I don't want to use an IFA

Laughing_Boy

I find it very frustrating that pension providers do not allow direct access to my pension. I am thus obliged to pay substantial amounts to an IFA for the privilege of accessing my own money. Even using an execution-only advisor means paying a significant amount.

I had a Section 32 policy which I switched prior to A-day to another provider. I was thus able to keep my existing lump-sum benefits (greater than 25%) and also take advantage of the new provder's greater flexibility in terms of pension provision - i.e. unsecured income etc. I am now in the situation where I want to take the lump sum with zero unsecured income (for the moment), but apparently I am not able to make this decision on my own - I have to pay an IFA to tell me what I already know!

This surely contravenes my rights! If push came to shove, surely they would have to give me access to what is after all MY cash.

Any comments./advice would be appreciated.

cyclonebri1

I've found a very similar frustrating stuation like this myself.

Arranged my own annuity with the pension plan provider I have used for years. Decision made so didn't want an IFA. Tried to get the commision they would pay to him or even 1/2 of it. Nothing doing so they keep the allocated commision.

Within a week of this I find I have an AVC fund with another provider that I must take very shortly. Decide to go back to the personal plan provider to bring in this extra amount and buy an additional annuity. After over an hour of being passed around on the phone I'm told they can only deal through an IFA. Said they couldn't give me advice. Said I didn't want any. Said they'd ring me back. I'm still waiting.
This is L&G by the way.

Does make you a little miffed:rolleyes:

EdInvestor

Laughing_Boy wrote: »

I am now in the situation where I want to take the lump sum with zero unsecured income (for the moment), but apparently I am not able to make this decision on my own - I have to pay an IFA to tell me what I already know!

Oh God yes.You can't allow joe bloggs just to decide for himself that he wants to put his pension fund into income drawdown.For heaven's sake, he might lose the lot ( of course investments organised by IFAs never lose money).

This surely contravenes my rights! If push came to shove, surely they would have to give me access to what is after all MY cash.

Nope. I once had an IFA demand an extortionate fee of 500 pounds for offering an opinion on whether or not it was "appropriate" to put a small protected rights pension into income drawdown.This didn't include any guarantee that the view would be positive. Do they think we are total idiots?

The whole system is outrageous.

dunstonh

I am thus obliged to pay substantial amounts to an IFA for the privilege of accessing my own money.

What makes you think that? Those providers that do allow you direct access just keep the commision that they would have paid an IFA for themselves.

Plus, IFAs can usually get better terms than those that buy direct.

Even using an execution-only advisor means paying a significant amount.

Again it doesnt. Most will do execution only with a very small amount of commission retained and not charge a fee. On pensions, commission is better than fee for most due to tax relief. So agreeing a fee and using commission method to pay it is tax efficient.

I am now in the situation where I want to take the lump sum with zero unsecured income (for the moment), but apparently I am not able to make this decision on my own - I have to pay an IFA to tell me what I already know!

This surely contravenes my rights!

Section 32s which are not at maturity are considered occupational pension schemes and a lot of pension providers will not accept occupational pension transfers without an IFA signing of on it. Most, if not all, IFAs will not do execution only with an occupational pension transfer (final salary) because 9 times out of 10 its bad advice. Execution only rules do not allow you to transact when you know the transaction isnt the best thing to do.

The problem you are suffering is because of consumer protection and the risk of liaiblity to both the adviser and the pensions company.

EdInvestor

The only way round the problem is to convert the Section 32 to a normal PP and then move it to a SIPP for drawdown ( a chunk of the S32 will become protected rights and that can't go into a SIPP until October, but might be quite small.It would need to be put in a separate PP pro tem).

But you will be limited to 25% tax free cash if you do that.
There's always a ripoff somewhere.

Laughing_Boy

Hi everyone

Thanks for all your comments.

Well dunstonh is fighting the IFA corner - so I'm in the other corner!

I already did the switch through an execution-only broker - I paid no I.C. and pay only 0.55% AMC with no trail. I neverthelss paid a fee well over £1000 for executing the switch!

You're right, however, in saying that providers usuallycharge the IC regardless of whether it's mostly paid back to an IFA in the form of commission. But not always e.g. Skandia's single-price pension (which by the way is not what I have). IFA's are reluctantly being pressured into offering a more transparent fee-based charging structure instead of the less transparent commission-based structure whereby IFA's have been able to recommend products with the best commission for them regardless of their absolute suitability for the client - this in itself is a mockery of the word 'independent'.

Providers are in bed with IFA's and it's all in the name of consumer protection!
Well it's certainly not protecting my money! And why shouldn't I be free to make a mistake anyway?

A lot of information is witheld from clients in order to maintain the status quo - it's now relatively easy to find literature on the internet which is marked "For advisors only - not to be distributed to clients" - I wonder why not!? - well it's because if we had the information we would be in a better position to make decisions for ourselves. And the information withheld is not rocket science! In this way advisors are able to provide information for a price and call it "advice".

It's a scandal ... clients should be able to make their own choices and of course should be able to call upon the services of a truly independent expert if desired.

Laughing_Boy

Hi Ed Investor

Thanks for your comments.
I looked into the SIPP route - but the 25% limitation was the stumbling block.

Retired_I.F.A.

I dont undestand your beef at all, Look at your opening post again...


Now read what you were really saying.

I have a section 32 contract, I want to end it have another contract a drawdown plan be it a pp or a sipp given to me for free. I also want the new contract to allow me to take the higher tax free lump sum only allowed under the section 32 rules. Isn't it disgusting that I cant have stuff for free?

ormus

EdInvestor wrote: »

Oh God yes.You can't allow joe bloggs just to decide for himself that he wants to put his pension fund into income drawdown.For heaven's sake, he might lose the lot ( of course investments organised by IFAs never lose money).



Nope. I once had an IFA demand an extortionate fee of 500 pounds for offering an opinion on whether or not it was "appropriate" to put a small protected rights pension into income drawdown.This didn't include any guarantee that the view would be positive. Do they think we are total idiots?

The whole system is outrageous.

yes it is. the most disgusting thing is that most IFAs and nearly all the fund managers are about as good as my dog at investing my money.

dunstonh

IFA's are reluctantly being pressured into offering a more transparent fee-based charging structure instead of the less transparent commission-based structure whereby IFA's have been able to recommend products with the best commission for them regardless of their absolute suitability for the client - this in itself is a mockery of the word 'independent'.

I would disagree with that. IFAs working to NMA basis or what is now becoming known as CAR (customer agreed remuneration) can use the commission differences to enhance client terms. The FSA have proposed that CAR becomes mandatory for IFAs from 2009 and that it under consultation. However, a good number of us already work to that basis already.

Providers are in bed with IFA's and it's all in the name of consumer protection!
Well it's certainly not protecting my money! And why shouldn't I be free to make a mistake anyway?

60% of advice business is done through IFAs. 80% if you include direct to provider and execution only business. Providers are going to protect their distribution channels to some degree. Recent history has highlighted the damage that can be done to a provider if they do something against IFAs.

However, the fear of liability and redress is the main issue with pension transfers. There are transactions that the FOS would not allow an IFA to get away with on execution only.

Also, a lot of providers dont hold FSA authorisation to distribute products directly because of cost. Once they do that their staffing levels need to increase as do their costs of liability and regulation. Many dont see it as being cost effective. This is why so many direct salesforces have closed over the last decade.

it's now relatively easy to find literature on the internet which is marked "For advisors only - not to be distributed to clients" - I wonder why not!?

Because it hasnt been compliance approved for release to public and wont contain al the necessary compliance warnings. Therefore the consumer cannot use that document against the provider in a complaint.

EdInvestor

Retired_I.F.A. wrote: »

I dont undestand your beef at all, Look at your opening post again...Now read what you were really saying.

I have a section 32 contract, I want to end it have another contract a drawdown plan be it a pp or a sipp given to me for free. I also want the new contract to allow me to take the higher tax free lump sum only allowed under the section 32 rules. Isn't it disgusting that I cant have stuff for free?

No that's not what he's saying. He's complaining that in order to put his S32 into drawdown and take the full S32 TFC (which is possible at some insurers) he has to pay an IFA to "give permission" for him to do this.

He knows what he wants, what he wants is legal and contractually possible, why should he have to seek permission from (pay a bribe to) an insurance salesman to go ahead with it?

An S32 derives from an occupational pension, so he will never have needed an advisor before.Why now?