Interactive Investor

How can I cut the cost of my pension advice?

17th October 2019 11:31

Ray Black from interactive investor


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I have a pension worth £280,000 invested with Aegon Retirement Choices. Its annual charges are approximately £875, while my financial adviser’s charges are £2,030 a year.

In the latest quarterly review, my income was £2,500 and combined charges £2,900. How is this fair? How can I reduce the charges, especially for the financial adviser?

From: JC/London


At just over 0.31%, Aegon’s charges are pretty competitive. Your adviser’s charges are not too bad at 0.725% a year although it would not be difficult to find other advisers offering an ongoing adviser charge at just 0.5%. It sounds to me as if you don’t feel you are getting value for money. If your pension fund is invested in lower-risk asset classes, such as cash and corporate bonds, that may be true.

The first thing to consider is how long you expect to have your pension fund invested. If it will be for many years, the next thing to decide is if you are happy to take on the responsibility of looking after the money on your own, or if you would like a professional to help you with it.

If you are confident in your ability to choose the right investment strategy and make ongoing investment decisions without any professional advice, there is no need to pay an ongoing adviser charge.

If you would prefer to get some guidance when making investment decisions, you will need an adviser whom you trust and feel comfortable with. 

You may find someone whom you are very happy with at 0.5% but it is unlikely that you will get an adviser to provide you with an ongoing, exceptional service for less than that. 

Speak to your adviser about your concerns and they may be able to offer you an acceptable solution. If that doesn’t happen, you can either take full responsibility of the investment decisions and deal with Aegon direct or shop around for a new adviser who might be cheaper.

Reader JC from London responds:

“I was under the impression that I had to use a financial adviser. In the past, I had a Sipp and was not able to directly communicate with the company. I have plenty of time now and would be very happy not to have to pay a financial adviser for a very limited service.”

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This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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