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IFA wants to increase charge on existing pension

techno2
Posts: 3 Newbie

Hi,
My IFA has been acquired by 'Prosperis' and has sent me a form wanting me to approve an increase in his charges (admittedly just from 0.5% to 1%). I'm not even sure what gets done for the 0.5% apart from my receiving a Christmas card every year. Do I have to agree this increase and what would be the alternatives?
Background:
I retired 7 years ago in 2018, when I was 65. I got my full state pension, I had a small pension that I'd taken when I was 60 from one employment, I had another small pension from another employer that also started when I was 65, and a third small pension fund from my final employer that I decided I didn't need immediately as I owned a property that I rented out. I took advice from an IFA as I believe I had to, selecting the IFA after reading lots of online articles and advice(including MSE), He advised investing with Royal London which I duly did. The Royal London Fund matured after five years but I still didn't need it and so after speaking to him left the pot in for another five years.
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Comments
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(admittedly just from 0.5% to 1%)
Seems an odd way of looking at a 100% increase 😳16 -
I wouldn't. For any price rise for an ongoing service you should at least be given a strong reason as to why there is an increase (especially as it is a 100% increase in this case).
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It is fairly endemic in the industry for small business IFAs as they approach retirement or want to stop for other reasons - to exit and monetise their customer list by selling out to a consolidator which is often an FA firm with a tied and signficantly expensive product. They seek to migrate all customers across onto it. They don't want you on your old portfolio and product to manage long term. That's not the point of acquiring you as part of the old adviser's book.
In plain but archaic language the IFA is "selling you down the river" for their gain. Not yours.
Being quiet about the background and process is part of this happening without too many clients waking up and leaving. Which would disrupt the way they get paid out for client list and assets under management during the handover.
The IFA may view this "on the way out payment" as "their pension". Ironic as they are damaging yours.
They were never your friend. It was a business transaction.
You need to find a new IFA or consider DIY.
Or you accept them doubling the fee due to inertia and not wishing to engage. Your call.
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techno2 said:... a third small pension fund from my final employer that I decided I didn't need immediately ... advised investing with Royal London ... matured after five years ... left the pot in for another five years.
N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Shell (now TT) BB / Lebara mobi. Ripple Kirk Hill member.
2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 33MWh generated, long-term average 2.6 Os.Not exactly back from my break, but dipping in and out of the forum.Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs, Best kettle!1 -
Gemini AI (aka "Googling it") says this:
QUOTE
AI Overview
When paying an ongoing fee to an independent financial advisor (IFA), you can expect to receive a range of services, including:- Portfolio management: The IFA will manage your investments to help increase future returns
- Regular reviews: The IFA will periodically review your portfolio, product suitability, and performance
- Financial planning advice: The IFA will provide advice on financial planning
- Investment recommendations: The IFA will make recommendations for investments
- The fee you pay will depend on the level of service you require, your circumstances, and the firm you choose.
- The fee is usually a percentage of your assets under management (AUM), and a typical rate is at least 1%. However, some advisers may charge a different percentage.
You should ask your IFA exactly what services you are receiving for the ongoing fee. You should also check if the fee is dependent on a certain level of returns.
ENDQUOTE
Seems like a reasonable response to me, especially the bit about asking "what am I getting for my money?"2 -
I would tell him where to go. He's getting paid for doing nothing and wants to double his take
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I'm not even sure what gets done for the 0.5% apart from my receiving a Christmas card every year. Do I have to agree this increase and what would be the alternatives?If the pension was arranged after 1st Jan 2013, then on current rules, they should be in contact with you annually (often measured by tax year). The services offered and used will vary based on your circumstances. Sometimes it is annual work, such as tax allowance use, portfolio rebalancing, modelling/sustainability checks etc. Others like the comfort of the adviser being there to advise them even if they have little work to do.
If you feel the ongoing servicing is not adding anything of value, then you can ask the adviser to turn off the ongoing fee.
If the pension was arranged before 1st January 2013 then it will likely be commission based rather than fee based and turning off the 0.5% usually means that the provider will keep the 0.5% for themselves. In those cases, changing provider may be a viable option.
Ongoing adviser fees vary across the industry. However, it is typical for those with smaller values to be closer to 1% nowadays and have their charge tiered towards 0.50% as their value goes up. Some firms will go 0.50% on smaller values where you go to their office or use zoom/teams etc for meetings (i.e. cutting out the driving time reduces costs and frees up time and time is something IFAs find they have very little of).
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.2 -
Whilst Royal London will only set up / accept new customers via an IFA once you are onboard you can drop the IFA and self manage without changing from RL to ANO platform.2
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In the end only you can decide if paying 1% each year to an IFA is worth it or not.......many on here would not think it is, but many of the wider public do (tbh, the people on this board are probably not all that representative of the wider public when it comes to pensions).2
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Just say NO.1
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