Pension advisors - on-advice charges

bad_knees21

Hi!

I'm 32 and have recently got in touch with a financial advisor from Unbiased to help me consolidate my pensions and generally make me feel a bit more in control of my future .

They have sent their advice for free and have sent a breakdown of their fees which are:

£1400 - one charge to carry out changes which is transferring all of my pensions into a higher interest higher risk - this comes out of my current pension pot
0.95% per year for on-advice charge
0.27% per year for the charges on the new pension account

How does this on-advice charge compare - is it high for this kind of work? A quick google suggests that this may be…

Any advice would be much appreciated!

eskbanker

Questions like that need the total value of the assets to be given, as percentages will typically be higher for smaller pots due to the economies of scale…

Woodstok2000

Do you really need ongoing advice? You're (relatively) young and so longer term investments are likely to be in your plan. A review every 5-10 years or when your situation changes may be a more cost effective option if you are comfortable with the small additional risk that brings.

dunstonh

I'm 32 and have recently got in touch with a financial advisor from Unbiased to help me consolidate my pensions and generally make me feel a bit more in control of my future .

Unbiased is no longer an unbiased directory. I.e., it now includes restricted FAs, and its current pricing has forced out most small independent IFA firms. What you have left are mainly regional and national sales forces.

It's a very expensive directory to be listed on (as are several of the other directories). I know of a firm that increases its charges when it gets an inquiry through one of these directories because of the level of cost involved.

£1400 - one charge to carry out changes which is transferring all of my pensions into a higher interest higher risk - this comes out of my current pension pot

That seems quite cheap for the transactional part of the work. Transferring pensions is an upper level of risk for the advice firm and is time-consuming.

0.95% per year for on-advice charge

That could be reasonable or damned expensive, but it depends on the investment value. Many firms have tiers or taper their charges as the value goes up. So, without knowing the investment value, it's hard to comment on it being reasonable or not. Typically, a figure like 0.95% would suggest a smaller fund value.

0.27% per year for the charges on the new pension account

If the adviser is an IFA, then you expect the charges to be broken down between provider and investments, the exception being a handful of old-fashioned pension products that still bundle the two together.

If the advisor is an FA, then these frequently bundle the charges.

So, is the 0.27% per year for the product, or the fund charges or both? (fund charges themselves are typically broken down into multiple components too).

DRS1

You will undoubtedly be told that you should steer clear of a financial adviser and make sure you get advice from an Independent financial adviser.

Quite apart from the charges where are your pensions being transferred? Is it some platform connected to the financial adviser? So if you ditch the FA will you have to move the pensions again?

Are you employed and do you belong to your employer's pension? If so, are you being told to move out of that pension? Hopefully not. That could easily mean losing the employer contributions. But maybe you are self employed.

bad_knees21

https://forums.moneysavingexpert.com/discussion/comment/82123049#Comment_82123049

Thank you for this! The company who have done the analysis is an Independent financial advisor, so they are suggesting using Aegon for the pension

bad_knees21

https://forums.moneysavingexpert.com/discussion/comment/82123045#Comment_82123045

Thanks for this! The only information I have is that this is a 0.27% charge that Aegon charge (the pension that they have advised me to consolidate my old pensions into and transfer some of my workplace pension into)

bad_knees21

https://forums.moneysavingexpert.com/discussion/comment/82123014#Comment_82123014

That's good to know - the total value of assets is just under £30,000

bad_knees21

https://forums.moneysavingexpert.com/discussion/comment/82123049#Comment_82123049

I am employed full time :) It's more to consolidate my old pensions and then transfer some of my current workplace pension all into the same pot. So I will still definitely be paying money into my workplace pension

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82123082#Comment_82123082

Is it really going to be worth forking out to consolidate these? There is the 'small pots rule' which has some benefits that would be lost by rolling up multiple smaller pensions into one that would (ultimately) be above £30K, and obviously you'd be giving up a few percentage points of these pots merely by paying to move them.

At 32, the bulk of your retirement provision will presumably come from your current workplace scheme and/or those of future employers, so worth (re)evaluating the principle of consolidating older smaller pots IMHO…

gm0

At your age.

The N years x charge "drag" is a LOT of money for advice or an overly expensive platform. 0.27% for the pension is excessive vs low cost DIY which requires you to think and shop. (Assuming this is the scheme/platform element i.e. excludes the embedded in fund unit prices fund management charges payable everywhere which you see on the fact sheets).

I remember being time poor. And mostly lucky with defaulting/falling into the various choices without using advice until quite late.

But your circumstances - especially if international and complex may merit professional advice. If UK domiciled and stable employed with savings and pension. Not so much.

In your shoes - if I had a trail of employer pensions to tidy and lacked time from work and family to do the admin. Honesty about whether you are ACTUALLY going to get around to it.

Then I would either buy transactional advice (no ongoing). And have it done. Then put the low cost no advice arrangement back in the draw.

Or get an IFA to do it on the initial charge + ongoing relationship. And pay up. And then once consolidated. And you have done any other tax planning, iht, life cover thinking, as suits family circumstances and new government rules.

Pull it away within a year or two to a single DIY SIPP. Ending the ongoing advice. Nice and tidy. Lower ongoing run costs. By 0.95%. It requires reading the initial contract carefully. No deferred management fees or stealthy exit charges.

If a long term investment average return is 6% across the cycle. 1% of it to "keep an eye on it" is a lot to gift away each year - rain or shine. In the -20% years as well as the +20% ones.