot be on whim.   

 Was I naive to hope an IFA would advise switching one or two pensions into one of my others?

That question cannot be answered without knowing the details used in the research and analysis as it is very specific and personal.

I have dozens of cases on the go at the moment but one has 7 pensions and all 7 are being consolidated into one with ample justification.  However, another has 5 pensions but we are only consolidating 3 of them as two cannot be justified to move due to existing benefits that are worth keeping.

Is there any adviser who for a small fee would take a superficial look and advise me on a switch?

Yes and No.   An IFA can and will do that.  However, it cannot be superficial.   Advice is advice.   There isn't a "superficial" or "maybe right but I have only looked superficially" allowance.
 
And in reality, what use is superficial advice?     

Albermarle

But they recommended overall that I should switch everything into funds managed by a company they work with - which would involve four charges (platform fee, fund fees, investment manager fee and the IFA fee) - a lot higher than I currently pay. 

There are lots of pension/investment platforms that are designed to work directly with IFA's. Each IFA will have a preference for some over others, due to things like more modern software, more reactive responses and they will be more familiar with the quirks of ones they use regularly. So it is easier for them to consolidate a clients pensions into a provider they know and work with every day. However this is really only an admin issue, and what is more important is the portfolio of investment funds chosen as suitable for you.

The IFA can do this, or they sometimes outsource/delegate the actual investing to a DFM/investment manager as in your case.

Inevitably all this will tend to cost more than a standard pension ( but not always ) but you are getting professional advice so you would expect it to be more expensive ( although costs can vary quite a lot)

Otherwise you could say to the IFA, I want to still want to manage/consolidate the pensions myself, but will pay you to offer some initial advice on consolidation and investment choices. This appears to be a less popular route, as the IFA is not getting ongoing fees, and the client still has to do some of the legwork and probably has to repeat the process every few years.

 Is there any adviser who for a small fee would take a superficial look and advise me on a switch?

The adviser is on the hook legally for any bad advice given. So they will not offer advice without knowing all about you and your finances. Plus documenting everything in case of future comeback.

The alternative is to gain knowledge in this area and DIY your finances/pensions, as many on this forum do.

xylophone

Is it possible to transfer your "old" pensions into your current workplace pension?

If so, is this worth considering from the point of view of retirement plans, costs and convenience?

Presumably all of the old plans are Defined Contribution and have no safeguarded benefits?

Had you considered consolidating all of them into a SIPP?

https://www.moneysavingexpert.com/savings/cheap-sipps/

Are you happy about choosing your own investments?

 Or had you considered eg Vanguard with a Target Retirement option?

https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds


Assuming that you are over 50, book an appointment with Pension Wise for guidance on pension access.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

Marcon

BowerBadgers said:

Was I naive to hope an IFA would advise switching one or two pensions into one of my others? 

 

Coming on to a public forum to check on advice given to you by a regulated individual who has access to all the relevant facts (whereas nobody here has access to any of that) is worrying. 

Not naive but possibly a bit short-sighted/jumping the gun in terms of the possible outcome. Depending on the instructions you gave to the IFA, doing what you 'hoped' may or may not have met what you have said your objectives are. Sometimes having the lot in one place - and possibly a completely new place - will more closely align with what you have said you want to achieve.

As suggested above - have you asked the IFA? They are best placed to explain themselves and answer your questions, but it's not unreasonable that they would charge for doing so.

BowerBadgers

eskbanker said:

BowerBadgers said:

But they recommended overall that I should switch everything into funds managed by a company they work with - which would involve four charges (platform fee, fund fees, investment manager fee and the IFA fee) - a lot higher than I currently pay. It didn't feel I was getting truly independent advice. 

Are you assuming that higher cost equates to a less desirable solution, i.e. you're looking for 'cheap' rather than 'suitable for your objectives'?  Obviously nobody on here knows what those objectives are (or any details of your existing pensions, or wider financial circumstances, etc), but if your rationale for unease with the recommendation is a cost increase then that seems superficial.

I'm not defending the IFA here though, and it's not impossible that they're not acting in the client's best interests, but just pointing out that there isn't actually any evidence of that from what's been posted so far....

BowerBadgers said:

Was I naive to hope an IFA would advise switching one or two pensions into one of my others? 

If you felt that doing this would be sensible, did you put that forward for consideration, or at least ask why the recommended action was considered better?

Thank you - in a way that helps put some perspective on it for me. 
Re your second question: Yes, I did, and initially the IFA advised me to switch one into another, but a week later told me not to because they'd found out the range of funds wasn't as wide as they first thought.

BowerBadgers

dunstonh said:

 which would involve four charges (platform fee, fund fees, investment manager fee and the IFA fee) - a lot higher than I currently pay. It didn't feel I was getting truly independent advice.

You would expect to see platform, fund, discretionary (where being used) and IFA fees split out.   Cost of that doesn't impact on independent status.

I carried on asking questions about their fees for non-pensions advice, and after about 10 emails, they then said they would charge me another £400 for their time in follow-up queries! 

If you have yet to employ them or you are asking fore hours in time then that doesn't sound unreasonable.    

But I will have paid £1,725 and I'm no further forward in knowing what to do with my pensions. I'm now looking at PensionBee.

Pensionsbee is more expensive than an IFA-arranged solution on a similar basis.  It is also more limited than a platform-based solution.

Costs are a secondary concern. Not primary.  Suitability is primary.    Low cost doesn't make it most suitable.

Is it standard for an IFA to recommend switching to companies and platforms they work with? 

I suspect are using an IFA but are misunderstanding the relationship of an IFA and the companies they recommend

Yes, it is normal and expected for whole of market solutions to be used when using an IFA.   Those providers and platforms supply their data in a way that meets FCA regulations for distribution via advisers.  Providers that do not offer their product via the whole of market do not supply data that meets advice requirements.

However, any pension transfer should be justified.  It cannot be on whim.   

 Was I naive to hope an IFA would advise switching one or two pensions into one of my others?

That question cannot be answered without knowing the details used in the research and analysis as it is very specific and personal.

I have dozens of cases on the go at the moment but one has 7 pensions and all 7 are being consolidated into one with ample justification.  However, another has 5 pensions but we are only consolidating 3 of them as two cannot be justified to move due to existing benefits that are worth keeping.

Is there any adviser who for a small fee would take a superficial look and advise me on a switch?

Yes and No.   An IFA can and will do that.  However, it cannot be superficial.   Advice is advice.   There isn't a "superficial" or "maybe right but I have only looked superficially" allowance.
 
And in reality, what use is superficial advice?     

Thank you. This is all useful and actually quite reassuring. I felt higher charges would eat into my pension more than lower and didn't have confidence their scheme would outperform my current pensions. On the £400 extra - I had already paid them £1,500 for the report so thought follow-up discussions were reasonable. 

BowerBadgers

Albermarle said:

But they recommended overall that I should switch everything into funds managed by a company they work with - which would involve four charges (platform fee, fund fees, investment manager fee and the IFA fee) - a lot higher than I currently pay. 

There are lots of pension/investment platforms that are designed to work directly with IFA's. Each IFA will have a preference for some over others, due to things like more modern software, more reactive responses and they will be more familiar with the quirks of ones they use regularly. So it is easier for them to consolidate a clients pensions into a provider they know and work with every day. However this is really only an admin issue, and what is more important is the portfolio of investment funds chosen as suitable for you.

The IFA can do this, or they sometimes outsource/delegate the actual investing to a DFM/investment manager as in your case.

Inevitably all this will tend to cost more than a standard pension ( but not always ) but you are getting professional advice so you would expect it to be more expensive ( although costs can vary quite a lot)

Otherwise you could say to the IFA, I want to still want to manage/consolidate the pensions myself, but will pay you to offer some initial advice on consolidation and investment choices. This appears to be a less popular route, as the IFA is not getting ongoing fees, and the client still has to do some of the legwork and probably has to repeat the process every few years.

 Is there any adviser who for a small fee would take a superficial look and advise me on a switch?

The adviser is on the hook legally for any bad advice given. So they will not offer advice without knowing all about you and your finances. Plus documenting everything in case of future comeback.

The alternative is to gain knowledge in this area and DIY your finances/pensions, as many on this forum do.

Thank you - everything you say is useful, especially about platforms and software. I did offer to pay one-off fees for that advice, as you suggest, but they withdrew the initial advice because Fidelity didn't have the range of funds the adviser had initially thought. 
It's reassuring about legal obligations.