Pension Freedom and Charges for Advice

Pension Freedom and the Increase in Charges for Financial Advice. 

As we point out in our Bulletin 60, Pension Freedom has meant that a whole new world of pension provision, investment, life-planning and inheritable wealth has descended upon us. Pension Freedom is certainly a revolution, but it has also added a lot that is new, complex and possibly confusing, which means that taking financial advice on what is the best thing to do is, perhaps, more important than ever.

However, as you might have read in the press recently, it seems that the cost of financial advice has, broadly, gone up as a result, with many unable to afford the help they need, with The Treasury’s Financial Advice Market Review now in place to investigate.

What will the review explore?

Harriet Baldwin, the Treasury Minister in charge, said the review would “explore what can be done to make sure consumers can access high-quality and affordable advice”. She also said that the results will be published before next year’s Budget in 2016. What it finds remains to be seen, of course, and then we can expect more time to be spent on implementing any proposals, which for many is not really quick enough as it is estimated that there are millions who need professional, financial advice, but can’t really afford it.

It makes sense to provide affordable financial advice, not least so that people know what the new Pension Freedom Rules are that affect how they can actually use their savings.

Has Anything Been Done Yet?

There have been Government Funded guidance initiatives. For example, millions have been spent on the Money Advice Service, although it seems not to deliver anything more than guidance about what to look out for and where to go for advice. The same could be said of the Government’s Pension Wise initiative.

We recognise that guidance can be useful, but in many cases more than guidance is needed otherwise the chances are that important financial decisions will be made by people without taking proper advice or understanding the full implications of their decisions.

What do we think?

The new Pension Freedom rules introduced in April 2015 mean, at their simplest, that once you’re aged 55 or over, your pension pot can be used in any way you like, providing rules aren’t broken.

From our point of view, as company pension specialists (including SSAS propositions for business owners and advising on staff pension schemes), pensions and advising people to help them save properly for their retirement years is our focus. Given that the Financial Advice Review is still months away from reporting, we will continue to offer the best possible advice and charge for our advice in the way we always have:

  • We always agree up front with our Clients how we are going to be paid for our services and how much.
  • Charging fees for advice has always been the norm for us, many years before the new Retail Distribution Review, which came into effect on 1st January 2013 and requires that advice is charged for at a level that is agreed up front. To us adviser charging is not new and we offer this on a fee basis or agreed transparent remuneration, which is paid out of the client’s investment.

If you or one of your clients need pension advice, in light of the new pension freedoms, where the charge for the advice is completely transparent and agreed up front, then contact us or call us on 0121 693 0690, for a free initial chat.

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