Pension advice from Wealth Management company

Hi

I have a pension fund from a previous employment which I am looking into moving to a different fund. I was advised to go and talk with a specific wealth management company. I met with a representative of the company today and was happy with our discussion where the representative agreed to look at the fund and then advise me on the options available to me and what might best suit my needs.

My question is are these wealth management company's reliable? The representative also informed me that they could look into any other policies that I and my husband hold and advise us accordingly.

They are a free service so they don't have any vested interests? I would appreciate any feedback people have on these entities and whether they are a good idea to depend on.

Thanks in advance!

Hi househunter

I presume they will charge a fee or commission based on products taken out. Do they deal with any specific life office for investment I.e act as a broker or invest themselves?

Hi ClearFinance

Thank you for your reply, I appreciate it. He didn't mention anything about commission either; when I asked about their charges, he assured me they were a completely free service. He said the fact that they do not charge ensures they are an independent entity and can give me, the client, the best advice on all options with no vested interest. AFAIK they don't deal with any specific organisation.

Hi Househunter,

There will definitely be a charge here - hard to see how the advisor is doing this work completely for free.

Perhaps after they have reviewed all of your other policies they will realise that you need to change them all (and generate a commission to them for new business).

As far as I know they must now by law disclose any commission that you will be charged.

They might try to hide it in the annual fee for the pension - do you have any details from them on what the annual management charge will be.

No such thing as a free lunch, very frustrating that these companies go out of their way to fool people. Ask yourself - how are the advisor's wages getting paid?

The term Wealth Management is just a marketing expression that some Financial Brokers use. Your post describes a Financial Broker to me, so there's no reason to believe that they're any more or less reliable than any other Financial Broker just because they use Wealth Management in their business name.

He said the fact that they do not charge ensures they are an independent entity and can give me, the client, the best advice on all options with no vested interest.

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This statement would worry me. Why does the fact that they don't charge ensure independence? All it means is that, if they're not getting paid by you for the review, they must be getting paid by some other means. Usually a "free review" is paid for when the findings of the review are that you should take out some form of financial product that earns them commission. As thumbelina says, how are they paying wages?

Incidentally, for an advisor to refer to themselves as independent, they must offer you the option of paying by fee or commission.

AFAIK they don't deal with any specific organisation.

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Their Terms of Business letter, which they should give you from the outset, should inform you which companies they do business with.

For the record, I'm a Financial Broker myself.

I really hate hearing these types of stories. For the last few months there has been so much bad press relating to fees & charges on pension funds & investments & how much life companies deduct in charges. Everyone forgets to point out that most standard offerings in the market for products such as single premium pensions start with 105% gross allocation on a 1%amc basis. However most individuals only benefit from a 100% allocation while the broker takes the additional 5% that the life company offer as commission. Yes I understand that there are genuine brokers in the market who need to take this as commission, especially where other advice fees are not charged but there are also those who like to market this great advice method to generate new business commission from the life company. Yes on most financial products commission has to be disclosed but unfortunately to most these disclosure schedules go unread or very often misunderstood. Always ask the following: what is the gross allocation, what is the net allocation, what initial commission is being charged,what is the annual management charge, are you charging a trail commission, is there a policy fee, are there early surrender / transfer penalties? Only then will you have an idea of how free the advice has been.

Indeed. the above posts a re a true reflection of what goes on. I think if an individual is happy with their allocation rate for a product and the advisor takes a payment be it commission or fee then everyone should be satisfied. Undfortunately those that take huge fees for small tasks gives the general market a bad name. It is important to have a clear concise breakdown of what your product offers and compare it yourself on the general market place.

Best thing to do is be careful and make sure you make smart informed decisions whatever you choose. From what i see above commission is the way the wealth MGT company is paid. This is fine, just once it is clear.

Thank you to all for your replies; I was indeed wary of the 'free' advice so I will just need to ask a few more questions and find out just how free it really is.

Appreciate all the feedback, thanks again.