Action against an adviser who charged too much?
|Financial Advice | General
Asked by dandrew, submitted
20 August 2014.
I retired with a pension pot of £320,000 and took draw down pension for which my financial advisor took an initial fee of £3,044 followed with a further fee of £9,132 and an advisor's fee of £1,846. He then persuaded me to change pension providers for a further fee of £5,000. I thought at the age of 70 that I was street wise alas there is no fool like an old fool. Any advise or has the horse bolted?
Answered by Justin on 29 October 2014
If these are the fees paid to the adviser and exclude the pension and underlying investment fees, then they are very excessive. Especially since the adviser charged a further £5,000 to switch out of the pension he/she originally recommended. Even if the advice was good this subsequent fee should really have been covered by the ongoing annual fees you are very likely paying the adviser.
Hearing of cases like this makes me very frustrated at how greedy some advisers can be. It’s what prompted me to set up an IFA practice last year to provide honest advice with relatively low fees. We won’t change the world overnight, but are gradually helping more and more individuals avoid paying extortionate fees such as you’ve experienced.
Provided you agreed to pay the adviser fees it’s going to be hard to seek redress in this respect. If the adviser adhered to their terms of business, which they must have given you a copy of before you agreed to use their services and incur fees, then it’s (sadly) difficult to put in a claim against an adviser just because they were expensive.
However, if the advice is questionable then you may have a claim against the adviser. It’s not possible to determine whether this might be the case without looking through their recommendations. But if the advice to switch pensions was not due to saving money (after the adviser fee!!) or a fundamental change in your circumstance that necessitated the change, then there’s a reasonable chance you may have valid grounds for complaint.
Finally, since the adviser is also probably charging you an ongoing fee, are you getting any service in return? And even if so, it would seem difficult to trust the adviser given their past actions. You might want to switch to another adviser moving forwards, provided they don’t try and charge you an initial fee and their annual fee is sensible - you don’t want to jump out of the frying pan into the fire!
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