Pension Advisor fees

TGP99

Hi, I wonder if someone could tell me if these fees are sensible please?

I'm hoping to retire in a few years and have various pensions most of which are dornmant now. I wanted an advisor to tell me when I could retire and whats best to do with my current pensions.An advisor was recommended and hes prepared a report for a fee and had discussed his ongoing %age of my pension pot which seemed OK.  However when I see the total costs of setup and year on year costs I'm really surpised its so high.

For a £600K pot its £18K to setup and £9K/annun to maintain. Thats all in and includes 1% fee for transfering all my pensions and platform costs etc. It just seems like a crazy amount of money. My risk appetitte is low so theres not much scope for growth and any little growth would seem to get swallowed up in these fees. Finding the process very stressful and not sure what to do

LHW99

So that is a setup fee of 3%, and an ongoing annual fee of 1.5%? It does remind me of a company whose advisors are not independent.

If it is a non-independant FA, then they tend to be sales people, and will be restricted, so only recommend investments from their own investment house, which may not be as good as ones an IFA can recommend.

Can you say the company / what funds you are recommended to invest in? The charges seem high to me, and you would need to be guaranteed a good return to mitigate the fee (and inflation). No one should try to guarantee that.

cloud_dog

Are you sure you are not able to transfer any of the pensions yourself?  Assuming there aren't any guarantees associated with your pensions, and ignoring any Defined Benefit schemes, the process is relatively straightforward. 

A 1.5% ongoing charge for an adviser appears on the face of it relatively extreme, but is this 1.5% made up of adviser fee, DFM (investment manager fee), and platform fee?  Are you able to provide a breakdown of charges?

Most importantly, are you able to confirm that this is an Independent Financial Adviser and not a restricted adviser of some sort?

Albermarle

As said 3% is high on a £600K pot. About half of that would be more reasonable.
With the ongoing fee as the previous poster said, we need more detail of what it includes.

If your needs are relatively straightforward, you could consider handling it all yourself. Obviously some more reading/research would be needed, and DIY finances do not suit everybody. Many of the posters on this forum learnt a lot just by reading this, and the Investments forum regularly.

TGP99

Hi, thanks for coming back. yes, sorry, should have said definately independant.

I'm sure I can transfer the pensions myself, there are no penalties for any of them.

The ongoing fee includes everything, there is about £1K of DFM and platform costs. Its a 50/50 split of conservative protfolio and managed portfolio. There's a 1% fee to transfer the pensions. What appears odd is the year on year costs are applied in advance so initial costs are setup plus ones years worth

Brie

Have you asked to have an hour long consultation for free?  Most IFAs will offer this and will give you general advice based on the information available but won't go into a lot of details.  But this might be sufficient for you to know that you might be able to start taking one of your pensions in 2 years time and then might be able to get them to manage things at X% with certain proviso.  This way you can decide whether to wait to move things around thus saving a couple of years' worth of fees while you gather more information.

Aminatidi

It's always easy to say this when it's someone else's money and they may not feel they have the knowledge or confidence to invest it themselves but £9K/year in fees is one hell of a headwind to overcome.

What are the suggested investments?

TGP99

AIPM Core Alpha 40 & HSBC Global Strategy Conservative portfolio 50/50 split

Aminatidi

Well I've never heard of AIPM Core Alpha but HSBC Global Strategy Conservative is a cheap low cost multi-asset fund and costs 0.17%

There are no end of similar low cost multi-asset funds available so I think I'd be looking at whether you think you need advice (initial and ongoing) and if so whether or not the company you're speaking to look like good value for money.

It looks expensive especially if they're just parking half of it in something you could do yourself for 0.17%.

wjr4

The initial fee is far too high, it should be a maximum of half of that. What is their ongoing fee? You say 1% transfer fee but that doesn’t make any sense. I’d find another firm who will do it for cheaper. Just make sure you’re not tied into that fee already if you’ve signed any forms agreeing to it. They should have told you the fee before providing the report. 

TGP99

It was 1% (as part of initial fee) for every existing pension that got transfered to the new platform, which ended up being all of them. Ongoing costs are platform costs, Fund management fee ~1K (think thats the AIPM managed fund), Fund costs ~4K and ongoing advisor fee ~4K. The initial figure seems massive but my main concern with the ongoing costs are I only need ~30K/Year from it and paying 9K to secure 30K seems a bit counter intuitive