IFA charges to combine pensions? One time fee preferred

Sausages_Folks

I'd like to combine my FSAVC (over £120k) with an existing DC pension pot. I have other DB pensions in payment which cover normal expenditure so I'm planning on using the combined FSAVC and DC pension as a drawdown pot. I've done extensive forecasting/modelling and this is the best option for me taking account of age/lifestyle/savings/attitude to risk/tax brackets etc.  

As the FSAVC has a guaranteed annuity rate (GAR) associated with it, regulations are obliging me to get an IFA to rubber-stamp not taking an annuity.
Ideally I'd like an IFA only for this one-off piece of work. The "Unbiased" IFA finder service has been unable to find an IFA for me. One that I have found myself has quoted a 2% of FSAVC valuation charge which seems an enormous amount. 
Is 2% excessive ? Is there an IFA out there who works to a fixed price or, at least, a much lower % ? Any recommendations how to find one ?
 

FIREDreamer

Do you know what the GAR is? Seems a shame to lose it if the rate is good and you could always reinvest £3,600 gross p.a. of that annuity income into another DC pot.

EDIT: Assuming you no longer work.

HappyHarry

Sausages_Folks said:

regulations are obliging me to get an IFA to rubber-stamp not taking an annuity.
 

It is not rubber-stamping.

The IFA is needed to provide advice. The advice needs to justify why the IFA is not recommending you take the guaranteed annuity rate. It is considered that such an action is not likely to be in your best interest, and there is a considerable bit of work to do to demonstrate both to you and the IFA's PI insurers that taking such an action is in your best interest. Then the IFA is on the hook should you wish to complain at any point in the future about the advice.

Personally, I would snap their hand off for a fee of £2400.  

Have you considered what options there might be should the IFA recommend that you take the GAR?

dunstonh

As the FSAVC has a guaranteed annuity rate (GAR) associated with it, regulations are obliging me to get an IFA to rubber-stamp not taking an annuity.

If only it was that simple.    Its a very high risk transaction for an IFA and one that is, in most cases, unlikely to be suitable for a consumer.

Ideally I'd like an IFA only for this one-off piece of work. The "Unbiased" IFA finder service has been unable to find an IFA for me.

Did you untick the option at the bottom of the page in the directory view (not the lead generation method) that will show the IFA firms that haven't paid unbiased for an entry?

One that I have found myself has quoted a 2% of FSAVC valuation charge which seems an enormous amount. 

2% on £120k is £2400.  That is dirt cheap for such a high risk transaction and the amount of work required.

Plus, it's an ongoing cost to the IFA firm forevermore as PI insurance renewal questionnaires ask specific details about advice that has overridden a GAR.  Not volumes but actual summary explanations and on any cases, no matter how long ago it was.      So, the firm has to factor that increased annual cost for as long as they exist.

Is there an IFA out there who works to a fixed price or, at least, a much lower % ? 

I think you underestimate the work and liability cost.   I am sure you can get a fixed cost.
Personally, I wouldn't take you on as a client, transactional or otherwise—nothing personal. I don't like doing high-risk business and don't want the regulatory hassle.  I know others feel the same way.  

However, I suspect some would offer a price that acts as a passive deterrent.  i.e. circa £5k+

Sausages_Folks

FIREDreamer said:

Do you know what the GAR is? Seems a shame to lose it if the rate is good and you could always reinvest £3,600 gross p.a. of that annuity income into another DC pot.

EDIT: Assuming you no longer work.

Yes - I know what the rate is and have multiple annuity quotes with different variables. None as attractive as having the sum growing in my own DC pot for me to access when I want. Annuity with GAR has no annual increase. 

Sausages_Folks

HappyHarry said:

Sausages_Folks said:

regulations are obliging me to get an IFA to rubber-stamp not taking an annuity.
 

It is not rubber-stamping.

The IFA is needed to provide advice. The advice needs to justify why the IFA is not recommending you take the guaranteed annuity rate. It is considered that such an action is not likely to be in your best interest, and there is a considerable bit of work to do to demonstrate both to you and the IFA's PI insurers that taking such an action is in your best interest. Then the IFA is on the hook should you wish to complain at any point in the future about the advice.

Personally, I would snap their hand off for a fee of £2400.  

Have you considered what options there might be should the IFA recommend that you take the GAR?

OK - I was sloppy with the phraseology, point taken.   

DRS1

Sausages_Folks said:

FIREDreamer said:

Do you know what the GAR is? Seems a shame to lose it if the rate is good and you could always reinvest £3,600 gross p.a. of that annuity income into another DC pot.

EDIT: Assuming you no longer work.

Yes - I know what the rate is and have multiple annuity quotes with different variables. None as attractive as having the sum growing in my own DC pot for me to access when I want. Annuity with GAR has no annual increase. 

I think you may find they were asking you to share that information!

I had a pension with a GAR from Scottish Widows.  The rate was given for a level annuity but if you get a quote from them they will quote for variations to the annuity including increasing annuities using the GAR as a starting point and modifying it to account for the variation.  For some reason SW would not give you an RPI increasing annuity (ask for that and the GAR would not apply) but a fixed rate increase would be OK.

The other point which may interest you is that my SW GAR fell away if I did not take it at 65.  Not all GARs are structured that way.  But if yours is then you just need to wait until the relevant age has passed and the requirement for advice will also fall away.

Albermarle

Even if you just want to transfer a pension pot without a GAR, something like £2.5K would be not unusual.
One issue is that in any situation, an advisor will not give you advice without pretty much knowing everything about you and your finances. Then all this info has to be recorded in fixed ways as they are heavily regulated.

Sausages_Folks

Thanks for all replies. Very useful to have had your thoughts.