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Personal pension - not great?

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  • dunstonh
    dunstonh Posts: 116,027
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    edited 22 January 2019 at 1:06AM
    Speaking to the sw, they haven't paid out commission to anyone since 2016 when the change happened.

    As its a commission plan, what that really means is that you are paying the same fees. However, SW are keeping the commission that would have been payable to themselves.

    Fee based plans are explicit. The adviser charge is additional to the product/investment charge. With commission-based plans, the provider charges you a fee and pays everyone out of that fee. if they stop paying the commission, they keep it themselves. You dont get your fees reduced.
    SW did say they trialing a scheme I think called CET? Something about IFA hired from outside to do some checking and advising on portfolios or pensions, if I was interested in that.

    Its not an IFA. It will be a guided service (flow chart style) to a limited internal investment selection.

    Find out what your current annual charges are. This may show on your last statement. If not, SW will be able to tell you. I suspect you are in excess of 1% a year. Possibly around 1.3-1.7%. Which is expensive for a non-advised solution. Alternatives could well be cheaper, simpler and better. However, what you have is not bad. It is still doing a job. Nothing to panic about.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • OK thanks.



    So would you switch to another platform where I don't pay as much? Who? As it seems I'll be paying something, somewhere, wherever I go.



    Of course, no panic right now, but if others can skim as little of me as possible that would be beneficial. And as soon as I can move, if you think that is worthwhile, the better. I don't want to stay just because I'm young and have 32 years left as I could be saving thousands.



    The other IFA who I've been recommended is willing to do a free initial look but the after fees they quoted seemed way too high for what I need.
  • dunstonh
    dunstonh Posts: 116,027
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    So would you switch to another platform where I don't pay as much? Who? As it seems I'll be paying something, somewhere, wherever I go.

    You will be paying something. You can either ask an IFA to set up your pension on a transactional basis (which would cost you an initial fee but see your annual charge around 0.3x% p.a. Or you can use a DIY provider.
    The other IFA who I've been recommended is willing to do a free initial look but the after fees they quoted seemed way too high for what I need.

    Remember that a fee adviser will be cheaper than most commission plans. The fee can come from the pension. But the actual charge will be lower. So, if you make it clear that you are looking for a simple low cost option on transactional advice basis (i.e. no automatic ongoing) then you should be fine.

    Or use a DIY provider (I will let others who know the DIY providers better comment on those).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • JoeCrystal
    JoeCrystal Posts: 3,001
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    O
    The other IFA who I've been recommended is willing to do a free initial look but the after fees they quoted seemed way too high for what I need.

    How much are the fees you was quoted out of interest? When I arranged the transfer for my pension onto cheaper pension provider four years ago, it cost me £300.
  • They said can charge on either a time cost/hourly charged basis or, where we are managing and monitoring a portfolio of investments for you, on a portfolio based charge...but that he would suggest that portfolio based charge would be most appropriate for me.



    I propose to waive the initial fee as you were previously a client.


    250 per hr total £627 (2hr work)..

    Or

    1% of portfolio so £400..portfolio charge
  • JoeCrystal
    JoeCrystal Posts: 3,001
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    edited 22 January 2019 at 10:38AM
    They said can charge on either a time cost/hourly charged basis or, where we are managing and monitoring a portfolio of investments for you, on a portfolio based charge...but that he would suggest that portfolio based charge would be most appropriate for me.



    I propose to waive the initial fee as you were previously a client.


    250 per hr total £627 (2hr work)..

    Or

    1% of portfolio so £400..portfolio charge

    That is more than reasonable actually especially on a small pot, you should clarify the fee with the IFA, it should be a one-off fee. I wouldn't be comfortable with hourly charge as it could be an open-ended potentially, especially if it takes more than two hours. I am pretty sure that it would take more than two hours actually.
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