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What does a pensions IFA do for an ongoing fee?

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    What does a pensions IFA do for an ongoing fee?

    My wife moved her private pension a short while ago, using an IFA recommended by a friend. All fine and above board.

    The pension is a 'balanced risk' portfolio with a fund manager charge of 0.95% and a 'provider' charge of 0.25%. That seems a little high compared to the charges for my self-managed funds trackers, but whatever.

    However, the IFA also charges an ongoing 0.5% fee and I'm wondering what this is for.

    She's yet to ask him, but surely with the pension moved, there's nothing else to do other than to step away and trust the fund manager to manage it optimally (while keeping an eye on things, of course)?

    So what's left for the IFA to do? Am I missing something else that an IFA does in these situations..? (I've never used one, other than for my first mortgage many years ago, before getting wise.)
    Last edited by Adlopa; 9 March 2017, 13:25.

    #2
    To line his pocket.
    "You’re just a bad memory who doesn’t know when to go away" JR

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      #3
      Originally posted by SueEllen View Post
      To line his pocket.
      ^ This

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        #4
        He keeps his mailing list up to date and occasionally tries to get you to buy a new product to generate more income (for him).

        As seasoned financial professionals they realise that asking for their fees upfront would elicit responses of how much? you've got to be kidding etc. whereas 0.5% sounds quite innocuous until you work out the value of it over a number of years. Add in the backhanders they get from the funds and they are on a nice little earner.

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          #5
          I would guess just to keep an eye on it, discuss performance with you periodically, see whether you want to change tack (eg higher/lower risk), increase/decrease contributions, invest in something different etc.

          I think a lot of IFAs are perhaps realising that "transactional work" is starting to dry up a little, as with increased digitisation it becomes easier for people to click the buttons to do it themselves. Many are therefore drifting to become sort of life income planners. Eg if you want to retire with an annual pension income of £X, how many more years do you need to work and contribute £Y to your pension before you can afford to do that? What if you wanted an annual pension of £1.5X? etc. Whether you feel that adds value to you or not is another matter.

          Bear in mind your average user of this forum, by virtue of being here, is someone inclined to do a bit of their own research. Many can't be bothered and are happy to pay others to do it for them.

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            #6
            Originally posted by Maslins View Post
            Bear in mind your average user of this forum, by virtue of being here, is someone inclined to do a bit of their own research. Many can't be bothered and are happy to pay others to do it for them.
            Absolutely this.
            'CUK forum personality of 2011 - Winner - Yes really!!!!

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              #7
              Hm, that's all pretty much what I figured. Given that the ongoing maintenance (and even the initial rejiggery) is so straightforward now, ongoing IFA fees do seem be largely pointless. Thanks, all.

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                #8
                I'm right on the cusp of signing with an IFA for 0.5%. Really not sure which way to go.
                ...my quagmire of greed....my cesspit of laziness and unfairness....all I am doing is sticking two fingers up at nurses, doctors and other hard working employed professionals...

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                  #9
                  Oh god, FFS people wise up !!!
                  OP - between your advisor and platform fees and no doubt expensive funds on those platforms, I will be amazed if you are even making a profit, almost ALL of the gains will be going to others NOT you. This will cost you thousands, maybe tens of depending on the amounts.
                  GET SIPP, GET Vanguard Lifestrategy fund 80, breathe easy.

                  0.5% does not sounds like much but I am telling you this could easily be 10% of your returns, add on fees from platforms/active funds and you can be giving up 50% easy.

                  There is only ONE good reason for getting an IFA involved in this, that is to stop you making stupid decisions like selling up when it kicks down 20, 30 or 40%. IF you can't trust yourself not to do this, you probably should not be investing in shares.

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                    #10
                    Originally posted by Lockhouse View Post
                    I'm right on the cusp of signing with an IFA for 0.5%. Really not sure which way to go.
                    If you really do have to use an IFA - moving a pension ? £30K for example or simply for the finacial planning aspect then did you ask for a one of fee instead/as well?
                    £Xk upfront for the 'advice' may sound a lot but could be thousands less than the drip drip of fees over many years.

                    @Lukemg - spot on
                    So now I am worried, am I being deceived, just how much sugar is really in a spoon full!

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