IFA for Pension Fees

[SueEllen]

Nope. I talked it through with them on the phone, and the relevant bit of their terms is this:

Should you invest through regular premiums, our range of charges taken over 12 months are:
 Up to 50% of the first £250 of monthly premiums
 Up to 30% of the next £500 of monthly premiums and up to 10% over £750pm.
For a regular premium of £1,000 per month, this would equate to £3,600 (12 x £1,000 x 0.3)

It's a flat charge of 4% if you invest a lump sum, but given that most pension contributions will surely be a regular premium, then 30% seems to be the charge.

Louis Bacon doesn't charge 30%!

Crazy.

Do you have it in writing? Get them to at least email you or provide their terms in writing so you aren't mistaken.

If they match what was said on the phone then report them as already suggested.

[northernladuk]

Or ask them for possible scenarios and what you will make/lose. I can't believe they can come up with one where you actually make any money.

[Jessica@WhiteFieldTax]

Are you sure its not 30% of the first months payment rather than each months payment?

eg paying £250 a month in, is he charge (a) 30% x 250 x1 or (b) 30% x 250 x12?

(a) would make more sense

[dingdong]

Go with iii, choose a vanguard lifestrategy or vanguard target retirement fund and just go away and forget about it.

Research quote in the Telegraph this week showed how paying just 1% extra in fees would cost you 16 years of retirement income by the time you retired.

[eek]

Nope. I talked it through with them on the phone, and the relevant bit of their terms is this:

Should you invest through regular premiums, our range of charges taken over 12 months are:
 Up to 50% of the first £250 of monthly premiums
 Up to 30% of the next £500 of monthly premiums and up to 10% over £750pm.
For a regular premium of £1,000 per month, this would equate to £3,600 (12 x £1,000 x 0.3)

It's a flat charge of 4% if you invest a lump sum, but given that most pension contributions will surely be a regular premium, then 30% seems to be the charge.

Louis Bacon doesn't charge 30%!

Crazy.

Looks about right for an IFA setting up a regular payment pension plan 20 years ago. I told them where to go and went for one off payments instead.

[Maslins]

Whilst I'm not vouching for this IFA or saying their fees are a bargain, just thought I'd add a bit of balance.

To those saying some IFAs charge 0.5%-1% whilst this guy apparently charges ~30%, you're comparing apples with oranges. The former are typically an annual recurring fee based on the total value of the funds they look after, and I'd imagine many would also have a minimum charge for modest value pots. The latter seems to be a one off fee.

Also, look at the amounts they're talking about, it's contributions of circa £500/month. So 30% of that is £150. Add that up over a year and it's £1,800. This is for someone looking after your investments for you. It's not a million miles off what many contractor accountants charge per year (including ourselves)...though I can't really comment on how the workload would compare.

Definitely not saying you should go with this person...but I don't think the fees are quite as outrageous as some people are suggesting.

[northernladuk]

This is for someone looking after your investments for you. It's not a million miles off what many contractor accountants charge per year .

Isn't that like comparing apples and oranges?

[kaiser78]

Go with iii, choose a vanguard lifestrategy or vanguard target retirement fund and just go away and forget about it.

Research quote in the Telegraph this week showed how paying just 1% extra in fees would cost you 16 years of retirement income by the time you retired.

Thanks - interesting article.

[lukemg]

Already know the level of destruction fees can do, visible and invisible (funds transactions and expenses etc) but this is still shocking.
Looks a bit like my endowment stitch up from 1993, big chink of the first 3 years payments went in fees.
Even 1% is a huge amount when you might only be getting 4% over inflation.
It is madness, start reading (monevator.com) set up a SIPP and find out who Vanguard is.
It will be the best paid work you ever do...

[rectifier]

Go with iii, choose a vanguard lifestrategy or vanguard target retirement fund and just go away and forget about it.

Research quote in the Telegraph this week showed how paying just 1% extra in fees would cost you 16 years of retirement income by the time you retired.

Good figures. I'm really leaning towards this option of self management now, although I don't necessarily agree with totally forgetting about it. I use Vanguard Lifestrategy in a few other funds I have and whilst it's good now, past performance doesn't etc etc etc.

I spoke to another IFA who came up with more sensible charges, but as you've noted here, even charges of a couple of percent make an enormous difference.