Annual pension advice fee - is it worth it?

[mangocrazy]

I retired about 3 years ago and transferred the various bits and pieces pensions I had to Aviva as my pension provider. There was an initial setup fee and the in house Financial Advisor steered me through deciding which pension product to settle for, based on an analysis of my attitude to risk (on the cavalier side - I am a rufty tufty biker, after all...)

But there is also an annual call to discuss how my pension pot is performing and decide if any tweaks are necessary. However this comes at a price - substantially north of £1,000 per annum. Now one of the first rules of pensions as I was led to understand is 'keep charges to a minimum', as they can eat into your base fund to a quite alarming degree. So I am questioning what exactly I get for my £1000+ - I'm broadly happy with the way the fund is set up - I've got enough to live on and do the things I want, and at current rates I should still have funds well into my 90s.

So - do I really need an annual review with the Aviva FA, or should I just keep the £1000+ p.a. in my pension pot?

[MyLittleStudPony]

Pension stealer!

[Cousin Jack]

My take is that pension advice might be worth £1000, but for that I would want totally independent advice, not advice from someone tied to Aviva, who will only ever compare different Aviva products. If you are happy with Aviva and don't want to change horses I doubt the in-house guy is going to be worth anywhere near that sort of money.

[mangocrazy]

My take is that pension advice might be worth £1000, but for that I would want totally independent advice, not advice from someone tied to Aviva, who will only ever compare different Aviva products. If you are happy with Aviva and don't want to change horses I doubt the in-house guy is going to be worth anywhere near that sort of money.

Yes, I'd have thought a fee in the hundreds, not thousands would be appropriate for that level of advice.

[Le_Fromage_Grande]

Are they going to make you over £1000 pa, if not, you're wasting your money

[Yambo]

Sounds like you are funding someone else's pension.

[Dodgy69]

The fee you mention, is that just for advice or their fee for being your pension provider. ?

If no advice required, does this mean no fees. ?

[Count Steer]

Sounds pretty outrageous to me. £1k for a phone call from a non-independent FA? I'd tell them to FO. Tell them you're going to use the money on an IFA to review your pension arrangements every 2 or 3 years (including whether to move from Aviva).

IIRC IFAs will either charge you a fee and not take commission on the 'products' they sell you or do it for 'free' and sell you 'products' that they get commission on. A tied one charging is a 'having cake and eating it' arrangement. (I think some outfits like Fidelity will do the reviews for £0 if you have enough funds under management).

Personally I'd put the time in and review things myself anyway if I was a bit about performance, but not everyone wants to. If you're happy with the current situation then why bother? Chasing improvements can cost and doesn't always work.

[Mr. Dazzle]

Yeah what he said. If it's from your current supplier I'd expect it to be free, if it costs £1000 I'd expect it to be truly independent.

FWIW I paid an IFA a one off fee to look at a bunch of different things simultaneously, didn't cost £1k.

[gremlin]

Sounds trumpy to me. We have a IFA who, by coincidence, we saw up in The Smoke yesterday. Hard to work out what his advice costs as it's all tied in with management fees, but his advice in terms of tax planning and providing scenarios* in terms of retirement, savings, pensions, etc. has been pretty good. Might be worth asking around, as the independents have the market to choose from in terms of investments. Aviva will give you Hobson's choice.


*None of the scenarios seem to include me retiring any time soon.

[Count Steer]

Just been thinking about this in the shower...

If you retired at 65 and died at 95 they'd have siphoned off £30,000 (in addition to dealing charges etc etc) from your hard earned pot.

If they'd asked for it up front what would people tell them to do? Because it's a slice here and a slice there they get away with it - and they'll take it whether your funds rise or plummet. It's not performance related.

If it's optional tell them to do one and use some of the money to review everything with an independent, say, every 3 years depending on what you think is coming down the economic pipeline and your personal situation.

[mangocrazy]

Thanks for all the comments, they're basically confirming my thoughts and feelings. The fee is purely for the Annual review, there's no active monitoring of my chosen pension product, it's just a one-off review. The charge is 0.36% of the net amount invested, so can be expected to decline over time as cash is drawn down. The pension product I've chosen does also have annual management fees, an overall weighted fund cost of 0.15% and platform charges of 0.21%. So it would certainly be advantageous to check out the wider market and switch to accasional use of an IFA rather than an FA who is tied to one pension provider's products.

I'll be giving the FA a call today to tell him his services are no longer required and will be doing a trawl of the market to see what's out there. Are there any pension comparison sites that anyone can recommend?

[Dodgy69]

I'm always a little intrigued by the word 'independent'.

[Mr Moofo]

Sounds like you are funding someone else's pension.

If they are managing your pension , it costs money. That's the way it goes
Depending on how much you pension is , 1k may not be that significant to get the best out of your money

[Count Steer]

The platform and service fees look pretty typical tbh. If it's in a SIPP in a range of funds that's just the cost of service really. Most of these big outfits offer a range of mixed funds income/growth/risk etc and as long as you don't get too exotic I think they're much of a muchness. Aviva seems OK but you could look at others like Fidelity for comparison. (I think they offer free reviews...if you have enough invested, but that might have changed).

I do worry about having all the eggs in one basket so wouldn't put shares, ISAs and funds all with one company but that's just my risk gland being hyperactive probably.

[Potter]

IMO there isn't a simple answer to this.

The thing that FAs are best used for is advice about all the various products and methods of entry into them.
So it could be that you do the phone call, change your product and make/lose thousands...or you could just pay him a grand to waffle and tell you to put your head back in the sand and everything is fine.

I make these guys work for their money and if I'm paying good money then I prepare questions and use it as a master class to teach me as much as they can in the time I have available. I'm also pretty blunt, whilst being polite, that I know they're only giving me the time of day because they want to make money from me, so they have to earn it.

I'd be tempted to give it a try, have all my questions ready and crucially to ask him right at the start of the call to justify how he's going to deliver £1000 worth of value to me.

Vaya con dios.

[Count Steer]

Just for comparison, here are the Fidelity SIPP charges.

https://www.fidelity.co.uk/services/sip ... /#tab-link

0.2% for >£250k (there are other charges depending on the funds you choose but that's their basic rate). It's a strange world but the less you have the bigger % they take ie 0.35% so it's not to do with operating costs. I assume they get kick-backs (legitimately) from the funds people - as FAs may.

Charles Stanley are v similar.

https://www.charles-stanley.co.uk/about ... ct-charges

[Dodgy69]

I pay to have mine managed for me. (diversified drawdown) But, in a world of unsettled turmoil, they can't make my investment grow. 12k down since start up, 18 months ago.

Imo, pensions and investments do well in calm, settled times and we don't do them anymore and i can't see any on the horizon.

[slowhare]

worth it?

definitely NOT.

[Count Steer]

I pay to have mine managed for me. (diversified drawdown) But, in a world of unsettled turmoil, they can't make my investment grow. 12k down since start up, 18 months ago.

Imo, pensions and investments do well in calm, settled times and we don't do them anymore and i can't see any on the horizon.

Which is why a final salary pension in a good scheme is the golden ticket. I never thought I'd ever, ever, ever (ifsay this, but, there may be a time soon when annuities start to look attractive

(If you're fit as a flea and interest rates keep rising and...etc).