Pension advise from advisor via work query - good or bad investment

20vt-rs · 20 June 2018 at 6:14PM

Hi all,

My work offer us free financial advise (high level summary) via a 3rd party that has gone through due diligence etc for them to be bought on-onboard. I have attended sessions that are quite high level and not person specific, and want to look at my own situation now.

They offer a full financial review which the main part is pension related, do reports and recommendations as well as advising how to invest pension funds (which I am flummoxed by!). They charge £1400 for the service which can be drawn off direct from our pension pots, so in effect tax free and you don't have to find the money...

Furthermore, they offer follow ups on a rate of 0.75% of your fund value, when you require this (I suspect they will push for annual review)...

Anyway, does this sound good value, is there anything I need to consider or ask about return on investment etc before making a decision what to do. I am ok with investing money in banks accounts but that's it, pensions shares etc really baffle me! For example my pension remains in default profile as I really don't have a clue

Thoughts welcomed...

Thanks.

greatkingrat · 20 June 2018 at 6:50PM

It really depends on your circumstances. Roughly how much is your fund worth? Paying £1400 from a relatively small pot is probably not worth it. When do you want to retire? Do you have any other pensions from previous companies apart from your current one?

Brynsam · 20 June 2018 at 6:50PM

Helpful article at https://www.aviva.co.uk/retirement/news-views/report/advisers-what-they-charge-and-how-you-pay/

Note that you can only draw £500 in each of 3 tax years (i.e. max £1,500) - is that how your adviser expects to be paid, rather than in one go?

dunstonh · 20 June 2018 at 6:54PM

Are they IFAs or restricted?
What is your fund value? (as it lets us know the fee relative to your pot as well as whether it is high enough to benefit from such reviews)

Furthermore, they offer follow ups on a rate of 0.75% of your fund value, when you require this (I suspect they will push for annual review)...

Without ongoing reviews, you are likely to end up in a simplified investment. The sort you can pick yourself. So, that makes paying £1400 rather expensive.

if the service is restricted and not independent, then the fund range is likely to be limited and that makes building a portfolio difficult (not impossible but often when the range is limited, the multi-asset funds are the best solution).

dunstonh · 20 June 2018 at 6:56PM

Note that you can only draw £500 in each of 3 tax years (i.e. max £1,500) - is that how your adviser expects to be paid, rather than in one go?

FCA wont allow the advice fee to be spread like that.

Also, don't take much notice of that £500 rule. Most providers don't offer it and the providers that deal with intermediaries allow ad-hoc charging beyond that £500 limit.

20vt-rs · 21 June 2018 at 8:04AM

Hi all,

Many thanks for your feedback, here’s some info you asked for:

Years to retirement - 25
Current fund value - £103k
No other pensions (I consolidated a few years ago)
Advisors are national IFA’s

Thank you

20vt-rs · 22 June 2018 at 9:12AM

dunstonh wrote: »

Are they IFAs or restricted?
What is your fund value? (as it lets us know the fee relative to your pot as well as whether it is high enough to benefit from such reviews)

Without ongoing reviews, you are likely to end up in a simplified investment. The sort you can pick yourself. So, that makes paying £1400 rather expensive.

if the service is restricted and not independent, then the fund range is likely to be limited and that makes building a portfolio difficult (not impossible but often when the range is limited, the multi-asset funds are the best solution).

Morning - Just wanted to bump this one up, have put in some details in the last post, would appreciate your opinions on this dunstonh

- If there's any other info needed let me know, many thanks...

dunstonh · 22 June 2018 at 11:38AM

Years to retirement - 25
Current fund value - £103k
No other pensions (I consolidated a few years ago)
Advisors are national IFA!!!8217;s

Its a subjective figure. However, I typically use £100k as the point I will look at more advanced options. So, you are in that ballpark. For me, that ticks one box.

However, the pension in question is the other thing. Some workplace schemes are very limited in what they offer. If the pension has say just 20-40 funds then its very difficult to build a bespoke portfolio that is likely to be any better than the multi-asset funds they have available. So, if the money is in your current employer's pension scheme, I would check the funds list out and see if the range is worth it or not.

If the pension is individual (i.e. away from the employer) then its not an issue as it can always be moved to a modern plan with wider investment options.

Then there is the firm. IFA firms are all different. There can be pros and cons with different firm types. Most IFA firms are small local firms with 1-4 advisers. However, there is growth in the nationals as they are buying up smaller firms. With a small local firm, once you have your IFA that adviser tends to be the one you stick with for a very long time. Nationals tend to have higher staff turnover (mainly as they attract advisers earlier in the career path or because they have been buying up smaller firms and advisers used to working in smaller firms dont like the restrictions placed on them and leave). So, you need to think of what type of service you want. Do you want a local person who is on call or you can drop in on them or do you want a national where the person you speak with could be different every time but uses a uniform process for everybody and will likely have more glossy documentation.

20vt-rs · 25 June 2018 at 10:06AM

dunstonh wrote: »

Its a subjective figure. However, I typically use £100k as the point I will look at more advanced options. So, you are in that ballpark. For me, that ticks one box.

However, the pension in question is the other thing. Some workplace schemes are very limited in what they offer. If the pension has say just 20-40 funds then its very difficult to build a bespoke portfolio that is likely to be any better than the multi-asset funds they have available. So, if the money is in your current employer's pension scheme, I would check the funds list out and see if the range is worth it or not.

If the pension is individual (i.e. away from the employer) then its not an issue as it can always be moved to a modern plan with wider investment options.

Then there is the firm. IFA firms are all different. There can be pros and cons with different firm types. Most IFA firms are small local firms with 1-4 advisers. However, there is growth in the nationals as they are buying up smaller firms. With a small local firm, once you have your IFA that adviser tends to be the one you stick with for a very long time. Nationals tend to have higher staff turnover (mainly as they attract advisers earlier in the career path or because they have been buying up smaller firms and advisers used to working in smaller firms dont like the restrictions placed on them and leave). So, you need to think of what type of service you want. Do you want a local person who is on call or you can drop in on them or do you want a national where the person you speak with could be different every time but uses a uniform process for everybody and will likely have more glossy documentation.

Hi again, many thanks for that info it's really useful. I know now that I am at the tipping point to start looking into the nuts and bolts of my investment to make sure it's working as i need it to be.

The pension is separate and away from the company, so if I ever leave it stays with me. I have a feeling there are approx 800 options for investment which is the baffling part for me!

I get what you are saying regarding the IFA, I think i would lean towards a local that i can drop in on here and then, but on the other hand my company gives us some FOC benefit with this national so pros and cons. I think i may do a bit of local searching and find out what other options are, then compare and make my mind up. It doesn't sound too expensive then what I am being offered but I think I need to do a local compare as a comparison. Now to work out someone local who is good, is there some web sites you can get references from to have a starting point?

Thanks...

dunstonh · 25 June 2018 at 10:36AM

but on the other hand my company gives us some FOC benefit with this national so pros and cons.

The fees you mentioned do not indicate much FOC benefit.

Now to work out someone local who is good, is there some web sites you can get references from to have a starting point?

No. Indeed, you tend to find many of the good ones have virtually no internet coverage beyond adviser listings. They dont need to advertise. So, they dont. They rely totally on local reputation.

20vt-rs · 25 June 2018 at 11:11AM

dunstonh wrote: »

The fees you mentioned do not indicate much FOC benefit.

Nothing free with those fees, but they hold regular free sessions that we can attend on things like pension planning, estate planning etc etc. Whilst they are all good an informative, they don't look at individual circumstance. These sessions were what i meant as FOC, and the same company does the chargeable 1-2-1...

dunstonh wrote: »

No. Indeed, you tend to find many of the good ones have virtually no internet coverage beyond adviser listings. They dont need to advertise. So, they dont. They rely totally on local reputation.

I will have to start asking friends and family, see what I can find out. Plus google!

Thanks for the input

Pension advise from advisor via work query - good or bad investment

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