Financial Advisor Fees for Pension withdraw

dunstonh

And that's all i want. I do not ned any advice or explanation.I have considered this for two years and know what I m doing.

That may be what you want but, if you have safeguarded benefits, then you are not going to get it.   The adviser would be crucified by the FOS or FCA if they did such a thing.

You don't even know what you are giving up.   So, you can't say you know what you are doing.   

And what i it with the 3% fee? It's not their pension. They have not nor will manage it. 3%....I was expecting 1% maximum. 

£1200 is very cheap.   Your expectation for about 12-18 hours work costing about £300 is bizarre.
I wouldn't do it for £1200.

Overriding a safeguarded benefit is extremely high risk for an adviser and its something that needs to be declared every year and results in an additional cost in PI insurance forever more.   Each one done adding more and more annual cost.

If you then factor in that people who say that just want a signature and don't want advice tend to be the highest risk clients.    As are know-it-alls who know nothing.  Factor in all of those and you have a high risk client wanting to do a high risk transaction.    Why would any adviser want to do that?

So someone with £250,000 they will charge over £7,500
For the same "work" How have they got away with this?

Most adviser firms tier their charges as the amount gets bigger or have caps and collars.

Are there any F.A that charge 1% or less for this?

They wouldn't be in business long if they did.

If this is the fee for F.A per hour:

Average hourly rate

£196

Why cant i be charged that?
I fee it is a bit cheeky to charged at 3%. 
I'd be furious if I had £200,000 and they wanted to charge me £6,000

So, what you want is about 12-18 hours. Lets say 12.  £196 x 12 is £2352.
As there is no intention to buy a financial product via the adviser, then it would be subject to VAT. So, add another £470 on top.

And that is for a simple case.    People with more money tend to have other issues.  They are looking at multiple tax wrappers, additional taxes etc.   Small amounts have fewer issues.

However, the real cost is the liability risk and the ongoing cost of covering that liability.

markcri

dunstonh

Fair enough..
Thanks

markcri

Frustrating thing for me is it was £5 over the £30,000 limit...

markcri

That's a bit unfair..I am not saying I know it all. I am saying my mind is made up. Shame i have to go through all of this

If you then factor in that people who say that just want a signature and don't want advice tend to be the highest risk clients.    As are know-it-alls who know nothing.  Factor in all of those and you have a high risk client wanting to do a high risk transaction.    Why would any adviser want to do that?

HappyHarry

Deep breath ...

It is not a "release form" that you are asking an IFA to sign. It is a form confirming that the IFA has provided advice on transferring a pension with a safeguarded benefit.

Giving advice on a pension with safeguarded benefits is one of the highest risk areas that an IFA will advise on. Very few IFAs have the qualifications, undertake the mandatory ongoing training, have the PI insurance in place and the FCA authorisation to carry out such work. The ones with all the appropriate permissions have the role of Pension Transfer Specialists (PTS).

The regulator, the FCA, instructs those involved in this area of advice to begin with the assumption that the pension transfer is not in the individual's best interest. This is because the majority of the time it isn't.

The PTS will want to know your current circumstances, experience of pensions and investments decision making and planning  and your future plans. They will want to know the ins and outs of the ceding pension scheme which will involve writing to the pension scheme administrators and asking a great deal of questions.

After a lot of going and frying with you and the ceding pension scheme, the PTS will then write up their recommendations in a reasonably prescribed format, and present it to you along with any corresponding information to back up their recommendation. 

In most cases, the recommendation will be to retain the pension and not transfer it. You will then find difficulty finding a pension scheme to accept the transfer. The advice fee - typically a minimum of a few thousand pounds - will be payable regardless.

The advice given by the PTS will stay with them forever, so if you complain 20 years down the line the PTS will have to defend their advice. The PI insurers will ask for an increased premium for the PTS every year from the date of the advice until the final closure of the business, unless a long-stop is brought in some time by the regulator - which currently seems unlikely.

The risk and cost of advising on a £500,000 transfer is massively more than that on a £30,500 transfer, so there is not generally a flat fee.

Hopefully this will go some way to explaining why the cost of such advice is so expensive, why so few IFAs do it, and why doing so for £305 is just not a viable option.

dunstonh

Is this a Royal London (ex CIS) plan?   if so, I sympathise as the GARs are usually rubbish (but the risk to the adviser is the same)

If it's a different provider, then the vast majority of the others with GARs are extremely valuable.  Often in double digits and double the current open market option rates.  

SmokeysTravels

So probably worth checking there is definitely a safeguarded benefit with your pension provider. If this is confirmed the £30k limit is in place and while the value of your pension pot is above that you will need to pay for financial advice to cash it in. 

You could continue to monitor the value as it’s not beyond the realms of possibility that the value could drop below the £30k limit. You would then instruct your pension provider to cash it in. They would give you 25% tax free and tax the rest. As they won’t have your tax code they will likely tax you using the emergency tax code, which may mean you pay too much tax. If this is the case you can claim it back from HMRC. By cashing in your pension pot, you will trigger the money purchase annual allowance (MPAA). This means the amount you can pay into a defined contribution pension in the future is reduced to £10000 per year. This includes contributions from you, your employer and the tax relief.

xylophone

Have you seen this

https://assets.publishing.service.gov.uk/media/5a80b577ed915d74e33fbf54/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

Is it the case that your pension has a Guaranteed Annuity Rate?