Easy Move to Get A Bigger Pension Fund
Published / Last Updated on 15/09/2023
Financial Advice is riddled with different adviser fees charging structures. The majority of financial advisers offer an initial fee charge usually of say 2-3% pa of the fund value and then an ongoing yearly charge of between 0.75% to 1.0% pa.
We do not do this, we usually take no % charges from your pension fund and prefer to charge clients a set fee so that more of your pension fund stays in your fund as well as charging an ongoing set fee rather than an ongoing % pa also deducted from your pension fund.
Typical Charge on say £100,000 pension fund + a regular premium of between £200pm and £500pm:
|
|
Typical Adviser Charge = 3% Upfront + 1% pa ongoing |
Our Set Fee Approach |
|
Fund Value |
£200,000 |
£200,000 |
|
Initial Adviser Fee/Charge |
£6,000 |
£2,661.60* |
|
Ongoing/Yearly Adviser Fee/Charge |
£2,000 pa which increases as the fund grows |
£435 pa* |
*Based upon our fee charges as at 15/09/2023 for a £200,000 pension transfer. See 1 X Pension Transfer
In year 1, that is already a saving in fees of just short of £5,000 in the first year and an ongoing yearly saving start £1,565 pa (saving increases as fund value grows).
Impact of Charges on Value of Funds:
As we operate a fee only advisory approach, we are not restricted to adviser only pension providers but also direct to consumer pension providers meaning that we secure the best pension scheme to suit your needs and requirements.
Let’s Compare Two People Aged 30 and 50.
Do not forget, many advisers want to push you onto their preferred pension platform that could have say a Platform Fee of 0.3% pa plus a Fund Management Charge of say 1.0% pa plus the Financial Adviser Annual Charge of say 1.0% pa. That’s a total yearly charged before you see any growth of 2.3% pa.
On a pure, fee only service from us, we could secure a simple fund management charge of pension fund of say 0.4% pa to 0.6% pa plus of course our separate £435 pa ongoing charge.
Client 1 aged 30 with £50,000 consolidated into a pension fund and paying in £200pm. Pension Fund projections to age 60.
|
Client 1 |
1% pa Adviser Charge (deducted from pension fund) |
Our Fixed Fee Approach £435 pa (paid direct and not from fund) |
|
Current Fund Value |
£50,000 |
£50,000 |
|
Current Monthly Payment |
£200 pm |
£200 pm |
|
Gross Annual Growth Rate (Average) |
5.0% pa |
5.0% pa |
|
Total Annual Charges Deducted From Fund |
2.3% pa |
0.6% pa |
|
Net Annual Growth Rate (Average) |
2.7% pa |
4.4% pa |
|
Projected Fund Value at Age 60 |
£223,093 |
£336,086 |
|
Difference |
|
+ £112,993 but will have paid £435 pa separate adviser charge (may increase) |
Client 2 aged 50 with £200,000 consolidated into a pension fund and paying in £500pm. Pension Fund projections to age 60.
|
Client 2 |
1% pa Adviser Charge (deducted from pension fund) |
Our Fixed Fee Approach £435 pa (paid direct and not from fund) |
|
Current Fund Value |
£200,000 |
£200,000 |
|
Current Monthly Payment |
£500 pm |
£500 pm |
|
Gross Annual Growth Rate (Average) |
5.0% pa |
5.0% pa |
|
Total Annual Charges Deducted From Fund |
2.3% pa |
0.6% pa |
|
Net Annual Growth Rate (Average) |
2.7% pa |
4.4% pa |
|
Projected Fund Value at Age 60 |
£330,716 |
£385,522 |
|
Difference |
|
+ £54,806 but will have paid £435 pa separate adviser charge (may increase) |
Reality check: for client 1 is that over a 30-year period, they may have paid c£20,000 in direct ongoing adviser fees but they still have a £112,993 bigger pension fund at age 60 and for client 2 over a 10-year period, they may have paid c£6,000 in direct adviser fees but they still have a £54,806 bigger pension fund at age 60.
Always pay a direct fee for your financial planning advice and never a direct % upfront and % ongoing.
