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Pru sets out adviser charging plans

Prudential has set out how it plans to facilitate adviser charging, including the products that will offer adviser charging and when deductions will be taken.

Pru says it will offer adviser charging on its guaranteed pensions annuity, income choice annuity, flexible retirement plan including drawdown, and trustee investment plan.

The Prudence inheritance bond, the Prudential investment plan, the offshore portfolio account and the international Prudence bond will also facilitate adviser charging.

Pru will set up adviser charging arrangement based on an instruction from the client. It will also act on adviser instructions where they are in relation to decreasing or stopping adviser charging.

Depending on the product, clients can pay their adviser monthly, quarterly, half yearly or yearly.

Initial adviser charges for single premium business can be taken as a percentage of a client’s payment, premium or transfer value or as a specified amount.

Initial adviser charges for regular premium business can be taken as a percentage of each premium or a percentage charge over a set period up to a maximum of 60 months.

For annuities, the initial charges will be taken from the annuity purchase price. For income drawdown, the initial charges will be taken from the transfer value invested after the deduction of any tax-free cash.

For regular and single premium pensions, the initial charges will be taken from the gross premium invested, after tax-relief has been applied. For transfers the charge is taken from the transfer value invested.

On bonds the initial charges will be taken from the money paid by the client before the contract is set up. The premium is the client payment less the adviser charge.

Ongoing adviser charges can be taken as a percentage of the fund, a percentage of the total investment, a specific amount, or income payments depending on the product.

Ad hoc charges will also be facilitated on certain products.

Ongoing and ad hoc charges on the income choice annuity are taken from the post-tax income due to the client. Ongoing and ad hoc charges will be taken from the fund on pensions, income drawdown products, and the Prudential investment plan and Pru’s offshore bonds. The charges will be taken from distribution income on the Prudence inheritance bond.

Pru distribution change director Russell Warwick says: “The important thing for advisers is to have simple processes to maintain their cash flow post-RDR. Our aim has been to create an easy payment method to assist the process of adviser charging. We have the systems and capability in place to facilitate the charge, which means that advisers using us will not have to collect their fees directly from their client, unless they specifically wish to do so.”

Pru will announce the legacy products compliant for adviser top-ups later this year.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. I completely approve of all of this. The bit I would like to add however is that advisers will hammer providers until they cry over charges to demonstrate their worth to clients, and submit hourly fee notes to same providers over every minute wasted due to admin problems. Providers can expect no quarter at all from efficient advisers – judging by the capability of many of them, I fully expect to be receiving a steady flow of compensation cheques (as usual) for our wasted hours sorting out needless errors.

  2. Thats all well and good but what about the renewal/trail on existing contracts? An article appearing on the site IFAOnline would suggest that Prudential and Standard Life have both stated that they do not have the systems in place to facilitate paying this after the end of this year.

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