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Advisers hit out at ‘deeply worrying’ rise in Pension Wise costs

Pension Wise jenga

The increasing cost of Pension Wise guidance appointments has been attacked by advisers after it rose 7 per cent in a month.

Latest figures from the Treasury show the average cost of a Pension Wise appointment surged from £516 in December to £554 in January, with officials blaming the increase on marketing and awareness raising campaigns.

However, advisers say the cost is now closing in on their own services.

Combined Financial Strategies chartered financial planner Jonathon McColgan says: “I’ve seen reports that the most people would be willing to pay is something like £450 for advice, so if you marry that figure with what we’re already paying for Pension Wise, you can see the concern.

“If consumers aren’t willing to spend that and the Government is spending even more than that, there’s a bit of a dislocation there.

“The reality is for that money you are not talking about much more for people to get fully regulated advice. And the way those figures are increasing it won’t be long before it breaches that, and the Government would have been better off just offering vouchers.”

Wingate Financial Planning director Alistair Cunningham says his own firm charges £600 for an initial meeting and written report, which lays out options for clients. He says: “I would expect that we are not the cheapest of firms either, so there must be other firms that are offering similar services and some even cheaper than Pension Wise.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 2nd March 2016 at 1:23 pm

    It’s all just OPM, of which the supply is perceived to be bottomless, so who at Pension Wise gives a toss?

  2. The real outcome with all the Governments and Regulators interference within our industry has been they thought advisers over charge. Even without the regulatory costs advisers have to pay and only Pension Wise only offering guidance, they are finding they cannot compete with the advisers and have become on many cases more expensive. Alistair Cunningham is correct and depending where in the UK you seek advice can have a big impact on the cost.

    At £550 we would complete a full review, have two meetings and a report, with the option to move forward at a further cost to transaction and implementation of our advice.

    So currently the client seeks a meeting with Pension Wise, which I pay towards via my fees. They then instruct the client to seek independent financial advice. I then charge the client for the advice needed. So actually if you take this to the logical conclusion I am not being paid for my time. All that is being achieved is jobs in Pension Wise to give guidance, paid for by advisers to have consumers given guidance to see an adviser!

    When will they admit they were wrong and introduce a voucher system, we all no the answer!

  3. These costs for Pensionwise truly epitomises what happens when Govt and regulators try to get involved in things they don’t understand. £550 for a guidance session is a total disgrace, they know it but won’t admit it.

  4. Paolo Buco nel Terreno 2nd March 2016 at 7:37 pm

    £4.2m divided by c22,000 advisers left in the industry = £190.91 p.a. per adviser. That is your gross cost, however, that amount as an expense (levy) with 20% Corporation Tax factored in reduces to a net cost to an adviser of £152.72. That’s a cost of just £2.94 per week (less than a Tesco Meal Deal!).

    If an IFA gets just one ‘User’ throughout the year as a client after being approaching by them following a PW session [which is highly likely after a ‘User’ sees a PW ‘Guider’ as he/she will inform the ‘User’ about how to utilise the Money Advice Service ‘tool’ to find a local adviser e.g.], and even if that client has only c£50,000 of pension funds to be advised upon (assuming some some IFAs still see clients with £50k?), then with an initial fee of 3%, with a 0.5% ongoing servicing fee, that equates to a total first year fee income of £1,750, which arguably gives you your expense (levy) back.

    If any more ‘USERs’ approach the IFA over the year (which again is more than possible assuming they are a decent IFA that get’s client approaches via unbiased, etc…), then that expense (levy) could be viewed as one hell of a cheap marketing cost when compared to an IFA’s annual budget towards marketing his service throughout the year……so I don’t see what the real problem is here for any IFA…..your £2.94 is doing a lot of good for a lot of people that otherwise would not get access to any form of guidance, let alone financial ‘advice’, and in the process you have a high chance of getting a client back from the service…..what is there to lose?

    You all make it sound like you are paying the £554 personally for each client seen by PW (which would equate to a levy of £13.3m for the c25,000 people that have had a PW session so far)…so do the maths, stop using the £554 figure to mislead people as to the impact on you all and then take your hat off for a service designed by Government that is delivering a fantastic [FREE to client] offering to those that can’t afford IFA fees post RDR…….It does not deserve the level of criticism it is getting.

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