Good News for Pension Switching

The FCA say we will not be able to take commission for new advice and you need to disclose upfront how much your advice will cost and how it will be paid.

Every firm is different, so your charging structure should reflect the service that you provide and what your clients are willing to pay. There are several different charging structures to consider, including:

• deduction from a client’s investment;
• cheque from the client;
• fixed fee;
• hourly rate;
• percentage of funds invested; and
• menu of pricing options.

The objective of RDR is to clearly unbundle and separate advice from product.  Should we  now ask why  we factor into a pension projections Critical Yield figures where adviser fees are included,  an assumed advice charge (not a product charge) that can at an instance be removed by the client?

Tenet IFA Network, take the same view recommending adviser charges are removed from Critical Yield calculations.  Gill Davidson says: “The policy regarding ongoing fees for pension switching was previously that they were factored into the critical yield calculator with all other costs. “However, to provide increased transparency for consumers the initial and ongoing elements of cost are separated out.

There are rumors that the FCA are also promoting this view in their recent road shows.