Anyone ever used a Pensions/Financial Advisor?

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mkmel
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Anyone ever used a Pensions/Financial Advisor?

Post by mkmel » Mon Sep 25, 2017 4:31 pm

I have some money in my Pension pot that I am looking to utilise and have 2 choices of how to go about it.

I can either simply do it all myself by contacting the trustees of my pension pot and take out 25% of it tax free and then pay the 20% or whatever it is tax on the remainder left in the pot.

Or I can get an FCA registered Pensions/Financial Advisor and pay him the 3% or whatever of the Pension pot commission and get him to save me paying the tax man so much.

But will he save me more money than it will cost me to employ him?

Has anyone on here ever used a Pensions or Financial Advisor and is it worth it to get someone?

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by CleggHall » Mon Sep 25, 2017 4:43 pm

mkmel - my advice, if at all possible leave your money in the pension pot unless you are steering it towards a better returning investment. In other words, do not spend or consume it now. Retirement is often, and hopefully, a long term of 30+ years and inflation rapidly will eat into and erode the value of your retirement income. Hang in with saving whilst you are in employment and resist the temptation to cash in now.

I speak as a 72 year old with a decent pension but one or 2 other annuities are now becoming worthless.
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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Guitargeorge » Mon Sep 25, 2017 4:50 pm

I think you are right to seek financial advice. I don't regret going with my advisor. They know things we don't!

Walton
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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 4:51 pm

Ask your pension administrators for a Cash Equivalent Transfer Value, if it is a final salary pension you had.

The current situation with gilt yields mean that final salary schemes are now paying transfer values of 30, 40, 50 times the annual pension, which combined with the pension freedoms (introduced a few years ago) mean that transferring out can now be highly beneficial to you.

I'd highly recommend speaking to a financial adviser, who would prepare a lifetime cashflow report tailored to you, and would advise on the best use of your funds.

Fees wise, the last case I worked on had ongoing fees of 0.3% Provider, 0.75% investment managers, 0.8% adviser ongoing, coming to 1.85% annual charge all in, with an initial charge of about £1300, covering the reports necessary. As an example of the work that goes in for that, I sent a 6,500 word letter with 4 separate lifetime cashflow reports last week. This was based on a CETV of just over £600k.

You would need to find a G60 qualified adviser if final salary. If it's a DC pot, then that initial fee comes right down.

I know you're in MK, but should you be open to a Lancs based adviser charging around the above fees, let me know and I'll give you the details of the firm I work for.
Last edited by Walton on Mon Sep 25, 2017 5:00 pm, edited 1 time in total.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by brunlea99 » Mon Sep 25, 2017 4:57 pm

I would recommend getting advice from an IFA. See the attached website which enables you to select a local Independent Financial Advisor (not linked to sell any specific products). Most of them give the initial advice free of charge and they will give you an overview of your personal financial profile and offer alternative options best suited to you. I used one recently for pension advice and the outcome of my meeting (after a comprehensive overview of my current pensions) was to stay the way I am.

https://www.unbiased.co.uk/adviser-enqu ... 7QodiKcElA" onclick="window.open(this.href);return false;

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Healeywoodclaret » Mon Sep 25, 2017 4:59 pm

It really depends on how much is in the pot versus how many more years you are planning to work. If it's a small pot probably not worth employing a financial advisor. If it's a substantial amount then yes do. You do pay emergency tax on the remaining 75% but you can claim some of it back. If you are working and paying PAYE you do not need to wait until the new tax year. You just down load form P55 send it off to Bournemouth. They don't pay your rebate by BACS surprise surprise they send you a cheque usually within 6 weeks. Don't try to phone your local tax office it's a complete waste of time. Just bang the form in as quick as you can.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by JohnMac » Mon Sep 25, 2017 5:01 pm

I have a works pension with Standard Life.
When I took early retirement I was given free impartial advice by them.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Diesel » Mon Sep 25, 2017 5:06 pm

St James Place.

They are that ******* big that they absorb any fees themselves.

https://www.sjp.co.uk" onclick="window.open(this.href);return false;

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 5:08 pm

SJP's fees are eye-watering, not absorbed

http://m.citywire.co.uk/money/which-exp ... s/a1036115

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mkmel » Mon Sep 25, 2017 5:13 pm

Perhaps I should have mentioned that I am 66 years old and retired and because of my various health issues realistically to put it bluntly I am only going to be around for another 15 to 20 years.

And I do need to access at least the 25% tax free amount of the pot right now with the rest spread out over say the next 10 years when I am fully able both physically and mentally to enjoy spending my money.

So doing nothing with it right now is definitely not an option

And no it's not a final salary pension.

Thanks for all your comments and advice btw.
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mkmel
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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mkmel » Mon Sep 25, 2017 5:25 pm

Healeywoodclaret wrote:It really depends on how much is in the pot versus how many more years you are planning to work. If it's a small pot probably not worth employing a financial advisor. If it's a substantial amount then yes do. You do pay emergency tax on the remaining 75% but you can claim some of it back. If you are working and paying PAYE you do not need to wait until the new tax year. You just down load form P55 send it off to Bournemouth. They don't pay your rebate by BACS surprise surprise they send you a cheque usually within 6 weeks. Don't try to phone your local tax office it's a complete waste of time. Just bang the form in as quick as you can.
What sort of ball park minimum figure in a Pension pot would you call substantial enough to make it worthwhile to employ a Pensions/Financial Advisor.

And I am already retired.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 5:47 pm

mkmel wrote:Perhaps I should have mentioned that I am 66 years old and retired and because of my various health issues realistically to put it bluntly I am only going to be around for another 15 to 20 years.

And I do need to access at least the 25% tax free amount of the pot right now with the rest spread out over say the next 10 years when I am fully able both physically and mentally to enjoy spending my money.

So doing nothing with it right now is definitely not an option

And no it's not a final salary pension.

Thanks for all your comments and advice btw.
If you already plan to exhaust it all within 10 years you'll be better off transferring it to a flexi-access drawdown plan rather than annuitising.

Oh, and definitely use the Unbiased website given above, and find the right adviser for YOU.
Last edited by Walton on Mon Sep 25, 2017 6:04 pm, edited 1 time in total.

Diesel
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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Diesel » Mon Sep 25, 2017 5:47 pm

Walton wrote:SJP's fees are eye-watering, not absorbed

http://m.citywire.co.uk/money/which-exp ... s/a1036115
Interesting that, Walton.

I will look further into my arrangement with SJP.

I am very naive at the best of times, so....

Thanks.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mkmel » Mon Sep 25, 2017 5:59 pm

Walton wrote:If you already plan to exhaust it all within 10 years you'll be better off transferring it to a flexi-access drawdown plan rather than annuitising
Excuse my ignorance but I take it that would realistically mean going through a Pensions/Financial Advisor as I would have no idea how to go about doing that.

That being the case what sort of fee would they charge me?

And would that be a better option for me financially rather than just claim the 25% of my Pension Pot tax free and then pay whatever the tax is on the remaining 75%.

In a nutshell Walton if you were me which option would you take?

And I don't know how true it is but somebody once told me that if you have certain big health issues and not necessarily terminal ones that you can get the benefit of a bit more money?
Is that true?

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Barry_Chuckle » Mon Sep 25, 2017 6:12 pm

I wouldn't touch SJP with a barge pole.

25% Tax free, then use "drawdown" to utilise the best exit strategy for the rest, this strategy would depend on your individual tax status as anything taken over the 25% is deemed income for the current tax year. Take advice and utilise future years personal allowances (currently £11,250) if possible.

You may find a shortage of advisors willing to guide you though due to the industry being worried this could be a future "bad advice scandal", concern is that when folk get to retirement, they could claim that they weren't aware when they emptied their pension pot, that this would lead to no pension income in retirement.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Claretpants » Mon Sep 25, 2017 6:13 pm

Walton wrote:If you already plan to exhaust it all within 10 years you'll be better off transferring it to a flexi-access drawdown plan rather than annuitising.

Oh, and definitely use the Unbiased website given above, and find the right adviser for YOU.

Spot on

The remaining fund you can take advice amounts each tax year to save paying 40% in one tax if you take all at once

Plus any surviving spouse will have lump sum left over as opposed an annuity which would reduce or die with you


Definitely need advice as after a mortgage it’s the biggest financial decision you will make

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 6:16 pm

As an example of the tax you'd pay, say you had a £100k pot. 25k tax free, but then by taking the 75k as cash as well all at once, you'd pay tax of about 34k, off the top of my head.

If your pot is over say £30k I'd definitely be looking to run things past an adviser through unbiased. Pay what you're happy to, and if it seems expensive, get a figure from another adviser. There are plenty around, and some are very expensive.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mealdeal » Mon Sep 25, 2017 6:18 pm

Walton wrote:
Fees wise, the last case I worked on had ongoing fees of 0.3% Provider, 0.75% investment managers, 0.8% adviser ongoing, coming to 1.85% annual charge all in, with an initial charge of about £1300, covering the reports necessary. As an example of the work that goes in for that, I sent a 6,500 word letter with 4 separate lifetime cashflow reports last week. This was based on a CETV of just over £600k.
I might not have admittedly, but have I understood this correctly? Ongoing fees of 1.85% on a CETV of £600,000? Isn’t that over £11,000 a year?

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 6:26 pm

mealdeal wrote:I might not have admittedly, but have I understood this correctly? Ongoing fees of 1.85% on a CETV of £600,000? Isn’t that over £11,000 a year?
1.85% is easily covered with investment target of 5 or 6% per annum

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mealdeal » Mon Sep 25, 2017 6:27 pm

So it is over £11,000 a year then? Jesus.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mkmel » Mon Sep 25, 2017 6:29 pm

Some great advice given on here so thank you guys it is much appreciated

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 6:36 pm

mealdeal wrote:So it is over £11,000 a year then? Jesus.
And that's with a modest adviser charge of 0.8%.

A lot of advisers charge 2-3% just for their bit alone, never mind all in.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by ElectroClaret » Mon Sep 25, 2017 6:39 pm

Walton wrote:As an example of the tax you'd pay, say you had a £100k pot. 25k tax free, but then by taking the 75k as cash as well all at once, you'd pay tax of about 34k, off the top of my head.

If your pot is over say £30k I'd definitely be looking to run things past an adviser through unbiased. Pay what you're happy to, and if it seems expensive, get a figure from another adviser. There are plenty around, and some are very expensive.
Isn't the tax figure for a basic taxpayer 20%, Walton?

So out of a 100k pot, £25,000 would as you say be tax free, then the remaining £75,000 would have 20% deducted.
That's £15,000, but, as I say, that's if the tax take is 20%. Not completely sure. Is the tax on cashing in pensions higher?

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mealdeal » Mon Sep 25, 2017 6:41 pm

The best advice I’ve got is be your own financial advisor. You’ll save a fortune.
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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Diesel » Mon Sep 25, 2017 6:50 pm

Okay then, I thought I was hunky dory with SJP.

I have a pot of £37,000 ish? With them, should I be moving it?

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 7:06 pm

ElectroClaret wrote:Isn't the tax figure for a basic taxpayer 20%, Walton?

So out of a 100k pot, £25,000 would as you say be tax free, then the remaining £75,000 would have 20% deducted.
That's £15,000, but, as I say, that's if the tax take is 20%. Not completely sure. Is the tax on cashing in pensions higher?
There's a tax calculator here, from Which

http://www.which.co.uk/money/tax/income ... n-pensions

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Hipper » Mon Sep 25, 2017 7:13 pm

When I got an annuity about four years ago (before the current flexible arrangements came in) they did ask some medical questions and I was told that if, for example, I smoked, I would get more. So you should mention your medical conditions to your advisor.

If it is about obtaining money, another option, if you own your property, is Equity Release, also known as a Lifetime Mortgage. Again, this is something you should get good advice on by specialists in that field. This too can be affected by medical conditions.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by CleggHall » Mon Sep 25, 2017 7:14 pm

Diesel - steady as you go!
Yes St James Place initial and annual charges are relatively high but the performance of their SJP funds is excellent too. They are ruthless in culling non-performing fund managers and the competition so engendered produces high returns. I have been with them since 2009 and am most satisfied with their growth and returns over the past 8 years.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by mealdeal » Mon Sep 25, 2017 7:32 pm

CleggHall wrote:Diesel - steady as you go!
Yes St James Place initial and annual charges are relatively high but the performance of their SJP funds is excellent too. They are ruthless in culling non-performing fund managers and the competition so engendered produces high returns. I have been with them since 2009 and am most satisfied with their growth and returns over the past 8 years.
And I’m willing to say that a decent tracker fund will **** all over an expensive SJP managed fund over the long term.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by ontario claret » Mon Sep 25, 2017 7:43 pm

About 30 years ago I used a financial adviser, and all they did was buy me a GIC, minus their cut. If you have half a brain, buy an investment instrument from a life insurance company. They're always solid. Standard Life is a good one.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by ElectroClaret » Mon Sep 25, 2017 7:45 pm

Thanks for the calculator, Walton.

Enormously (and pleasantly surprisingly) helpful.
Thinking of cashing one in myself. The tax in my case was a lot less
than I thought.£££££ :D Kerching!

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Blackrod » Mon Sep 25, 2017 7:47 pm

'A little knowledge is a dangerous thing' Alexander Pope
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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 7:50 pm

Anyone holding funds with Hargreaves Lansdown or SJP hasn't done their research.

But hey, if someone wants to pay over the odds then fair enough.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by barba » Mon Sep 25, 2017 8:07 pm

the biggest risk going into drawdown is a drop in the markets just beforehand. If you consider the current geopolitical risks and the fact central banks will shortly begin unwinding/ tapering QE coupled with the fact we are closer to the next crisis than the last the risks are there to be seen

Most 'default' funds are either too risky or will 'de-risk' into a gilt market which is at its highest for 300 years.

Understanding where your investments are is the first thing I would do. Hey you could lose a bit of growth if the markets grows but it's far better than losing 30% if Trump bombs N Korea.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Paul Waine » Mon Sep 25, 2017 8:39 pm

mkmel wrote:Perhaps I should have mentioned that I am 66 years old and retired and because of my various health issues realistically to put it bluntly I am only going to be around for another 15 to 20 years.

And I do need to access at least the 25% tax free amount of the pot right now with the rest spread out over say the next 10 years when I am fully able both physically and mentally to enjoy spending my money.

So doing nothing with it right now is definitely not an option

And no it's not a final salary pension.

Thanks for all your comments and advice btw.
Hi mkmel, I'm in similar situation to you, 64 in a few weeks. I've been looking at the best way to manage my DC pension funds.

I attended a "free" retirement event last year, some useful stuff - of course, the financial advisors were only looking for customers to get their fingers into everyone's pension pots.

The good bits, as I understand them:

1) Pension pot is not part of your estate, if it is held in trust (which is the standard arrangement). Your beneficiaries (as advised to pension funds) can receive whatever remains in your pension fund without paying any inheritance tax - if you die before 75. I think post-75 it becomes taxable as income to beneficiary (assuming rules aren't changed in the intervening years).

2) We aren't required to buy an annuity (about the only good thing George Osborne did as Chancellor) - so, taking out what you need, when you need, is, often, the better option. Keeping funds invested should provide some additional returns over the medium/longer term - though be careful, very careful. there are no guaranteed returns on investments - it's only the financial advisors who speak as though 5-6% per annum is a regular return.

3) Be aware of the "lifetime allowance" and how it is calculated. If you've already drawn some pension, perhaps a final salary at 60, that also counts as use of your lifetime allowance. The allowance is tested when you start to draw from pension pot. And, it is tested again at 75.

4) You might have "special situations" - you may need to use some of pension fund to pay off a mortgage, or other debt, or you may have some special occasions to celebrate, or the "journey of a lifetime" still to do. (There are several parts of the world I want to visit...).

So, first thing, draw up a "financial planning document" - all your income, all your expenses, the stuff that you must spend, the stuff that is variable/optional, the stuff that is "nice to do" etc.

Next look at the current charge on your pension pot(s). The best charge I've got is 0.3%. Of course, that is passive funds. From all the research I've seen the passive funds always beat the active investors over the medium term. (A possible return of 5-6% when the "advisors" are guaranteed between 1.5 and 2% of the fund, whatever the return, is an absolute "goldmine" for the advisors and very poor return for the investor).

I've not got as far as drawing down from my funds - so, I've no details just yet. When I looked last year a number of schemes hadn't set up their "draw down" (or other access) arrangements, others had them up and running, but the charges were "eye-wateringly high." The gov't/FCA as criticised the level of charges. I'm hoping this will improve the situation.

As a footnote, the financial advisors I saw last year, suggested that I withdraw my 25% tax free amount and give it to them to buy some sort of "life assurance" scheme - when I died it would pay out. They wanted a "fat fee" for setting it up for me, getting quotes etc (I'd had a heart attack a few months earlier), though there was no guarantee I'd qualify.

Tax wise, anything you draw down above the 25% tax free, counts towards your annual income - and is taxed at your marginal rate. Your state pension, and any other income, also counts as part of your taxable income, so you can find yourself paying 40% tax instead of 20%. Spreading it out over 10 years, as you say, can save you 20% tax charge immediately.

Last thing on charges: I've seen something about a US firm setting up in the UK, Vanguard might be the name. They are apparently a lot cheaper than other "fund managers" - already well established in US, of course. This may "shake up" the fund management industry somewhat.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Paul Waine » Mon Sep 25, 2017 8:41 pm

barba wrote:the biggest risk going into drawdown is a drop in the markets just beforehand. If you consider the current geopolitical risks and the fact central banks will shortly begin unwinding/ tapering QE coupled with the fact we are closer to the next crisis than the last the risks are there to be seen

Most 'default' funds are either too risky or will 'de-risk' into a gilt market which is at its highest for 300 years.

Understanding where your investments are is the first thing I would do. Hey you could lose a bit of growth if the markets grows but it's far better than losing 30% if Trump bombs N Korea.
Hi barba, agree, the current investment outlook is "not inspiring." What do we do though when the pension pot has got to last 20-30 years (assuming we can also make it that long)?

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by 3putt » Mon Sep 25, 2017 8:42 pm

Blackrod wrote:'A little knowledge is a dangerous thing' Alexander Pope
Great quote and so very very true.

I work in financial services, not in a pensions and not as an adviser (have done in the past though). That said, I have worked in the financial services industry for well over 30 years and therefore have a decent amount of knowledge.

I would concur that SJP are extremely expensive with their charges and would not use them personally.

I made the decision to take the cash equivalent value from two preserved final salary pension schemes a couple of years ago and transferred into a personal pension. I'm not saying that this necessarily the right thing to do for everyone, but I had good reasons and fully understood what I was doing.

I used an IFA (you have to if transferring out of a defined benefits scheme). However I did not want the adviser to manage my pension arrangement and therefore was able to negotiate a very reasonable one off fee for the transaction.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Dy1geo » Mon Sep 25, 2017 8:56 pm

My advice would be to use an IFA who has the specialist higher CII pension qualifications.

As for fees I must stress to negotiate a flat fee rather than a percentage what extra work is needed for a 100k fund to a 80k fund. If a large pot it should be capped.

Then you have to decide what you want with your fund, do you want a regular income, if so how much anything over 4% a year you are at risk of eroding underlying capital. If your needs are complex I would advise utililising an ongoing service and ask the advisor what the service is and again agree a flat fee for reviews and pay when needed, that way the fund is not being eroded through the advisers monthly charges

With regards researching an advisor my advice would be to look for one that doesn't "advertise" for work and discuss your needs and then agree to meet.
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Re: Anyone ever used a Pensions/Financial Advisor?

Post by atlantalad » Mon Sep 25, 2017 9:48 pm

Some great open discussion here. I am thinking of retiring in a year or so and have final salary scheme. I think I can transfer the CETV to a personal pension plan ( - I say think because my pension personnel are not forthcoming with information on this when I ask a direct question!) and would like to take 25% then have a drawdown with the rest. I have read ( or mis-read may be) somewhere that you need to give notice 12 month in advance of retirement to be able to transfer your pot to another SIP - is this the case?

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Diesel » Mon Sep 25, 2017 9:54 pm

Clever boy's.

Really, really interesting.

Thank you.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Mon Sep 25, 2017 9:58 pm

atlantalad wrote:Some great open discussion here. I am thinking of retiring in a year or so and have final salary scheme. I think I can transfer the CETV to a personal pension plan ( - I say think because my pension personnel are not forthcoming with information on this when I ask a direct question!) and would like to take 25% then have a drawdown with the rest. I have read ( or mis-read may be) somewhere that you need to give notice 12 month in advance of retirement to be able to transfer your pot to another SIP - is this the case?
It may be a muddling up of a couple of things: pension schemes largely do not provide transfer values once you are within 12 months of the scheme's normal retirement age.

You should be able to request a transfer value at any time, but be aware that these are guaranteed for 3 months from the date of calculation, within which all advice needs to be sought and all forms etc completed and received. Generally you're allowed 1 cetv from the scheme in a 12 month period, and the Trustees may deny a request for a recalculation if you miss the deadline. In my experience (10+ years in DB admin/actuarial prior to current job number-crunching at an IFA firm) however, they'll charge about £300 for a recalc.

There's no statutory rule stating that you need to give 12 months notice or anything.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by barba » Tue Sep 26, 2017 12:08 am

I agree with the above.

If you are considering transferring your DB scheme then get all the ducks in a row before requesting the CETV as 3 months is no time to get all the work done especially the TVAS report.

It is a lot of work transferring a DB scheme as the default position perhaps wrongly is that it's a bad idea and you need to provide a solid counter argument.

I use a three step approach:

1. Triage - to ascertain if the transfer has any chance. Second homes, holidays, because I want to are not good reasons.

2. Providing the advice - this could even be a no which is why step 1 is important.

3. Implementation.

Using step 3 in isolation is frowned upon by the regulator as remuneration is only generated by completing the transaction whether it is good or bad advice.

I personally feel pension freedoms and DB transfers will be the next miss selling / miss buying scandal in my industry.

With a life time of liability I'm cautious

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Healeywoodclaret » Tue Sep 26, 2017 7:01 am

mkmel wrote:What sort of ball park minimum figure in a Pension pot would you call substantial enough to make it worthwhile to employ a Pensions/Financial Advisor.

And I am already retired.
I'd say anywhere from 50,000 upwards. If you are already retired and there's less than 50,000 depending on your target date for cashing it in entirely it's probably best left where it is. Unless of course you have some cash flow problems and need a couple of grand quickly.


I'm not retired yet(I wish) and I'll be honest I'm probably wishing my life away. But once retired I'd don't envisage outgoings ie living expenses to be any less.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Spike » Tue Sep 26, 2017 7:52 am

Always consider all fees especially if you intend to use drawdown. Some of the ongoing fees will overtime seriously impact your returns. Be careful of moving from a Final Salary scheme the “ flexibility “ that offers is generally only in the Adviser’s pocket.

I simply won’t touch Final Salary transfers because I think it’s the next big claim area!
For other pensions happy to offer free advice

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by TVC15 » Tue Sep 26, 2017 11:43 am

I agree about transfers being potentially a future area of claims.

That said transfer values are high and it is definitely worth talking to an IFA.

There are other benefits of having a private pension including possibly earlier access to your pension than in your DB scheme and also being able to pass on the funds to your children when you and your spouse have died - the pension pot also being outside of inheritance tax (unlike your house, bank savings etc).

Under a DB scheme in the unfortunate event you and your spouse die at the same time any pension pots just go back into the scheme. If one of you dies your partner gets a spouses pension (often 50%) and when your spouse dies at a later date any remaining pension "dies with you" - i.e. goes to the scheme.

Every bodies circumstances are different - attitude to risk, capacity for loss, etc etc which is why it's important to see an IFA as they will go through all of this with you before making a recommendation.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by atlantalad » Tue Sep 26, 2017 7:01 pm

There is a great deal of information in all the above contributions. Some statements don’t inspire confidence in making decisions on pensions and, in particular, relying on IPA’s. Suggestions are to seek advice from IPA’s before you make a decision. I get that because they are the “experts” with the financial knowledge. However, the feeling is that most IPA’s would tend to stay clear of advising clients to transfer out of final salary DB schemes for fear that it could come back as mis-selling.
What is the point of seeking an IPA’s experts opinion if, at the end of the day they would be reluctant to recommend ( using expert analysis) transfer out for fear of their advice later proves erroneous. It begs the question – just how knowledgable are IPA’s. I like the idea of transfer for the very reason highlighted by TVC15
“ Under a DB scheme in the unfortunate event you and your spouse die at the same time any pension pots just go back into the scheme. If one of you dies your partner gets a spouses pension (often 50%) and when your spouse dies at a later date any remaining pension "dies with you" - i.e. goes to the scheme. “



I’d like to think that any residuals may be left to my kids when I am gone rather than back to the coffers of shareholders in a large multinational. Guess I will have to polish my crystal ball and start a spread sheet projection.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Paul Waine » Tue Sep 26, 2017 9:55 pm

atlantalad wrote:There is a great deal of information in all the above contributions. Some statements don’t inspire confidence in making decisions on pensions and, in particular, relying on IPA’s. Suggestions are to seek advice from IPA’s before you make a decision. I get that because they are the “experts” with the financial knowledge. However, the feeling is that most IPA’s would tend to stay clear of advising clients to transfer out of final salary DB schemes for fear that it could come back as mis-selling.
What is the point of seeking an IPA’s experts opinion if, at the end of the day they would be reluctant to recommend ( using expert analysis) transfer out for fear of their advice later proves erroneous. It begs the question – just how knowledgable are IPA’s. I like the idea of transfer for the very reason highlighted by TVC15

"Under a DB scheme in the unfortunate event you and your spouse die at the same time any pension pots just go back into the scheme. If one of you dies your partner gets a spouses pension (often 50%) and when your spouse dies at a later date any remaining pension "dies with you" - i.e. goes to the scheme."

I’d like to think that any residuals may be left to my kids when I am gone rather than back to the coffers of shareholders in a large multinational. Guess I will have to polish my crystal ball and start a spread sheet projection.
Hi atlantalad, unfortunately, TVC15's words are "not well chosen." If you are in a DB scheme you have a defined benefit, but you don't have a "pension pot" and there is no "remaining pension" if you (and partner) die earlier than average. Until the very recent changes to pension regs, this was a great advantage of DB scheme. The sponsor of the scheme is responsible for paying your defined benefit (typically, based on final salary and years if service. Typically, also inflation protected, depending on terms. Often, but not always, also providing a pension for a surviving dependant/spouse/partner). It doesn't matter to you how much is in the pension fund - provided the sponsor is financially capable of fulfilling the covenant. Of course, sometimes, the pension fund has a deficit and the sponsoring employer goes bust, (BHS, Tata Steel and many others are examples of this situation). If the sponsor is unable to pay the pension protection fund steps in. I think existing pensioners get the greatest protection (but I'm not sure if it is 100%), beneficiaries (employees and ex-employees) who haven't started to receive pension are cut to 90%, and higher pensions are capped. The fund, of course, works on the basis that some people will die before others - and many of them have deficits because we are not dying as early as we used to do.

Defined contribution schemes, whether company sponsored of personal you have your own pension pot. Your pension is determined by the money in your pot. Until 2015 your choices were (a) buy and annuity or (b) set up lot's of little pension pots, and draw down on each one in turn and (c) (I think I'm got this right) at 75 you had to buy an annuity. The changes no longer require you to buy an annuity - with low interest rates they have been very poor value. And, for the first time, whatever is in the pot when you die can be inherited by your dependents. I'm not sure how wide your freedom is to decide who can inherit it, surviving spouse/partner and children would be natural choices, As relationships are broader these days, I'd assume it also permits wider choices.

But, the big, big questions are: how will your investments perform? Will the markets crash (as they did in 2008)? How much money do you need? Do we know how long we will live? Will we outlive our pension pot, or will there be something left when we "shuffle off this mortal coil."

As, for most, our "date of death" is unknown the promise of a defined benefit pension is judged to be "better value" than a DC pension pot.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Walton » Tue Sep 26, 2017 10:46 pm

The plethora of reports I mentioned the other day go into those possibilities though PW. TVAS reports are prepared with many different scenarios played out, and you can then add extra levels of analysis in terms of lifetime cashflow reports.

The last few reports I've done have had funds lasting until age 120+.

The death benefits available from DC pots tick boxes for so many people nowadays, and after 10 years in DB environments I now see how limited the final salary provision on death is.

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by TVC15 » Wed Sep 27, 2017 4:42 pm

Paul Waine wrote:Hi atlantalad, unfortunately, TVC15's words are "not well chosen." If you are in a DB scheme you have a defined benefit, but you don't have a "pension pot" and there is no "remaining pension" if you (and partner) die earlier than average. Until the very recent changes to pension regs, this was a great advantage of DB scheme. The sponsor of the scheme is responsible for paying your defined benefit (typically, based on final salary and years if service. Typically, also inflation protected, depending on terms. Often, but not always, also providing a pension for a surviving dependant/spouse/partner). It doesn't matter to you how much is in the pension fund - provided the sponsor is financially capable of fulfilling the covenant. Of course, sometimes, the pension fund has a deficit and the sponsoring employer goes bust, (BHS, Tata Steel and many others are examples of this situation). If the sponsor is unable to pay the pension protection fund steps in. I think existing pensioners get the greatest protection (but I'm not sure if it is 100%), beneficiaries (employees and ex-employees) who haven't started to receive pension are cut to 90%, and higher pensions are capped. The fund, of course, works on the basis that some people will die before others - and many of them have deficits because we are not dying as early as we used to do.

Defined contribution schemes, whether company sponsored of personal you have your own pension pot. Your pension is determined by the money in your pot. Until 2015 your choices were (a) buy and annuity or (b) set up lot's of little pension pots, and draw down on each one in turn and (c) (I think I'm got this right) at 75 you had to buy an annuity. The changes no longer require you to buy an annuity - with low interest rates they have been very poor value. And, for the first time, whatever is in the pot when you die can be inherited by your dependents. I'm not sure how wide your freedom is to decide who can inherit it, surviving spouse/partner and children would be natural choices, As relationships are broader these days, I'd assume it also permits wider choices.

But, the big, big questions are: how will your investments perform? Will the markets crash (as they did in 2008)? How much money do you need? Do we know how long we will live? Will we outlive our pension pot, or will there be something left when we "shuffle off this mortal coil."

As, for most, our "date of death" is unknown the promise of a defined benefit pension is judged to be "better value" than a DC pension pot.
Paul - don`t think it was a case of my words being "not well chosen" but more of a case of trying to put this into layman language so that its relatively easy for people to understand the main difference between a DB scheme and a DC ones - especially in relation to death benefits and what happens with the funds or pension payments when the pension holder and / or spouse dies.

Whilst many DB schemes will be different in terms of the specific death benefits in relation to the spouse this is part of the IFAs job to check these out as part of the transfer recommendation process. Generally though it is true that with a private pension the ability for this to be passed on in full to spouse and children is a benefit of a personal pension over a DB scheme.

You are correct that under a DB scheme this is not a pot....and of course a "guaranteed" benefit for life and the certainty that this brings is one of the big benefits of DB over personal pensions when the pot can go down aswell as up.

It`s a massive area of complexity for individuals to understand and the fact it really is "crystal ball" stuff when an IFA is forecasting future growth makes it even more of a minefield.

Undoubtedly we will see regulation around TVAS change in future years as TVAS in itself is a very linear type assessment and there needs to be more of an end to end approach of the individuals financial circumstances, Unfortunately knowing the FCA these changes will probably come when the issue of claims and miss-selling starts to rear its head....that`s how the FCA normally operate !!

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Re: Anyone ever used a Pensions/Financial Advisor?

Post by Paul Waine » Wed Sep 27, 2017 5:47 pm

TVC15 wrote:Paul - don`t think it was a case of my words being "not well chosen" but more of a case of trying to put this into layman language so that its relatively easy for people to understand the main difference between a DB scheme and a DC ones - especially in relation to death benefits and what happens with the funds or pension payments when the pension holder and / or spouse dies.

Whilst many DB schemes will be different in terms of the specific death benefits in relation to the spouse this is part of the IFAs job to check these out as part of the transfer recommendation process. Generally though it is true that with a private pension the ability for this to be passed on in full to spouse and children is a benefit of a personal pension over a DB scheme.

You are correct that under a DB scheme this is not a pot....and of course a "guaranteed" benefit for life and the certainty that this brings is one of the big benefits of DB over personal pensions when the pot can go down aswell as up.

It`s a massive area of complexity for individuals to understand and the fact it really is "crystal ball" stuff when an IFA is forecasting future growth makes it even more of a minefield.

Undoubtedly we will see regulation around TVAS change in future years as TVAS in itself is a very linear type assessment and there needs to be more of an end to end approach of the individuals financial circumstances, Unfortunately knowing the FCA these changes will probably come when the issue of claims and miss-selling starts to rear its head....that`s how the FCA normally operate !!
No worries. I wanted to help everyone avoid the idea that there is a pension pot left behind when someone in a DB scheme "dies early." The next thing we would all learn is that Jeremy Corbyn and John Mcdonnell will be claiming all those funds - in the same way that Gordon Brown got away with the first tax grab from the DB schemes in 1997.

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