Ifa charges - pension

[Notsureaboutthis12]

I’m wondering if my ifa’s charges for managing my pension are over the top.
1.22% ongoing fee plus 3% of any extra i add to the pot.
Is this a standard amount?!

Yes those fees are more than you could be paying. Have you considered managing it yourself? There are courses like meaningful money out there that are empowering many to do this. And there’s low cost sipp accounts out there that offer much smaller fees than what you’re paying. You might still need some professional advice from time to time but there’s providers out there that charge for this without the ongoing management and fees associated with that

@CheeseNcrackerz thanks. I don’t feel confident manage it myself and pot pot in growing very nicely - nearly 10% in the last year. However 3% of any extra I add seems a lot!

Honestly I don’t know what a typical amount is if you’re wanting it managed. But I read a lot of information in forums and such from people looking at financial independence and typically the advice is you don’t need an ifa managed service. You might need advice at certain points but they may not do much for that amount. I mean I’m mid 40’s and very much in an accumulation phase so I’m investing in diversified 100% equities fund I’ll revisit when I’m closer to retirement age and need to start thinking about building a cash ladder. I may seek advice at that point.

on the 10% growth- some of that is inflation. Also the market is the highest it’s ever been now so I’d hope you’re experiencing some good growth! We all are.

my sipp is with vanguard. They charge a .15% platform fee capped at £375. Plus a low ongoing fund charge- for ftse global all cap which tends to be a favourite for many the fee is 0.23%

so yes you are definitely paying for the privilege of someone else watching over your pension accumulating.

I think 3% top up is far too high once the account is set up.

Over the top. Do The Rebel Finance School (free on FB and YouTube) and manage your own pension.

That 3% is eye-watering. DIY is preferable, but it's horses for courses; if you don't feel confident about investing, shop around for an adviser and don't be shy about asking about their charges.

That is criminal!!

Just look at what funds they have invested in and then switch to a SIPP with similar fund.

Here’s the impact of fees on your pension pot over 25 years, assuming:

• Starting pot: £100,000
• Annual contribution: £5,000
• Annual growth: 7%
• Time horizon: 25 years

📊 Final Values:
Fee RateFinal Value
0.15% self managed gets you £833,555.59
3.00% from your IFA gets you £474,813.17
💥 Difference due to fees: £358,742.41

OP, those fees sound high. 1% for the first £500k and lower % for staged amounts over £500k is more normal.

Around 1% seems OK- how often do they review the funds for that? The 3% for additional contributions seems high, you could just pay them in yourself

I want to make sure my message above is not missed.
These fees could cost you around £358,742.41 with the assumptions above.

Your calculation is wrong.

A low cost Sipp is under 0.5% platform fee and global trackers are 0.1-0.25% So less than 1%. Even a managed fund is generally below 1%.
If you are happy with your investments they can easily be replicated by looking on Trustnet or Morning star for the funds or their alternatives.

The markets have been pretty strong over the last year, so to be honest 10% is the absolute minimum I would hope for over the last 12 months. My investments (a global fund, a european one, a uk one and an emerging markets one) are up between 15 & 18% over the last year, thats without an ifa. Don't forget there will be bad years (even with an ifa) so you need the good years to be very good.

You could have invested in a range of tracker funds that would have achieved similar if not greater growth. I would not give an IFA a slice of my pension!

This is not right, you have assumed 3% on the whole fund. The Op states that the 3% is only on the amount added not on the whole fund. The full fund charge is 1.22%.

However I do agree that these fees are excessive and you could do better if you shop around. In fact you would do better using a cheap platform like Dodl and choosing a global diversified fund to add to every month/year and just let it do its thing.

To clarify, the 3% isn’t on the whole fund. It’s a one off charge for anything extra added. Eg if I add £10000, i pay a £300 fee.

@Hayley1256 reviewed once a year.

I assume the 1.22% includes platform and fund charges which you will have even if you don’t pay for advice.

@messybutfun yes, that’s right.