George filled out our online enquiry form after searching for independent financial planners online. He had been using an adviser for some time but since their last meeting the adviser had partnered with a large wealth manager. He was concerned the adviser didn’t have his best interests at heart.
The adviser had made a recommendation to consolidate his pensions and investments into one portfolio with the new wealth management firm. George had used google to find reviews on the new firm, which indicated they were reputed for high costs, inflexibility, modest returns and a sales driven approach. He understandably wanted a second opinion. We are always happy to do this, whether this is on new advice or plans that have been in place for some time.
As always we looked to understand his personal circumstances, future plans, family aspirations and risk profile. Two things stood out to us. Firstly, the pension would definitely be relied upon to provide retirement income for day to day living. There would be very little wriggle room in the future based upon current circumstances, future income requirements and ability to save.
Secondly, the existing plans did seem to be old. We know that many older pensions and investments are now unsuitable because of changes to regulations, past higher charging regimes and generally poor fund management. This means it was right to consider the review.
Being open and fair, we wanted to take a view on what his existing adviser had recommended. The bulk of our work here involved collecting information from the existing schemes and then analysing it to give us a clear understanding of their features and suitability. We then presented our advice in such as way that that it was very clear how it differed from what had been offered.
The existing plans were clearly unsuitable. But having reviewed the recommendation made by the other adviser, we had concerns with this too.
Firstly, the plan was much more expensive than our comparable independent offering. There was a difference of some 0.56% per year in total ongoing cost. This might not seem a big amount, but bringing it into monetary terms is important. We calculated that at a conservative growth rate over his time to retirement he could save over £9000 in charges. This was achieved simply by using a flexible pension scheme with a wide fund range. Our advice fees had been taken into account within this saving. This is a sum which would certainly make a difference to his future.
Secondly, whilst past performance is no indicator of the future, the portfolio that was being recommended to him had very much under performed. Had he invested into this portfolio and continued to be disappointed, due to the charging structure of the wealth management firm, he would have had little option but to incur further advice costs to move. On top of this there would have been an exit penalty in the first few years.
As always, we made our findings clear with evidence in our report. We recommended a clear strategy for his pension and future retirement with a selection of quality funds from the wider investment market. We review these alongside his wider financial circumstances and changing life plans each year. He is delighted with the portfolio and flexibility it affords him and we look forward to helping him to move into retirement in a few years time.