IFA for pension advice and fee - outcome

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82033296#Comment_82033296

There is no record published anywhere, and the data has not been obtained from the FCA as to the status of the advisers. All we know are the number of advice firms. Some of which will be FAs or IFAs. Either way, it's a small proportion of the overall firms and advisers.

Also, as time has gone on, the scale of the BS/PS mis-selling has declined. In the early days, they thought it was widespread and that there would be a large amount of redress. This was in part due to the grading system initially indicating a low advice suitability ratio of just over 50%. However, a number of firms were able to obtain missing records or revise their paperwork and provide subsequent information that moved them from being unsuitable to suitable.

You also had a significant number which were classed as unsuitable but have not resulted in redress, as transferring out was the financially better option. Often it was not the advice that was wrong, but the audit trail behind it.

Unlike scams where consumers would usually get nothing for being a victim, those that were mis-sold under the BSPS transfers did get compensation.

If you have evidence of British Steel pensioners being scammed by IFAs, please provide a link to it, as there is nothing in any regulatory publications that suggests that has happened.

Rdwill

Personally, I'd ask exactly what you're getting for the £5,000.

If these are straightforward defined contribution pensions, platforms like AJ Bell will handle most of the transfer process for you once you provide the policy details. In my experience, gathering the policy numbers is the hard part; once you've done that, you've already done much of the work the adviser needs you to do.

The bigger question is whether you need ongoing advice afterwards.

On a £250k pot, a 0.75% ongoing fee is £1,875 every year. Over a long retirement, that's a significant amount of money.

For many people, a simple globally diversified index fund portfolio and a bit of self-education can achieve very similar investment outcomes. The real value of an adviser is in planning, tax, drawdown strategy and preventing mistakes. If you don't need much help in those areas, it's reasonable to question whether the fees represent good value.

I'd be asking for a very clear explanation of what I'm getting for £5,000 upfront and £1,875 per year thereafter.

NormalNorman

A mate used an IFA to consolidate her pensions. She worries that she will never be able to retire being single on average wage.

This is what what she ended up with for her £100,000 consolidated pot. She pays in £100 pm, her monthly fees pretty much match that. Plus the IFA initial cost. Yes, she also has a workplace scheme she could have consolidated into for nout. I'm unsure what other value the IFA provided.

Don't know why she doesn't contribute more to her workplace scheme. Nothing I can say to her being a regulated industry and although I did pass many professional finance exams in a previous career I'm not an IFA.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82033939#Comment_82033939

You make many good points, but would just like to add to one comment you made.

For many people, a simple globally diversified index fund portfolio and a bit of self-education can achieve very similar investment outcomes

Two points here;

1. The large majority of the public are pretty clueless when it comes to investing, or personal finance in general. I am sure if you stopped 10 people in the street in your average town in the UK and asked then to explain what a 'globally diversified index fund portfolio ' was , you would probably get one correct answer, two wrong ones and seven blank looks. What seems simple to us, is a world of mystery to most.
2. Even for those who know a bit more, or have an advisor, most will class themselves as medium risk investors, and therefore a 100% equity portfolio is not suitable. Although in the long term it is most likely the right choice, the potential short term volatility is too scary for many. There is a reason that pension default funds are never 100% equity.

Rdwill

@Albermarle Fair points. I completely agree that most people have neither the interest nor the confidence to manage their own finances and, for them, a good adviser can add significant value. My point was really aimed at people who are prepared to learn and take an active interest in their retirement planning. In those circumstances, it's worth understanding exactly what services you're paying for and whether they justify the fees being charged.