Discussion
A new (to me) IFA set up a pension scheme with Old Mutual Wealth in 2017 and my Ltd company contributed £40K. She charged a fee of 3% of £40K and of course she will receive 1% of the fund value every year.
Today I decided the company could afford another £40K and this transfer will incur another 3% fee in addition to her earning 1% of fund value. Is this the norm? I'm probably being naive, but I thought the initial legwork had been done in assessing my needs, identifying and setting up the pension. I questioned this but she talked at length about me saving corporation tax, dividend tax etc. and I switched off.
I'm sure somebody in the IFA business will put me right.
Today I decided the company could afford another £40K and this transfer will incur another 3% fee in addition to her earning 1% of fund value. Is this the norm? I'm probably being naive, but I thought the initial legwork had been done in assessing my needs, identifying and setting up the pension. I questioned this but she talked at length about me saving corporation tax, dividend tax etc. and I switched off.
I'm sure somebody in the IFA business will put me right.
RegMolehusband said:
No, nothing. Just a 15 minutes discussion today about how much the company could transfer.
Nice work if you can get it at £4800 an hour.How is your current investment with them performing? You can't get a SIPP or Personal Pension with OM as they only work via FAs but there's loads of places you can invest with if you can be bothered to.
Have you had a report showing the performance & charges? Don't forget that as well as the FA's 1% there's the OM platform charge & probably individual fund charges, although they might be obscured.
OM are a reputable institution but you need to be getting exceptional returns for high charges.
OM are a reputable institution but you need to be getting exceptional returns for high charges.
RegMolehusband said:
. I questioned this but she talked at length about me saving corporation tax, dividend tax etc. and I switched off.
You're looking at a £1,200 one off bill, as well as an additional £400 each year and you didn't pay attention? Those savings are a function of the pension wrapper, not her expertise.It has a current fund value of £45652. The original investment of £40K was made in November 2017. So that would seem quite good to me. I have my own login to OM so can see performance and charges completely.
However, I'm thinking about topping it up further in the summer and don't expect to be paying another 3% fee if it's not how IFAs normally operate.
I have two other funds with the Prudential and Aegon but would be a little nervous at bypassing my adviser. I'm actually at retirement age but still running the business and likely to make similar contributions during the next two years.
However, I'm thinking about topping it up further in the summer and don't expect to be paying another 3% fee if it's not how IFAs normally operate.
I have two other funds with the Prudential and Aegon but would be a little nervous at bypassing my adviser. I'm actually at retirement age but still running the business and likely to make similar contributions during the next two years.
xeny said:
You're looking at a £1,200 one off bill, as well as an additional £400 each year and you didn't pay attention? Those savings are a function of the pension wrapper, not her expertise.
At that point I was assuming that this is exactly how IFAs work so didn't query it any further.RegMolehusband said:
It has a current fund value of £45652. The original investment of £40K was made in November 2017. So that would seem quite good to me. I have my own login to OM so can see performance and charges completely.
However, I'm thinking about topping it up further in the summer and don't expect to be paying another 3% fee if it's not how IFAs normally operate.
I have two other funds with the Prudential and Aegon but would be a little nervous at bypassing my adviser. I'm actually at retirement age but still running the business and likely to make similar contributions during the next two years.
If you're happy with the funds and platform but not the IFA, can you just send the next £40K straight to OMW and save £1200 + £400pa? OMW will deal direct; in fact if you wish to dispense of your IFA they will take her off the books and deal direct with you. Been there done that!However, I'm thinking about topping it up further in the summer and don't expect to be paying another 3% fee if it's not how IFAs normally operate.
I have two other funds with the Prudential and Aegon but would be a little nervous at bypassing my adviser. I'm actually at retirement age but still running the business and likely to make similar contributions during the next two years.
You're in the position many people get to.There's a lot of money at stake so you want to talk to an 'expert'; you sense you're being shafted but don't know of another way. Drop a line to IM (see thread) and even if you don't invest with them you'll be able to clarify your thoughts and have a much better understanding of how stuff works.
I calculate your IFA has taken about £2,600 from your pension which is about 31% of the growth.
RegMolehusband said:
It has a current fund value of £45652. The original investment of £40K was made in November 2017. So that would seem quite good to me. I have my own login to OM so can see performance and charges completely.
.
That's less than 4.2%/year..
Unless you're chasing the least risk possible that it quite disappointing, although throwing quite so much if it in fees is part of the reason.
RegMolehusband said:
At that point I was assuming that this is exactly how IFAs work so didn't query it any further.
Is the IFA delivering value for that money?How long does it take for you to earn that money vs how long does it take for you to work out how to do the simple stuff yourself, and hire an IFA at a fixed cost when you want some specific advice?
The 3 % was the initial advice fee which would have been agreed with you, in writing, before any work was undertaken.
The 1% annual fee is to provide an ongoing financial advice service, again should be agreed in writing and if paid for the service should be provided as detailed. You can turn it off at any time if you are not happy with the service.
If you don't want to pay another 3% for advice on investing another £40,000 then don't, it's a free country.
It sounds like you don't have a particularly good IFA and certainly not a good relationship with them.
The 1% annual fee is to provide an ongoing financial advice service, again should be agreed in writing and if paid for the service should be provided as detailed. You can turn it off at any time if you are not happy with the service.
If you don't want to pay another 3% for advice on investing another £40,000 then don't, it's a free country.
It sounds like you don't have a particularly good IFA and certainly not a good relationship with them.
Having now read the very long and detailed terms of engagement, I can see that future transfers attract a fee "on the same basis" as the initial implementation fee paid at the outset.
I should have spotted this but now it comes to the crunch, I think it's unreasonable. So I'm going to follow up with a termination email.
I should have spotted this but now it comes to the crunch, I think it's unreasonable. So I'm going to follow up with a termination email.
RegMolehusband said:
It has a current fund value of £45652. The original investment of £40K was made in November 2017.
OK, so you've carried the investment risk and made £5,652Meanwhile your adviser, carrying no risk at all, has made,
3% up front
1% in 2018
1% in 2019
1% in 2020
Which by my schoolboy arithmetic is more than £2,500. Completely risk free. So far. And she will continue to take another £450 each year.
Big numbers.
anonymous said:
[redacted]
Yebbut the two are directly linked... and if you were an IFA you'd be off chasing new business at 3%, not fretting over whether someone's investments make another £100.RegMolehusband said:
To be fair (sorry about that phrase), I believe there are significant "client onboarding" and compliance costs to cover for any IFA.
Yep, I had that too. You have to wonder why the compliance/indemnity costs are so high don't you.Now at least if your investments don't do very well, you're not paying someone to watch them not do well
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