Removing Financial Adviser From SIPP

magd36

I used a Financial Adviser (FA) to set up a SIPP. I've no intention of adding to it, nor taking any income from it for the next 5 to 10 years.

I've been disappointed with the FA follow on service with no contact for nearly 2 years despite a contract promising an annual review.

They charge 0.75% per year and I'm therefore considering removing them from the SIPP charge.

The Platform Provider and the Managed Portfolio Service (MPS) will continue as normal.

Initially £1k was held in cash to pay the FA.

I checked and the following fees will be charged if there is no longer a registered FA with the platform: "£50 quarterly fee, £30 fee for any cash movement and a £29.95 for the telephone dealing per line of stock".

My questions are:

1. Other than the quarterly fee, will I be charged either of the other two fees?

2. How is the MPS likely being paid as it doesn't seem to be coming from the cash?

3. When the cash reaches zero how will the cash buffer be topped up? Is this automatic?

Am I better just asking a different FA to take over?

Thanks

dunstonh

I've been disappointed with the FA follow on service with no contact for nearly 2 years despite a contract promising an annual review.

That is a breach, and you are entitled to a refund of the service fee for one of those years.
Service years are often treated as tax years rather than calendar years as most allowances and advice transactions tie in with the tax year.

The Platform Provider and the Managed Portfolio Service (MPS) will continue as normal.

The platform should be ok but you may not be able to retain the MPS.     If the MPS is "agent as client" then the adviser firm carries ongoing liability and responsibility, and if you stop paying, they can insist you are switched out of the MPS.

your platform charges may change as some pricing deals exist based on the MPS used.

1. Other than the quarterly fee, will I be charged either of the other two fees?

yes.    An "orphaned" client is more expensive to deal with and some platforms do change their charges to reflect that.

2. How is the MPS likely being paid as it doesn't seem to be coming from the cash?

MPS as a portfolio of funds would have the charge showing as a line entry against the cash.
MPS as an OEIC would have the charge within the OCF (and you can keep that OEIC as its not agent as client).
MPS on an "own brand" platform may have the charge bundled with the platform charge.
MPS using own brand OEICs may have the charge bundled with the OEICs.

3. When the cash reaches zero how will the cash buffer be topped up? Is this automatic?

It varies with different platforms.  There is no set rule.   Some have automated options.  Some do not.  Some will auto-sell.  Some will not.

Am I better just asking a different FA to take over?

No.   The option should always be either to DIY or use an IFA.  Not an FA.       

magd36

dunstonh said:

I've been disappointed with the FA follow on service with no contact for nearly 2 years despite a contract promising an annual review.

That is a breach, and you are entitled to a refund of the service fee for one of those years.
Service years are often treated as tax years rather than calendar years as most allowances and advice transactions tie in with the tax year.

The Platform Provider and the Managed Portfolio Service (MPS) will continue as normal.

The platform should be ok but you may not be able to retain the MPS.     If the MPS is "agent as client" then the adviser firm carries ongoing liability and responsibility, and if you stop paying, they can insist you are switched out of the MPS.

your platform charges may change as some pricing deals exist based on the MPS used.

1. Other than the quarterly fee, will I be charged either of the other two fees?

yes.    An "orphaned" client is more expensive to deal with and some platforms do change their charges to reflect that.

2. How is the MPS likely being paid as it doesn't seem to be coming from the cash?

MPS as a portfolio of funds would have the charge showing as a line entry against the cash.
MPS as an OEIC would have the charge within the OCF (and you can keep that OEIC as its not agent as client).
MPS on an "own brand" platform may have the charge bundled with the platform charge.
MPS using own brand OEICs may have the charge bundled with the OEICs.

3. When the cash reaches zero how will the cash buffer be topped up? Is this automatic?

It varies with different platforms.  There is no set rule.   Some have automated options.  Some do not.  Some will auto-sell.  Some will not.

Am I better just asking a different FA to take over?

No.   The option should always be either to DIY or use an IFA.  Not an FA.       

When I was using the term FA I mean an independent FA. My current FA is also independent. The platform is AJ Bell and the MPS is Brewin Dolphin. Does that change any of your comments. I’m happy with the product and don’t want any changes. I’m just unhappy with the IFA. Don’t really need any more advice from an IFA but not sure if it will be costly removing one and how difficult it will be to manage.

Albermarle

There should not be any cost normally to remove an IFA, unless you have signed some sort of contract with that included.
If you want to go DIY, AJ Bell is a perfectly good platform popular with retail clients.
However they may want to switch you internally, to their retail branded platform.

Bostonerimus1

If you can't point to actual services and steps both IFA and MPS have taken to manage your money and do more than you could have done with a simple DIY approach then I don't see a reason to employ them. But before you cut them lose you should understand the minimal actions necessary to manage the SIPP yourself. My worry is that IFA and BD have come up with an overly complicated portfolio of funds that you will need to rationalize. Many times financial professionals create complex asset allocations according to models that claim to optimize risk vs reward, but a perhaps sub-conscious motivation is to make it look like they are doing something clever for the fees they charge.

magd36

Bostonerimus1 said:

If you can't point to actual services and steps both IFA and MPS have taken to manage your money and do more than you could have done with a simple DIY approach then I don't see a reason to employ them. But before you cut them lose you should understand the minimal actions necessary to manage the SIPP yourself. My worry is that IFA and BD have come up with an overly complicated portfolio of funds that you will need to rationalize. Many times financial professionals create complex asset allocations according to models that claim to optimize risk vs reward, but a perhaps sub-conscious motivation is to make it look like they are doing something clever for the fees they charge.

How would I get to understand the “minimum actions”. I don’t intend to remove BD who appear to be doing all the buying and selling. I only intend to remove the IFA who I can’t see are doing anything within the portfolio. They just seem to offer an annual review and recommendations, but have failed to even contact me in almost 2 years.

magd36

Albermarle said:

There should not be any cost normally to remove an IFA, unless you have signed some sort of contract with that included.
If you want to go DIY, AJ Bell is a perfectly good platform popular with retail clients.
However they may want to switch you internally, to their retail branded platform.

There is no cost to remove them but there are additional costs to AJ Bell if there is no FA registered to the account as described ie

"£50 quarterly fee, £30 fee for any cash movement and a £29.95 for the telephone dealing per line of stock"

I just worry how often I’d be charged the cash movement and telephone charge. I presume rarely, if at all. I need to try and find out what happens if the cash element goes to zero. Do I need to do anything or will it be topped up automatically?

Thanks

Bostonerimus1

magd36 said:

Bostonerimus1 said:

If you can't point to actual services and steps both IFA and MPS have taken to manage your money and do more than you could have done with a simple DIY approach then I don't see a reason to employ them. But before you cut them lose you should understand the minimal actions necessary to manage the SIPP yourself. My worry is that IFA and BD have come up with an overly complicated portfolio of funds that you will need to rationalize. Many times financial professionals create complex asset allocations according to models that claim to optimize risk vs reward, but a perhaps sub-conscious motivation is to make it look like they are doing something clever for the fees they charge.

How would I get to understand the “minimum actions”. I don’t intend to remove BD who appear to be doing all the buying and selling. I only intend to remove the IFA who I can’t see are doing anything within the portfolio. They just seem to offer an annual review and recommendations, but have failed to even contact me in almost 2 years.

My question would be what buying and selling are BD doing and why? If you have an asset allocation appropriate for your circumstances there should be very little selling going on and any buying is just the usual monthly contributions and automatic reinvestment of dividends.

Albermarle

magd36 said:

Albermarle said:

There should not be any cost normally to remove an IFA, unless you have signed some sort of contract with that included.
If you want to go DIY, AJ Bell is a perfectly good platform popular with retail clients.
However they may want to switch you internally, to their retail branded platform.

There is no cost to remove them but there are additional costs to AJ Bell if there is no FA registered to the account as described ie

"£50 quarterly fee, £30 fee for any cash movement and a £29.95 for the telephone dealing per line of stock"

I just worry how often I’d be charged the cash movement and telephone charge. I presume rarely, if at all. I need to try and find out what happens if the cash element goes to zero. Do I need to do anything or will it be topped up automatically?

Thanks

AJ Bell have a platform designed for use with Advisors - ' Invest Centre' which is presumably where your money is.

They also have a platform for Retail investors ( Man & Woman in the street) called 'YouInvest' 

I presume the charges you mention are for the small number of non advised clients they have on the InvestCentre platform ( who presumably had an advisor and dumped them) .

The charging structure of YouInvest is totally different.

If you want to DIY, I suggest you request a transfer to YouInvest. I would hope that AJ Bell could arrange this easily.

dunstonh

 I don’t intend to remove BD who appear to be doing all the buying and selling. I only intend to remove the IFA who I can’t see are doing anything within the portfolio.

If the DFM is employed as agent as client then you cannot stay in the BD portfolio as the adviser carries liability for ongoing suitability.  You are not willing to pay that any more.

They just seem to offer an annual review and recommendations, but have failed to even contact me in almost 2 years.

Which is wrong, as mentioned higher up.   Rules require "at least annually".  That doesn't mean exactly every 12 months, but it can mean once per calendar year or once per tax year.   You should contact them and ask for a refund for the year missed.

I need to try and find out what happens if the cash element goes to zero. Do I need to do anything or will it be topped up automatically?

You will need to ask them.

However, you may well be best transferring the pension to a DIY platform as functionality on intermediary platforms differs from DIY platforms.    DIY investing on an intermediary platform is complicated and inefficient and often not practical.

magd36

dunstonh said:

 I don’t intend to remove BD who appear to be doing all the buying and selling. I only intend to remove the IFA who I can’t see are doing anything within the portfolio.

If the DFM is employed as agent as client then you cannot stay in the BD portfolio as the adviser carries liability for ongoing suitability.  You are not willing to pay that any more.

They just seem to offer an annual review and recommendations, but have failed to even contact me in almost 2 years.

Which is wrong, as mentioned higher up.   Rules require "at least annually".  That doesn't mean exactly every 12 months, but it can mean once per calendar year or once per tax year.   You should contact them and ask for a refund for the year missed.

I need to try and find out what happens if the cash element goes to zero. Do I need to do anything or will it be topped up automatically?

You will need to ask them.

However, you may well be best transferring the pension to a DIY platform as functionality on intermediary platforms differs from DIY platforms.    DIY investing on an intermediary platform is complicated and inefficient and often not practical.

After a bit of digging following the questions and advice I now realise it isn't a SIPP I have. It's actually a Retirement Investment Account (RIA) in the InvestCentre platform. I will confirm if I can stay with BD even if I drop the IFA. They've not suggested I can't. I will also ask if the cash will automatically be topped up.

I will contact the IFA to refund charges for the year.

All useful. Thanks