Why am I being charged for draw down advice?

frustratedwithpensionadvisers

Hi there,
I have an old pension that predated the draw down types. I sought free independent advice from a recommended adviser for Pension Wise but I felt all they were doing was trying to sell me their product. I then went to my pension scheme and spoke to someone who I thought was employed by them but turns out to be an 'independent' adviser though within the same group. After weeks of confusing conversations that really didn't fill me with confidence, I decided to go for the option of moving some money into a ring fenced pot so I could draw out £15K. I thought I could get this for free, but thought I'd check because so much of the information provided was confusing. It was at this point he said he'd charge me £4500 based on a rate of about 3% on my main pot. This feels extortionate and not what I was expecting. Is this common practice in the industry? Is there a way of me getting access to my money without paying this kind of money? 
Any advice out there would be gratefully received.
Virginia

Dazed_and_C0nfused

frustratedwithpensionadvisers said:

Hi there,
I have an old pension that predated the draw down types. I sought free independent advice from a recommended adviser for Pension Wise but I felt all they were doing was trying to sell me their product. I then went to my pension scheme and spoke to someone who I thought was employed by them but turns out to be an 'independent' adviser though within the same group. After weeks of confusing conversations that really didn't fill me with confidence, I decided to go for the option of moving some money into a ring fenced pot so I could draw out £15K. I thought I could get this for free, but thought I'd check because so much of the information provided was confusing. It was at this point he said he'd charge me £4500 based on a rate of about 3% on my main pot. This feels extortionate and not what I was expecting. Is this common practice in the industry? Is there a way of me getting access to my money without paying this kind of money? 
Any advice out there would be gratefully received.
Virginia

If this is a DC pension with no special benefits why aren't you just transferring it to a modern plan?

MEM62

If I understand your post correctly, your current pension product does not support drawdown.  Therefore you are not just receiving drawdown advice, you are transferring your pension to a different product.  This will incur a charge for the initial advice and (optionally) a charge for on-going servicing.  As you have not indicated the size of your pot no-once can tell you whether this charge is reasonable or not.    

DRS1

I am guessing the pot size is £150k.

flaneurs_lobster

MEM62 said:

 As you have not indicated the size of your pot no-once can tell you whether this charge is reasonable or not.    

....he'd charge me £4500 based on a rate of about 3% on my main pot.

= £150,000

Marcon

frustratedwithpensionadvisers said:

Hi there,
I have an old pension that predated the draw down types. I sought free independent advice 

Why would anyone give free independent advice? 'Advice' has a very specific meaning when applied to financial products and usually involves both work, and some sort of risk, for the adviser giving that advice. It's not the simple mechanistic process I think you were anticipating.

Transfer your old policy to a modern one which supports drawdown. If your old policy has 'safeguarded' benefits (some sort of promise, such as a Guaranteed Annuity Rate) you are required to receive advice from a regulated adviser with permission to advise on such transfers - I wonder if that's what is confusing you?

coyrls

Are you sure Pension Wise recommended an adviser?  That doesn't seem likely.

frustratedwithpensionadvisers

Ok thank you people. My confusion is that I was told by my pension company that I  had free advice and what you have said here is not what he said to me. He told me I could do this transfer and then said he would charge me. Since I am only drawing down £15000, £4500 is a lot of  money to me. Maybe it isn't to others here. Personally it feels like exortation.
As for my comment about Pension Wise, they are advertised as a free advice service, I signed up and they directed me to a free adviser, so that's what I meant.

cfw1994

Very confusing.
PensionWise is a government-sponsored system to get free *guidance* (not advice).
I did not think they would recommend any advisors, so that sounds suspicious.

“I then went to my pension scheme and spoke to someone who I thought was employed by them but turns out to be an 'independent' adviser though within the same group”.
Not sure what the company is that run your scheme, but why not contact them to find how you can either start a drawdown, or perhaps move to a scheme that lets you?

dunstonh

Why am I being charged for draw down advice?

That is like asking why do you have to pay for things you buy.  If you buy advice, then you pay for it.

 I sought free independent advice from a recommended adviser for Pension Wise but I felt all they were doing was trying to sell me their product. 

That does not sound accurate on multiple points.

a) Pensionwise do not recommend specific advisers.    are you sure you spoke to someone from Pensionwise and not some clone firm pretending to be pensionwise? 
b) an adviser that is selling you their product is not an independent.  IFAs don't have their own product as they wouldn't be independent if they did.

I then went to my pension scheme and spoke to someone who I thought was employed by them but turns out to be an 'independent' adviser though within the same group.

Again, product providers do not have IFAs.   They have in-house sales reps. 

As for my comment about Pension Wise, they are advertised as a free advice service, I signed up and they directed me to a free adviser, so that's what I meant.

Pensionwise is not advertised as a free advice service and they do not employ advisers (free or otherwise).    They can give limited guidance in a limited range of areas but they do not give advice.  Indeed, they tell you to seek independent advice if you start asking questions that require advice.

AlanP_2

@frustratedwithpensionadvisers


Outline on here what you want to do, what pension you have and who it is with as that may help some of the posters on here to steer you in the right direction.

Advice, has a specific meaning in this context and is chargeable when provided by a regulated individual.