IFA initial cost and ongoing fees

Tedlad123

Had a chat with an IFA who has quoted an ititial 3% tranfer fee to a SIPP from an old Royal London workplace pension with ongoing fees of 1% annual and 0.7% platfom fees, quoting an Aviva plan. Speaking to a few people who have done the same thing they say it seems quite expensive, any comparisons?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6666955/ifa-initial-cost-and-ongoing-fees

Aren't the people you have already spoken to effectively providing comparisons.

What is the size of the pension to be transferred? 3% of £50k is significantly different to 3% of £1million.

Tedlad123

Yes, I understand how % work, transfer value £200k and the comments I've recieved are comparing %, not values

DRS1

Could the IFA be telling you he doesn't really want the job?

Do you need an IFA? You can do a transfer yourself for no charge (and maybe even get some cashback from the receiving SIPP provider).

But then you would need to make your own decisions about who to transfer to and how to invest the money once it is there. Is that what you want to avoid?

Or is this a Royal London plan which requires you to get advice from an IFA? If it is then is a transfer a good idea?

Tedlad123

To be fair, his initial comments where that the RL was doing OK an that I could change my RL investments myself to suit what I think I might get as a return. He said that as I get older (currently 56yrs) everything in their tailored plans (Governed Portfolio) assumes an annuity will be taken which isn't my case.

Have attempted a transfer from the RL to my current Aegon workplace pension which would run along side it but in a fund that is barely above cash/bonds return rate according to Aegon which I wasn't convinced by.

gm0

The comparator for DIY transfer (which is available to all but DB over the threshold and DC with safeguarded benefits with required advice clause attached (by FCA - not by the provider). Is of course free. No initial charge. The price whatever it is - to you is the cost to avoid learning enough to be confident to do it and your value of time for the (limited unless it goes wrong) admin. And that is an acceptable trade off - or it's not.

Any other number from any adviser be they wealth manager, fa or proper IFA is just an offer this week to you to treat. Expecting these to compete rationally one with another is a category error.

Do they want this business. At this size (your wealth), with any other potential - direct or family - or not. How new are they. how busy. who typically do they deal with. All affect the zone in which prices will fall.

A price to do it if not really wanted as a customer may be very high - to deter - a transaction or the customer entirely. The I'll do it if you really make it worth it.

Rather than just say - no - not bidding. Which is more helpful but also often found to be more offensive.

On the other hand initial charges can sometimes be waived and admin viewed as cost of sales - to acquire ongoing management of a large and interesting (to the adviser) family portfolio of work (as they hope).

It's their business and their choice what to offer.

What it isn't. Is a very liquid, market with well formed market prices for these transactions that you will definitely get as a walk up when you approach some random provider.

dunstonh

Had a chat with an IFA who has quoted an ititial 3% tranfer fee to a SIPP from an old Royal London workplace pension with ongoing fees of 1% annual and 0.7% platfom fees, quoting an Aviva plan. Speaking to a few people who have done the same thing they say it seems quite expensive, any comparisons?

Aviva don't have a platform that costs 0.7%. So, that must include the OCF and probably the TC as well (advisers have to include the TC in the disclosure even though most people totally ignore them as they are not an explicit fee). 0.7% suggests managed funds form most or all of the mix.

If you are charges focused then tell the IFA you don't want managed funds but want passives. IFAs have to follow your investment preferences if you have any.

Yes, I understand how % work, transfer value £200k and the comments I've recieved are comparing %, not values

3% is high on £200k but the 1% ongoing is ok.

To be fair, his initial comments where that the RL was doing OK an that I could change my RL investments myself to suit what I think I might get as a return. He said that as I get older (currently 56yrs) everything in their tailored plans (Governed Portfolio) assumes an annuity will be taken which isn't my case.

The GPs can opt out of lifestyling.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81986896#Comment_81986896

I don't know anything about RL's Governed Portfolio but if @dunstonh says it lets you opt out of lifestyling then you should investigate that.

The related question would be what have you selected as your retirement date. Lifestyling (aimed at buying an annuity) might for example start swapping you out of equities into bonds at 10 years from retirement. So if you picked 60 then you could be well into bonds by now but if you picked 65 then you may be just starting.

But it may also be worth asking RL about how their fund works - you may have a lifestyling thing which aims at drawdown not an annuity. Or rather it may be something which is available as an alternative to what you currently have.

It would make sense to investigate what alternative investment funds you have with RL (and Aegon for that matter. I don't really understand why they would only offer one fund for a transfer in. That doesn't sound right.)

daveyjp

Having recently seen a quote of a 1% transfer fee for a similar pension amount a 3% opening gambit is either a business who gets away with it, or a business that does not want to be bothered with such a low amount - or a mix lf both.

Regardless of reasons I'd shop around for a few more quotes.

Albermarle

£200K is at the lower end of values, but should still be interesting enough for an IFA who has spare capacity.

OP - you could always try to negotiate and aim for maybe 2% as a more reasonable figure. It sounds like yours is a relatively simple case.

Have attempted a transfer from the RL to my current Aegon workplace pension which would run along side it but in a fund that is barely above cash/bonds return rate according to Aegon which I wasn't convinced by

If you do not like the investment fund you have in your Aegon pension, why not change it? There should be a reasonable number of investment funds available with Aegon.