Pension Advice - How much should it cost?

[Bozzie]

So, having deferred taking my private pension until the new regulations came into place the time has now come to take some income from them. I got in touch with the guy who's we've dealt with for the past 15 years or so and asked him how to proceed. This morning I got a letter from him detailing his charges and I was staggered at the cost. £750 flat fee per pension fund involved (I've got two, so that's £1,500 to start with) plus a sliding scale of charges for investing the remaining funds after the tax free sum is taken if you choose the new 'flexi access drawdown' scheme.
I figure it's going to cost me well over 4 grand for advice on what is, in my opinion, a relatively modest pension fund. I get that the guy has worked hard to become 'chartered' and that you have to pay for his knowledge and expertise. But I just can't figure out what the hell he's going to be doing that justifies that amount of money. Is that the norm when it comes to fees for advice on pensions or is it on the high side? Not even sure if you can 'negotiate' with your financial advisor to agree a reduced fee. Any advice more than welcome.

 

[kaz7]

I don't know if that is fair or not but i would ask for a quote from a couple of others first

 

[city2]

Don't let this robbing bastard rip you off, it's your money, there is fees to pay but nothing like this shit is quoting, there is advice on pensions on gov sites.

 

[NeilYoungIsBack]

You can do it yourself and save the fees, but you'd need to do some proper research before making any decisions.

It might be worth joining the MoneySavingExpert forum - they have a Savings and Investment board and it full of people asking similar questions to yours with a range of sensible replies and tips.

<a class="postlink" href="http://forums.moneysavingexpert.com/forumdisplay.php?f=17" onclick="window.open(this.href);return false;">http://forums.moneysavingexpert.com/for ... y.php?f=17</a>

The main thing at this stage is don't rush into anything, give yourself some proper time to get clued up.

 

[NeilYoungsMilkFloat]

I am going through the same process of transferring my Drawdown into a Flexi Drawdown. I have contacted my provider (Aegon) who will do the transfer for free - no charges. Brilliant! The problem is is that I must employ a broker to facilitate the transfer. Not so brilliant. They have no facility for the pension holder to effect the transfer. They intend to have a portal to enable the public to facilitate transfers by Oct 2015, which is no good for me at the moment. Good planning Aegon! I run a Financial services company, in the mortgage sector, and have also many years experience of advising on investments and pensions, although I no longer trade in this area and my licence does not cover pensions and investments. I still have a good working knowledge of what constitutes good advice and know what fund I wish to transfer into so, it is a bit obscene that I must employ a broker to effectively press a few buttons on the providers portal to effect my transfer. This will cost me. I have a friend in the business who will help me, but he cannot just execute my wishes. He is forced to offer "advice", this involves employing a paraplanner and a network compliance team who will vet the advice and retain 30% of the commission leaving 70% out of which the para planner will be paid. The remainder we have agreed to split. In this case the charge will be 2% commission - most brokers would or could charge 5%. It's not a big fund, £70,000, so that is £1400 in charges, I will retain £415 with the arrangement I have made, a net outlay of £1000.

This is before I start juggling my drawdowns over the next few years to avoid the 40% tax.

The relaxation of the pension rules appears to be very attractive but it could prove to be expensive for many. There will be transfer charges with many providers and the taxation rules will limit how much can be drawdown without being charged excessive taxes. It could be, in a few years the next target for the PPI Claims Management companies...just sayin'.