Cheapest advice to allow transfer from DB scheme
Discussion
Does anyone know how to go about finding the cheapest way of getting the necessary sign-off from a regulated advisor to allow me to transfer my DB scheme to my SIPP?
The one IFA I spoke to a few years ago indicated that they would charge 3% of my fund. Plus they were very keen to also start taking further hefty annual percentages.
Are there any advisors that will do this work for a one-off fee based on the work involved? Surely it can't take more than a couple of hours to do the review and sign a few forms. Overly simplistic, I know - but what would be a reasonable amount for such a service? £1k? £3k? Certainly not £20k plus ongoing drip.
I don't actually want or need any actual advice. But I suppose the advisor needs to go through the pretence. I have no problem with that. I just don't want to pay 3% (equivalent to around 1 year's pension) for the privilege of being told the bleeding obvious.
The one IFA I spoke to a few years ago indicated that they would charge 3% of my fund. Plus they were very keen to also start taking further hefty annual percentages.
Are there any advisors that will do this work for a one-off fee based on the work involved? Surely it can't take more than a couple of hours to do the review and sign a few forms. Overly simplistic, I know - but what would be a reasonable amount for such a service? £1k? £3k? Certainly not £20k plus ongoing drip.
I don't actually want or need any actual advice. But I suppose the advisor needs to go through the pretence. I have no problem with that. I just don't want to pay 3% (equivalent to around 1 year's pension) for the privilege of being told the bleeding obvious.
The problem is that the adviser will remain responsible for the advice given, rather than just the time it takes to actually complete the advice.
I'll ask around for you though to try and find someone who could do this for a one off fee.
It is also worth remembering that the annual fee you refer to is the one that does the most damage over time, the initial fee is just more in your face.
I'll ask around for you though to try and find someone who could do this for a one off fee.
It is also worth remembering that the annual fee you refer to is the one that does the most damage over time, the initial fee is just more in your face.
JulianPH said:
The problem is that the adviser will remain responsible for the advice given, rather than just the time it takes to actually complete the advice.
I'll ask around for you though to try and find someone who could do this for a one off fee.
It is also worth remembering that the annual fee you refer to is the one that does the most damage over time, the initial fee is just more in your face.
Many thanks. Much appreciated.I'll ask around for you though to try and find someone who could do this for a one off fee.
It is also worth remembering that the annual fee you refer to is the one that does the most damage over time, the initial fee is just more in your face.
I am well aware of the effect of even very small sounding annual percentage fees. And also the effect of compound inflation over time. A very fine line has to be walked and I do know that in most cases the 'correct' advice is to stay in the DB scheme. However, my case is such that it fairly clear-cut (at least to me). Of course, I could be entirely mistaken, and some degree of sanity checking would be welcome.
I also know - from lurking on this forum for years - that there are some honest and skillful advisors out there. But I am also aware that there are lots of sharks. It is a general problem that the industry has - the smell of snake oil is strong. And any attempt to charge by percentages gets me twitchy.
A good friend of mine last summer got Dawn Slater of Newbury to go through the formalities on a fixed fee basis with absolutely no on-going involvement https://www.dawnslater.co.uk/ He's a very smart accountant and knew exactly what he wanted - this was for two transfers of deferred DB entitlements. He had to kiss a few frogs before he found this one!
Separately I and a different friend are next week visiting another IFA specifically for LTA input. I can ask if she can operate on this basis, as I'm given to understand she has a relatively high 'success rate' with DB transfers.
Separately I and a different friend are next week visiting another IFA specifically for LTA input. I can ask if she can operate on this basis, as I'm given to understand she has a relatively high 'success rate' with DB transfers.
Mazinbrum said:
You can still transfer out even if the IFA advises you are better off not to transfer out can’t you?
The IFA wouldn’t bear any responsibility then?
Yes, you can (the requirement to transfer is that you must seek regulated financial advice, not that you have to take, or pay for, it).The IFA wouldn’t bear any responsibility then?
The IFA would, however, have responsibility for either outcome. If they recommended you stay and you would have been better off leaving they will be as responsible as if they recommended you left and you would have been better off staying.
This is where most of the pension transfer cost lies.
Financial Advisers therefore price this in (as is right). It is a shame they also price very simple transactions in the same way when there is no such liability.
JulianPH said:
The IFA would, however, have responsibility for either outcome. If they recommended you stay and you would have been better off leaving they will be as responsible as if they recommended you left and you would have been better off staying.
This is where most of the pension transfer cost lies.
Financial Advisers therefore price this in (as is right). It is a shame they also price very simple transactions in the same way when there is no such liability.
I'm struggling to understand how likely it is that an IFA recommending 'stay' could end up on the hook some years down the line.This is where most of the pension transfer cost lies.
Financial Advisers therefore price this in (as is right). It is a shame they also price very simple transactions in the same way when there is no such liability.
In most cases it would be shear conjecture as to how the member would have invested the DC pot up until his death and the IFA would have had to have made hugely conservative SIPP investment return assumptions surely for 'stay' to be proved poor advice? I guess we could have extreme situations eg where the transfer value is greatly enhanced and could from the outset buy an inflation-linked annuity (without spouse pension if member has no desire) that exceeds his DB pension. Or if the member discloses a critical illness meaning that he gets minimal pension income from the DB scheme. Or if the DB scheme goes under shortly after and somehow the PPF rescue isn't sufficient. Perhaps not pointing out the hugely favourable conversion factor for testing DB pensions against the Life Time Allowance is the main risk?
Most of the above strike me as pretty improbably scenarios that a competent IFA should anyway be aware of, so I don't see that a 'recommendation to stay' should normally leave the IFA exposed.
That said, I've never read one of these expensive reports. I'd have thought generally it's safer for an adviser to point out the implications of a transfer rather than frame a concrete recommendation to the client, but maybe the FCA guidance requires the latter?
millen said:
JulianPH said:
The IFA would, however, have responsibility for either outcome. If they recommended you stay and you would have been better off leaving they will be as responsible as if they recommended you left and you would have been better off staying.
This is where most of the pension transfer cost lies.
Financial Advisers therefore price this in (as is right). It is a shame they also price very simple transactions in the same way when there is no such liability.
I'm struggling to understand how likely it is that an IFA recommending 'stay' could end up on the hook some years down the line.This is where most of the pension transfer cost lies.
Financial Advisers therefore price this in (as is right). It is a shame they also price very simple transactions in the same way when there is no such liability.
In most cases it would be shear conjecture as to how the member would have invested the DC pot up until his death and the IFA would have had to have made hugely conservative SIPP investment return assumptions surely for 'stay' to be proved poor advice? I guess we could have extreme situations eg where the transfer value is greatly enhanced and could from the outset buy an inflation-linked annuity (without spouse pension if member has no desire) that exceeds his DB pension. Or if the member discloses a critical illness meaning that he gets minimal pension income from the DB scheme. Or if the DB scheme goes under shortly after and somehow the PPF rescue isn't sufficient. Perhaps not pointing out the hugely favourable conversion factor for testing DB pensions against the Life Time Allowance is the main risk?
Most of the above strike me as pretty improbably scenarios that a competent IFA should anyway be aware of, so I don't see that a 'recommendation to stay' should normally leave the IFA exposed.
That said, I've never read one of these expensive reports. I'd have thought generally it's safer for an adviser to point out the implications of a transfer rather than frame a concrete recommendation to the client, but maybe the FCA guidance requires the latter?
Sorry - never intended to be provocative 
It's just that I'd always assumed 99% of the regulatory risk for an adviser is in a 'dodgy leaver' recommendation rather than a 'cautious stay'. Therefore curious to explore how the latter might arise.
As I said, I've never jumped these hoops - my own DB-DC transfer was some 20 years ago, long before all this stuff came in. I expect in practice much of the decision is driven by the client's specific beliefs (on investment prospects, individual longevity, desire for control etc).
It's just that I'd always assumed 99% of the regulatory risk for an adviser is in a 'dodgy leaver' recommendation rather than a 'cautious stay'. Therefore curious to explore how the latter might arise.
As I said, I've never jumped these hoops - my own DB-DC transfer was some 20 years ago, long before all this stuff came in. I expect in practice much of the decision is driven by the client's specific beliefs (on investment prospects, individual longevity, desire for control etc).
millen said:
Sorry - never intended to be provocative
It's just that I'd always assumed 99% of the regulatory risk for an adviser is in a 'dodgy leaver' recommendation rather than a 'cautious stay'. Therefore curious to explore how the latter might arise.
As I said, I've never jumped these hoops - my own DB-DC transfer was some 20 years ago, long before all this stuff came in. I expect in practice much of the decision is driven by the client's specific beliefs (on investment prospects, individual longevity, desire for control etc).
I was only being tongue in cheek! It's just that I'd always assumed 99% of the regulatory risk for an adviser is in a 'dodgy leaver' recommendation rather than a 'cautious stay'. Therefore curious to explore how the latter might arise.
As I said, I've never jumped these hoops - my own DB-DC transfer was some 20 years ago, long before all this stuff came in. I expect in practice much of the decision is driven by the client's specific beliefs (on investment prospects, individual longevity, desire for control etc).
Yes, obviously the vast majority of risk is badly advising on a transfer out, but bad advice relating to remaining within a BD scheme is still bad advice.
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