M&G Wealth / Openworks Pension Advisor charges

marky9074

Hi there,

I've had a personal pension for a long time with what was Openworks (now M&G Wealth Platform) made up from lots of consolidated pots and realised a year or so ago that the advisor charges were what I thought was high. The platform and service charges together were over 1% and the advisor charges also 1%. So basically over 2% all in all.

Now, I questioned this and was told that I could reduce the advisor charges by not having them available for on demand financial advice, and agreed to this (it appears I signed a form saying they would be 'between 0.5% and 1%'). However, looking at my charges over the last two years I see that the advisor fee did not go down, and I didn't get any annual review or any financial advise. So basically I paid the 1% fee but didn't get the service.

So I questioned this again, and was told that this was about the time that the fee with support/advise had gone up to 1.25% so 1% was less than I 'was' going to get charged......

I now have a company pension and this too is around 2% in fees. I appreciate that a fully managed fund (and not one just pegged to one product) is going to attract a larger advisor fee, but I am seeing places like https://www.profilepensions.co.uk/ suggesting that anything over 1% total fee is considered an expensive pension.

Would be great to hear from others on the M&G platform to see if they believe they are being charged too much in advisor fees.

Cheers,

Mark

dunstonh

The platform and service charges together were over 1% and the advisor charges also 1%. So basically over 2% all in all.

That is expensive but in line with expectation with openworks charges.

Now, I questioned this and was told that I could reduce the advisor charges by not having them available for on demand financial advice, and agreed to this (it appears I signed a form saying they would be 'between 0.5% and 1%'). However, looking at my charges over the last two years I see that the advisor fee did not go down, and I didn't get any annual review or any financial advise. So basically I paid the 1% fee but didn't get the service.

If your product was arranged after 1st January 2013, then an ongoing fee has to be in return for services.  From 2013, that could be once every year, 2 years or 3 years. From 2018, it has to be "at least annually".

If you product was arranged before 1st January 2013, then its from the commission days and an ongoing service was not required in conjunction with that commission.  Many advisers would provide services in exchange but it wasn't mandatory.

I now have a company pension and this too is around 2% in fees. I appreciate that a fully managed fund (and not one just pegged to one product) is going to attract a larger advisor fee, but I am seeing places like https://www.profilepensions.co.uk/ suggesting that anything over 1% total fee is considered an expensive pension.

You do have one pegged to a product effectively.    

Advisers cost money.  Typical range is around 0.5% to 1.0.   Platforms and funds can cost around 0.2x%-0.3x% at the lower end up to around 1% at the upper end.   (former being passive, latter being active)

Would be great to hear from others on the M&G platform to see if they believe they are being charged too much in advisor fees.

Fees are relative to the amount.   Someone with £100k would see 1% being typical.  Whereas someone with £500k would see 1% being damned expensive.

However, it seems your platform fee and fund fees are expensive too unless you are particularly wedded to active funds.

cfw1994

marky9074 said:

Hi there,

I've had a personal pension for a long time with what was Openworks (now M&G Wealth Platform) made up from lots of consolidated pots and realised a year or so ago that the advisor charges were what I thought was high. The platform and service charges together were over 1% and the advisor charges also 1%. So basically over 2% all in all.

Now, I questioned this and was told that I could reduce the advisor charges by not having them available for on demand financial advice, and agreed to this (it appears I signed a form saying they would be 'between 0.5% and 1%'). However, looking at my charges over the last two years I see that the advisor fee did not go down, and I didn't get any annual review or any financial advise. So basically I paid the 1% fee but didn't get the service.

So I questioned this again, and was told that this was about the time that the fee with support/advise had gone up to 1.25% so 1% was less than I 'was' going to get charged......

I now have a company pension and this too is around 2% in fees. I appreciate that a fully managed fund (and not one just pegged to one product) is going to attract a larger advisor fee, but I am seeing places like https://www.profilepensions.co.uk/ suggesting that anything over 1% total fee is considered an expensive pension.

Would be great to hear from others on the M&G platform to see if they believe they are being charged too much in advisor fees.

Cheers,

Mark

The part I highlight sounds like a mild version of the current scandal attached to SJP, where they have set aside almost half a billion quid to compensate customers who were not given advice they paid for 😳

That said, you admit you signed a form agreeing to pay 0.5-1%, so guess what….sorry to inform you that you agreed to pay them 1% 👀

What a shocking example for M&G Wealth 🙄

I would be looking to move it out very rapidly to something lower cost.  

You don’t say how the funds have performed.  

If the performance can be matched by a <Vanguard/II/AJBell/Hargreaves> lower cost alternative, move it out.  If companies ar part of Origo Options, that move can be pretty straightforward,
(& yes, of course, past performance cannot predict the future, but it can give you something to compare).

On your company pension - odd that they don’t offer a lower cost one to benefit the employees.  

We had an Aviva scheme which was very low cost.

Do you feel yours is giving value for the money?   Performance/advice.
If not, you might look to move a chunk away from that too (if it is allowed).

Obviously whilst working (& hopefully getting some company matched payments), you wouldn’t move future contributions.

Albermarle

For info - a typical workplace pension is normally charging something between 0.3% and 0.7% when using their standard funds. Costs generally have reduced in recent years.

If you have your own personal pension/SIPP, then costs can vary a lot depending on the platform and the type of funds you invest in. Could be from 0.1% up to 1.5%. More typically between 0.4% and 1%.

marky9074

Thanks all for your comments.

Just re-read what I signed and it said "Applicable rate 0.5%" and "Maximum rate 1%" (admit I don't understand what this means). That was document 2 that I signed. Now, I have just looked at document 1 and it is pre-filled with "Standard Service 0.5%" but the box that states "Ongoing Service - Transactional only - ongoing service not required" was not actually ticked....

Yes - I can take that one on the chin (in that I didn't then tick it by hand), but am confident that this was not an accidental lack of entry in the tick box that was auto-filled in that all I had to do was sign the end page..... My understanding (telephone conversation with advisor and then his assistant) was that I would no longer get advice and would be getting a transactional service from now on.

It looks like I took this product out mid 2013 and transferred in around 88k and now on the latest statement it shows 225k more or less, which by my rough calculation is around 9% a year which I am not unhappy with. It hasn't done a lot in the last 2-3 years (in fact went down until recently) but assume that is a general trend and not just the adventurous approach I selected when setting up.

I forgot to say previously that the company pension is with Nest (NEST Retirement Date Funds). To quote them:

"We take a percentage of the money going into your pot. This amount is 1.8%. So, for each £10 that's paid into your account we'll take a contribution charge of £0.18" and " We also take a very small percentage off the value of your pension pot over the year. This amount is 0.3%. So, for each £100 in your pot we take £0.30 off the total value of your pot over the year."

Still unsure if I should be moving all/some away from M&G. I have a history of doing lots of info gathering and making what seemed liked sound financial decisions, only for them to backfire (selling an endowment around 2008 and putting into an ISA for example...).

dunstonh

Just re-read what I signed and it said "Applicable rate 0.5%" and "Maximum rate 1%" (admit I don't understand what this means). That was document 2 that I signed. Now, I have just looked at document 1 and it is pre-filled with "Standard Service 0.5%" but the box that states "Ongoing Service - Transactional only - ongoing service not required" was not actually ticked....

It sounds like they have tiering where the maximum rate is 1%, but the rate applicable to you is 0.5%.

Yes - I can take that one on the chin (in that I didn't then tick it by hand), but am confident that this was not an accidental lack of entry in the tick box that was auto-filled in that all I had to do was sign the end page..... My understanding (telephone conversation with advisor and then his assistant) was that I would no longer get advice and would be getting a transactional service from now on.

If you are in a discretionary portfolio (DFM or MPS) then they will likely have to change the investments as well.   Although I know that not all advisers do and they run the liability risk of failing to do so.

It looks like I took this product out mid 2013 and transferred in around 88k and now on the latest statement it shows 225k more or less, which by my rough calculation is around 9% a year which I am not unhappy with. It hasn't done a lot in the last 2-3 years (in fact went down until recently) but assume that is a general trend and not just the adventurous approach I selected when setting up.

2022 was negative in nearly all markets and investable asset classes. Gilts and bonds had very large negatives. 2023 was a wavy line up and down but not going anywhere until Q4, when there was a burst across all investible asset classes.

Still unsure if I should be moving all/some away from M&G. I have a history of doing lots of info gathering and making what seemed liked sound financial decisions, only for them to backfire (selling an endowment around 2008 and putting into an ISA for example...).

you should be happy with 9% p.a. average.  However, it appears you are not as you are making changes.   You now need to be careful that you don't start making changes that result in a worse outcome.  Most people getting an average of 9% a year would be happy.

marky9074

Think that probably answers my question. Even with the higher than expected advisor charges, the return I am getting is within expectations (or even slightly better) so I should just leave it as it is. Thanks again.

marky9074

Whilst I am still here, is the general consensus that the Nest pension at 2.1% total fees is terrible for a 'modern' work place pension (only been in it two years). 

Mothman

The 1.8% is an initial contribution levy, you don't pay it each year so overall your charges aren't 2.1%. What your overall charge will be will depend on how long you are invested for but they are likely to be nearer the 0.3% than the 2.1% if you are in the scheme for a reasonable period.

dunstonh

marky9074 said:

Whilst I am still here, is the general consensus that the Nest pension at 2.1% total fees is terrible for a 'modern' work place pension (only been in it two years). 

They dont have a 2.1% total fee.

marky9074

Ahh ok, so I should expect a reduction in what they define as the 'Contribution Charge' previously at 1.8% and the 'Management Charge' of 0.3% this year? I just added these together as a total of '2.1%', so apologies if this is wrong.

Edit: Penny has dropped, just realised this is a % rate on contributions going in rather than total fund, so not so drastic but still sounds a lot.