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What do advisers charge for pension consolidation?

Question-Marks-Questions-500x320.jpgAdvisers charge an average of close to £3,000 for advice on pension consolidation, research has found.

A survey of just over 100 advisers conducted by consumer champion Which? in May this year found that, on average, financial advisers are charging £2,879 to roll multiple pensions worth up to £150,000 into a single self-invested personal pension.

The highest charge for this service was £6,000.

The average £2,879 cost is around 1.9 per cent of the pot’s value, meaning consolidating has the highest average quotation from advisers.

As part of the survey, Which? sought to find out more about advisers’ charges by asking for information related to five scenarios. The findings were:

Just over three-quarters (79 per cent) of advisers charge an upfront fee calculated as a percentage of the amount to be invested in one scenario, with the average fee sitting at 2.7 per cent.

The average £1,837 cost of turning a pension pot worth £100,000 into retirement income also reflects 1.84 per cent of the fund.

Which? says it found requests for advice about taking a 25 per cent tax-free lump sum and setting up a flexible income drawdown are rising noticeably following changes to pensions charges since 2015.

The variance recorded for this undertaking was the largest, and for a pension worth £150,000 reflects around 1.6 per cent of the total pension. The highest quote from an adviser respondent for this service was £4,500.

The survey also finds 46 per cent of advisers have no fee and charges information on their website for prospective customers to check. A total of 20 per cent of advisers have full details of their charges available, while 34 per cent have an outline of rough costs.

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Nearly one-third (31 per cent) of financial adviser respondents also say they would advise on pots of £50,000 while 20 per cent required more than £100,000.

An NS&I survey earlier this year, however, says up to 70 per cent of advisers will take pots under £50,000.



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. What,Which?, Why? Have you ever thought about the different ‘quality’ of advice you may receive for your money? Of course some may price a £60,000 inheritance so that they do NOT get the work. Interestingly, as with all of these type of ‘research’ articles there are no actual numbers of contributors. Funny that, because I have never ever been asked to contribute. WOI!

  2. £4,500 for a client to access the PCLS. Am I reading this correctly? Good God, that’s a tad OTT.

  3. Do ‘Which’ do a similar article regarding costs for a solicitor/accountant ?

    No doubt each firm will charge differently depending on their business model
    £4500 for accessing PCLS , could be a fair price if the fund was £500,000 , who am i to criticise

  4. How in god’s name can anybody at the lowest end quoted make any money on those type of transactions? Unless they are made up figures.

  5. Totally meaningless figures, you cannot arrive at a fair price due to all of the variables involved, different firms in different locations with different cost bases and profit objectives.

    The one common denominator is the cost of regulation and compliance, maybe Which? should be running a campaign for lower regulatory costs if they want to help consumers.

  6. Is this the same publication with a morgage advice arm that charges clients an upfront fee and a fee on completion and also recieving a procuration fee from the lender?

  7. Marty Y – it isn’t OTT at all. When you “access your PCLS” the adviser isn’t just processing a transaction. They are advising you on whether accessing your PCLS is the best way of financing your cash requirement and can only do this by considering the long-term effects of cashing in a quarter of your pension fund, and the other options available to you.

    Geoff has a good point. We could provide a cheaper service if the cost of regulation was lower and if we had better protection from FOS and claims handlers in cases where the client has declined full advice.

  8. Sorry, but those lowest quote numbers are not possible to do profitably for anyone, I don’t care how efficient or automated their process is, which means they must be charging something on and ongoing basis to cover their initial costs.

    But as usual with the likes of Which context is not given. A Pension consolidation could be 2 existing schemes, it could be 20 for all we know, that person may have major other issues that impact on the advice and that need to be considered so it’s a bit like saying.

    The average cost of a car is £30,000, meanwhile the cheapest was £1,000 and the most expensive £1,000,000. meaningless..

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