How much are advisers charging for pension transfers?


Advisers and networks are charging wildly different prices for advising on defined benefit to defined contribution pension transfers, Money Marketing research suggests.

As well as a split between charging on a time cost or percentage basis, some firms appear to be charging as much as two times more than others.

Firms that offer pension transfer outsourcing also report growing interest as volumes increase and the FCA’s new requirements leave less advisers qualified to do the work.

Interest in DB transfers has risen as members become aware of the greater flexibility and favourable death benefits now available to defined contribution pensions.

One network that asked not to be named says the current range for this type of work is between £700 and £1,200, with an hourly rate or minimum charge model becoming increasingly common among its advisers.

A spokesman adds that the size of the pot “does not necessarily mean less work – although the options may be more limited and the time spend reduced as a consequence”.

Sense compliance director John Netting says: “It’s pretty dangerous for networks with appointed representatives up and down the country to have a one-size-fits-all policy. Notionally, most of the people doing DB transfers are on about £200 an hour billing rate – it’s not a simple area and most people holding the relevant permissions tend to be at the upper end of chartered in terms of qualifications.”

Intrinsic would not give an indication of how much its advisers charge. A spokesman says: “Intrinsic appointed representatives do not have a standard fee. Each adviser is able to set a percentage or fixed fee themselves.”

Advice firm Portal Financial charges 5 per cent of the value of transferred funds. A spokesman says this because the work is “high risk” and requires “lots of analysis and G60 qualified advisers”.

In contrast, Fairey Associates managing director Ed Fairey says they “normally” charge clients around 3 per cent.

Wingate Financial Planning financial planning director Alistair Cunningham says his firm uses a time cost model and usually expects the work to cost around £2,000. He adds transfer advice is the only major service the firm does not offer on a fixed fee basis because of the “open-ended nature of the work”.

Towry head of retirement planning Andy James says the advice firm typically charges around £3,000, depending “on the complexity and time taken”.

LEBC undertakes transfers as part of exercises driven by corporate sponsors trying to reduce their DB liabilities, as well as individual cases. Divisional director of longevity Nick Flynn explains the firm uses O&M Pension Solutions to undertake transfer value analysis, which costs £175 per individual but falls for bulk exercises. In addition, clients are charged on a time cost basis.

He says: “If you’re doing hundreds of transfers at once as part of a big project you might get the cost down to £600 a transfer, if they are looking to go into drawdown that would probably double.

“On an individual basis, the bill would be quite a lot more because there’s no economy of scale. It’s probably more like £3,000 or £4,000 on a time cost basis – it’s not a cheap bit of work, because it is not simple.”

Specialist retirement adviser Intelligent Pensions charge clients not immediately vesting their pension £1,000 to generate a report, including running a transfer analysis and issuing a suitability letter. Those at the point of retirement are charged £750. However, clients are not given the certification to allow them to get the transfer done without an adviser.

If the transfer goes ahead, the firm charges 1.1 per cent of the transfer value and place the funds in a product recommended by the firm.

Intelligent Pensions technical director David Trenner adds that there is growing appetite from other advisers to outsource transfer business.

He says: “More and more financial advisers are interested in our service. We’ll advise on the stage inbetween, charge 1 per cent for implementation, and then stand aside for the investment advice offered by the other adviser.”

Pension transfer specialist HDC accepts referrals from authorised firms for pots worth £100,000 or more. An initial suitability report costs £300. Following a transfer the first £150,000 of the fund is charged 2 per cent, the next £350,000 at 1 per cent, the next £500,000 0.5 per cent, and 0.25 per cent on anything above £1m.

HDC managing director Heather Dunne says business has grown “exponentially” in the last few months as clients become aware of the pension reforms, and the FCA introduced tighter requirements on transfers.