Active Wealth director Darren Reynolds has emphasised that ongoing adviser charges for British Steel clients have not been calculated as a percentage of their funds.
In a letter addressed to work and pensions select committee chairman and MP Frank Field, Reynolds reveals more details about the way approximately 300 British Steel clients were advised by his firm.
The letter published today complements a longer one Reynolds wrote in January and provides additional details about fees and pension transfers.
For instance, Reynolds explains Active Wealth’s ongoing adviser charges are calculated on an hourly basis agreed with the client.
He says: “In most cases ongoing advisory service would amount to five to six hours of work, based on hourly rate of £100. This would result in annual charge of £500 to £600 per annum.
“While the fees would not have been calculated as a percentage of the pension fund, if we assume an average pension pot of £300,000, then a £600 ongoing adviser charge would equate to 0.2 per cent of the initial pension pot, prior to the addition of any investment growth.”
Reynolds also says of the roughly 300 British Steel Pension Scheme clients Active Wealth advised, 64 transferred out to an alternative pension arrangement.
Reynolds explains that in all cases, clients were advised that if their primary aim was to maximise a guaranteed income in retirement, then their interests would be best served by remaining in a final salary pension scheme, such as the BSPS.
However, if the client considered other factors to be a priority, then they should consider transferring out into an alternative pension scheme.
Reynolds also repeated the point made in his January letter that none of the BSPS clients have signed up to receive an ongoing advisory service and they have not therefore committed to paying any ongoing adviser charges.
He adds: “As I explained in my previous letter, Active Wealth’s practice has been to get in touch with its clients two years after they initially became a client of the company and, at that stage, to determine whether they wished to engage Active to provide an ongoing advisory service.
“They would, of course, be provided with details of the cost of the service at that stage as part of the facts they needed in order to make a properly informed decision.”
So far nine firms have voluntarily agreed to stop doing transfer work related to BSPS according to the FCA.
These are Vintage Investment Services, Retirement & Pension Planning Services, West Wales Financial Services, Active Wealth, Pembrokeshire Mortgage Centre, Mansion Park, Bartholomew Hawkins, Inspirational Financial Management and County Capital Wealth Management.