A Fair Price
A Simplified Money Case Study
Jenny came to us because she had started work with another an adviser who was offering to move a small pension fund she had from the late 1980s.
The fund was modest but when Jenny (not her real name) got the recommendation, she wasn't sure what everything meant. The paperwork was extensive. Through someone we both knew, she ended up being referred to us for a second opinion.
When we saw the details, we were amazed. Never mind the extensive paperwork. The price she was being quoted amounted to around 5% of the value of the fund she was moving. Because of the fund that was involved in the switch, we immediately began to realise it was going to take her a few years just to recoup the value of the fee, never mind actually advance the value of the fund she had.
When an adviser undertakes a review, there are quite a lot of legal, regulatory and fiduciary processes we need to go through. We are working in your interests, we need to get things right. Which takes time - and that time will have a price.
The payback for you is that we can help you and your money achieve more with our help than you would have achieved without us. Even if you are an expert, the very minimum we can do is save you hours of your similarly valuable time.
Either way, rather than worry about money, you can get on with doing something far more interesting. All of which - we believe - makes our fee a price worth paying.
But we also believe 5% is far too much to charge for the review of a straightforward pension plan. For a pension fund worth £30,000, that's £1,500. Even if the pension fund were worth only £10,000, it's still £500. Not only that, but why a percentage? How long does it take to review and move a pension worth £30,000? And does it take 3 times as long to move £30,000 than it does to review £10,000?
This challenge was pretty straightforward. For the size of pension Jenny had, our fee is £200. And not only do we consider her pension for that fee, we include as standard, a full review of her entire financial circumstances.
Which is exactly what we did. Saving Jenny a total of just under £600. Indeed, had her pension been worth £30,000, her saving would have been over £1,000. £1,000 that could have gone on working for her retirement. Rather than funding someone else's.
As financial advisers, we have an obligation to provide expert, unbiased advice to our clients. We also believe in offering excellent customer service and making sure that you understand everything that we do. Even the regulatory stuff.
But that doesn't mean we can't be efficient.
Firstly, we use technology to communicate with you and to support the dull, back office, administrative tasks that can otherwise easily eat away at time. There are some differences in our fees as you head up the wealth scale - but they are all fixed up and declared up-front. You won't find a single percentage in the fees we charge.
Second, the support we offer is specifically designed to help people who are not (yet) millionaires. So we start from the position of what we believe is sensible and value for money for the amounts involved - and charge that.
For Jenny, that means she has £600 more than would otherwise have been the case. And we'll be looking out for her to make sure that £600 continues to work as hard as all of the rest of her money.
A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interests rates and tax legislation
Tax planning advice is not regulated by the Financial Conduct Authority