Financial planning fees

[Mamma28383]

I engaged with a financial planner recently who specialises in children with SEND (have won some awards) and we talked about setting up a child’s pension for my child who has disabilities.

They showed me some portfolio options and later said the fees to set it up was £1k! I didn’t expect it to be this high. When I looked into other child pensions on MSE they take commission.

Are these fees typical at all?

Is there something special about a pension for a child with disabilities? What makes the pension different from any other pension set up for a child? Is there some extra legal legwork that is combined with it like POA at the same time?

The advice is more specialist but the products they sell are the same.

Some things like disability trusts are complex and need specialist solicitors which they use. I can see how it makes sense to do wills and trusts with them, and doing other bits like life assurance, child pensions, etc with them will
ensure it all ties together. I just have no idea if the fees are realistic.

You could do it yourself if nothing special like a Trust is needed.

Are you paying for the advice sessions? What may be happening is that you are getting the financial planning and regulated advice, but instead of paying up from for that you are paying in some other way, such as having particular products which have a setup fee and an ongoing fee.

Be very clear about what are involved.

I think I’m just so time poor, I would be ok to pay the fees for one planner to do everything for me. But I just want to be sure I’m paying the going rate.

Yes I think it’s like that, there is not charge for advice (so far) and they earn commission for setting up life assurance, and they earn flat fees for wills and trusts which I expected. I didn’t expect such a high flat fee for the child’s pension. Is setting one up really as much as £1k? I don’t know how to tell if that is good value compared to a child’s pension that MSE recommends and has a yearly commission.

Doing the pension bit yourself, it’s going to cost hardly anything. Have a look at AJ Bell for example, https://www.ajbell.co.uk/pensions/junior-sipp

Will, trusts, that sort of thing is what costs the money. Ask the adviser why the pension is costing so much, and could you do that bit yourself such as by using AJ Bell, and then have the adviser sort out other things?

All financial products have to have fact sheets. Get them for the recommended product and some of the competitors. If the £1000 is just for setting it up that’s crazy - think how long it takes to make that back and then there will be other ongoing fees.

The specialised legal help to set up disability trust - is that included? Maybe that makes the price better.

This sounds like appalling value. I would be very very cautious of going ahead with any of his advice. It sounds exploitative of parents with disabled children, who will be naturally active in forward planning and concerned for their child's future in excess of what another parent might feel. You've met with him and don't understand the basis for the extortionate fee. If this product was being sold in good faith and was in your and your child's best interests he wouldn't need to obfuscate and confuse to sell it. Who gave him the awards he's using for legitimatacy? His mother?
A child's pension is very easy to set up. You can do it yourself for free. Pick a platform like fidelity, vanguard, etc. Pick a passive global tracker to invest in. They'll be an ongoing fee of less than one percent.

What is a regulated service?

No the trust is separate and those are very expensive to set up, £2-3k at least - I’ve asked around.

The financial/estate planner firm offers a package of wills, trust and LPA that to be fair is less expensive than the package recommended by Mencap, and much less than specialist solicitors.

But yes I’ll go back and ask about the fees
and look at different options.

You can set up a child's pension yourself for free and choose what to invest in for free. You can invest in a single low cost global index tracker fund with low ongoing cost of a tiny fraction of the amount invested.

I'm not clear what the £1k fee is for from the financial planner. If they are choosing investments to hold in the pension, then that's probably about right. But it's a massive waste of £1k.

Considering you can only put £2800 or so a year into a child's pension, it could take several years to recoup that fee, so I really don't think you should pay it.

Are you sure your child will need a pension? If you are setting up an income for life, then don't forget they will get a state pension and possibly PIP or other disability support when they reach that age.

You're tying up that money until they are at least 57 and if their care needs increase or become more expensive you might need that money sooner than that.

What Jopo12 said!

Are you sure your child will need a pension? If you are setting up an income for life, then don't forget they will get a state pension and possibly PIP or other disability support when they reach that age.
You're tying up that money until they are at least 57 and if their care needs increase or become more expensive you might need that money sooner than that.

They don’t have physical disabilities, they are neurodivergent. So they won’t have physical care needs, just day-to-day living costs.

I think it’s quite possible that my child may never be independent, that that may not be able to hold down a job, and may even have to continue to live with us, or possibly some supported living. I want to know that when DH and I die that my child has enough money to enjoy life, and not just survive it on PIP. I also worry that things may change over the decades and any disability support simply won’t be enough. I thought a pension would be a good investment over the very long term.

But I’d quite like to know if there are better options, hence speaking to a SEN specialist financial planner. We have modest salaries and were planning to put a modest amount in the pension. We also have a savings account for my child. We had been putting money into an ISA for them but were told that might impact any benefits they may need if they are not working.

Thank you all for the advice on setting up a child pension independently.