Advice Needed: Pension Consolidation and Financial Advisor Costs

Deckard2049

Hi everyone,

I’m a complete newbie to financial planning, and recent life changes have pushed me to get my house in order.

I have a couple of pensions that I’d like to merge into one and actively manage rather than leaving them in standard company plans.

I first spoke to an advisor associated with SJP. Their proposal was to merge my pensions and manage them via their platform. There were no upfront costs, just ongoing fees, which they admitted were slightly higher in exchange for ongoing advice. That seemed reasonable.

Then I was recommended another (seemingly more independent) firm offering a similar service—merging my pensions into their platform and actively managing them. However, their fees seem excessive: it's a percentage to merge my pensions (which I find galling) as opposed to a fixed fee, plus nearly 2% annually for active management.

Paying to move my money into their platform, where they’ll charge me more, feels steep. And 2% ongoing fees also seem high.

Am I being unrealistic about costs? I’d like professional management, but this seems expensive. How difficult is it to merge pensions myself (e.g., via PensionBee) and manage them without an advisor?

Thanks in advance for any advice!

Marcon

Deckard2049 said:

Hi everyone,

I’m a complete newbie to financial planning, and recent life changes have pushed me to get my house in order.

I have a couple of pensions that I’d like to merge into one and actively manage rather than leaving them in standard company plans.

I first spoke to an advisor associated with SJP. Their proposal was to merge my pensions and manage them via their platform. There were no upfront costs, just ongoing fees, which they admitted were slightly higher in exchange for ongoing advice. That seemed reasonable.

Then I was recommended another (seemingly more independent) firm offering a similar service—merging my pensions into their platform and actively managing them. However, their fees seem excessive: it's a percentage to merge my pensions (which I find galling) as opposed to a fixed fee, plus nearly 2% annually for active management.

Paying to move my money into their platform, where they’ll charge me more, feels steep. And 2% ongoing fees also seem high.

Am I being unrealistic about costs? I’d like professional management, but this seems expensive. How difficult is it to merge pensions myself (e.g., via PensionBee) and manage them without an advisor?

Thanks in advance for any advice!

A firm is either independent or it isn't; there's no middle ground. SJP is not independent; whether the other firm you've approached is independent is something you need to check carefully.

You're a complete newbie to financial planning, so although merging your pensions might be simple enough (unless any of them have 'safeguarded benefits' and a transfer value of at least £30K, in which case advice is mandatory before the ceding scheme can pay over the transfer to your new choice of scheme), managing them when you are still clueless might not be ideal. 

Why not do some research, including getting quotes from other firms of independent financial advisers, and also checking what exactly you have in your 'standard company plans'? Do you even know if they are defined benefit or defined contribution? Check before going any further - and possibly fix an appointment with PensionWise for some free general guidance: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise You sound just the sort of 'novice' (meant in the nicest possible way) they are there to help educate in terms of the real basics.

kempiejon

Deckard2049 said:
I’m a complete newbie to financial planning, and recent life changes have pushed me to get my house in order.

I have a couple of pensions that I’d like to merge into one and actively manage rather than leaving them in standard company plans.

How difficult is it to merge pensions myself (e.g., via PensionBee) and manage them without an advisor?

It's good to know what you have before thinking about a change. You might have a good deal. If you already have a couple of pensions being run for you do you know where they invest in those standard plans and do you have some control over that? Which markets they are in, what assets they hold, how those investments have behaved over the past 3, 5 and 10 years. How much is it costing you to have this asset allocation? What returns or not have you benefited from?
It's like lots of jobs many people can and do DIY, it takes some time and skills but isn't onerous if you're so inclined or you could buy professional help. Like a good decorator or mechanic, gardener or cancer doctor you'd love a good one but how do you know? Some are more expensive than others some tasks a bit beyond the home gamer. Would you be able to save the money and trust yourself to take control of your financial future, I decided I could, but I like DIY and personal responsibility. It's my financial long term security not SJPs nor anyone elses.
DIY will not suit everyone.

Ibrahim5

The difference is that the financial advisor takes his fees from your pension whereas your decorator, mechanic, gardener or cancer doctor can't. So they can charge crazy amounts for filling a few forms in. They charge much, much more than a real professional like a cancer doctor whose job is much, much more complicated.

artyboy

Ibrahim5 said:

The difference is that the financial advisor takes his fees from your pension whereas your decorator, mechanic, gardener or cancer doctor can't. So they can charge crazy amounts for filling a few forms in. They charge much, much more than a real professional like a cancer doctor whose job is much, much more complicated.

Oh dear god...

OP, welcome. A first suggestion, please take what this poster says with a very very large pinch of salt. They have clearly been burnt by financial advice in the past and now feel it is their mission to slate, denigrate and abuse them and their profession at every turn.

I urge you to check their other posts if you don't wish to take my word for it. Others will be along with better practical suggestions than I can give, but please don't be put off on your first thread.

(if you are prepared to share the name of the 2nd advisor that would also be helpful. Given those charges, it wasn't Fisher Investments by any chance? Or any other firm with 'wealth management' or similar in their name...?)

Marcon

artyboy said:

Ibrahim5 said:

The difference is that the financial advisor takes his fees from your pension whereas your decorator, mechanic, gardener or cancer doctor can't. So they can charge crazy amounts for filling a few forms in. They charge much, much more than a real professional like a cancer doctor whose job is much, much more complicated.

Oh dear god...

OP, welcome. A first suggestion, please take what this poster says with a very very large pinch of salt. They have clearly been burnt by financial advice in the past and now feel it is their mission to slate, denigrate and abuse them and their profession at every turn.

I urge you to check their other posts if you don't wish to take my word for it. Others will be along with better practical suggestions than I can give, but please don't be put off on your first thread.

Practical suggestion as requested!

OP - look up to the top right of the screen and you'll see some icons on the dark green bar. To the right of the envelope icon is your own user icon.



Click on that and then hit 'Account and Privacy Settings' (immediately underneath your posting name and email address). Click on 'Ignore' list and add any posters whose posts aren't in your opinion worth reading.



It's a really useful function and means you don't have to keep reading nonsense from people who keep posting the same pointless and unproductive nonsense.

Ibrahim5

The point is that unlike a gardner, mechanic, doctor etc as an IFA has no practical skills. All they do is paperwork. So if you can read and write you just do a few hours research and you can easily manage your own finances and save thousands.

dunstonh

I first spoke to an advisor associated with SJP. Their proposal was to merge my pensions and manage them via their platform. There were no upfront costs, just ongoing fees, which they admitted were slightly higher in exchange for ongoing advice. That seemed reasonable.

SJP don't operate a platform.  Their pension product is the old style personal pension.  SJP have initial charges.

Then I was recommended another (seemingly more independent) firm offering a similar service—merging my pensions into their platform and actively managing them.

There are two classifications.  IFA or FA.    There is no scale of independence in respect of an IFA.   There is some differences in business models (e.g. a small local directly authorised firm vs a national network adviser firm) but that is not in a regulatory sense.

If the firm is moving it into their own product then they won't be an IFA.  IFAs retail the products of third party providers that are available on the whole of market.  They don't retail their own product.     FAs retail their own product.

Most IFAs are small local firms of 1-5 advisers.     National firms tend to be FAs.  Those national firms also tend to be more expensive.

ali_bear

The OP has good instinct about the cost, I would say that is extortionate. But SJP are more about wealth management, and pensions are just part of their business. 

Do you need ongoing financial advice? Because that is the service you would be paying for annually. OK if you do and you make use of it, a good financial advisor should earn and save you enough to offset that cost. Otherwise .. 

Otherwise you could learn the basics without too much difficulty and do it yourself. For merging your existing plans, as long as they are DC and without protected benefits, you could shop around for a SIPP. No cost to mover/merge into the SIPP, on-going annual charges should be in the 0.4% range or perhaps a bit more for individual fund management charges (depending on the fund). 

gm0

Benchmark

Target annual costs

DIY.  0.3% or slightly less all in - funds, platform, no advice. Passive investment.  Add specialist funds (at higher cost) to taste i.e. active and star fund managers.

Add 0.5% for advice from an IFA. Not a wealth manager like SJP

0.5%-1% initial charge for an IFA vs 0 DIY.  With some IFAs this is capped.  This pays for the advice, insurance of it (as suitable) and admin outsourced

Another vote for independent IFA or DIY avoiding wealth managers

10-12% of initial pot is the 40 year life of plan cost of advice.  You decide if your time to learn to DIY is worthwhile against that cost avoided.  It is work to learn.  And your risk attitude will determine how much work.

Albermarle

OP,
Regarding the charges mentioned in the previous post, if your two combined pots are say £100K (ish) or less, then the IFA charges will be at the higher end of the % scales mentioned . Maybe £2,000 initial charge and 1% pa.
If you have  £500K or more, then the initial charge could be £4000/£5000 and 0.5% pa .
Or something inbetween.
Some IFA's will try and charge more, but you can shop around.