Independent Pension Advice

People usually want to speak to an independent financial adviser when they’re thinking about making an investment, or, because they want advice on the best way to manage their existing pension savings portfolio. So what exactly is independent pension advice?

Independent pension advice is financial advice given to an investor by an unbiased financial adviser. To receive fully impartial and unbiased pension advice a financial adviser must research and consider all retail investment products or providers available to meet the client’s needs.

When it comes to your financial future, you may have a range of assets spread across your portfolio and you’ll want to make sure you get the best advice possible. Find out what advice you can get , where you can get that advice from and the different ways in which fees are structured.

If you are looking for a financial advisor in Newcastle or a Financial Advisor in Middlesbrough you can visit these links.

What will independent pension advice cover?

Independent pension advice covers a broad range of financial products. It’s highly likely that over time you’ve accrued wealth in a number of different assets. To be able to advise correctly a financial adviser should have a thorough understanding of:

  • Savings and Investments.
  • Defined benefit pension.
  • Defined contribution pension.
  • State pension payments.
  • Equity release.
  • Estate planning.
  • Tax planning.
  • Retirement planning

The best financial advice is given by advisors that take the time to develop a thorough understanding of your current circumstances and future life goals. They’ll look at things such as,

  • Your current age.
  • Your personal circumstances.
  • Your appetite for risk, now and in the future.
  • What exactly you want to do in retirement.

With that information they’ll work with you to develop a plan based on the detailed information you give them about your goals and aspirations. They’ll then be able to advise on the most suitable financial products available to achieve your desired lifestyle.

We’re here if you need any equity release advice

Where to get independent financial advice

One of the best options open to you when seeking independent financial advice is to look on the FCA Register. There you can check all firms that are local to you and make sure that they have the correct accreditations to give professional pension advice.

Once you’ve done that, you should also read the reviews online, talk to friends and family about their experiences and book consultations with a number of different independent financial advisers to assess the service offered and the fees that are charged.

You can get free advice that will help answer the technical aspects of your queries but because it’s free, it’s limited in scope and often doesn’t address the bigger picture questions. If you do need free advice:

You can get free guidance on your retirement savings options from:

Pension Wise has information to help you decide what to do with your money if it’s in a ‘defined contribution’ pension.

Independent financial advisor fees

There are three different ways you may be charged for professional financial advice, these are; flat fees, hourly fees, or a proportion of the money you want to invest. The table below takes a looks at the pro’s and cons of each

Flat Fees Hourly Rate Proportion of funds
What are the setup costs A one of charge that covers your entire pension advice cost Charged an ongoing hourly rate from anywhere between You’re typically charged an initial fee ranging between 1% and 4%
What are the ongoing charges You may be charged an ongoing flat fee for annual management Costs would typically stay the same charged on a per hour basis. £50 to £500 per hour. Annual management charges are usually lower than the initial set up fee and charges range between 0.5% and 1.5%
Drawbacks Flat fee structure lends itself to a templated approach that might not give you a completely bespoke outcome. There’s an incentive for the adviser to draw out the process for as long as possible Firms may be reluctant to take on smaller portfolio’s as the might not generate the revenue they feel the would need
Strengths You know exactly where you stand and how much you’ll be paying Will typically offer very bespoke packages and will take the time to make sure you’re in the best shape possible Will actively manage your pension pot and optimize that gains within your accepted level of risk as they’re paid on performance of your portfolio.

Independent vs restricted advice

When you receive independent advice you’re advised on the full range of products and providers in the market while with restricted advice the range of products and providers you’ll be advised on is limited.

If an advisor is restricted they will explain what they’re restricted to.

What’s the difference between advice and ‘non-advised’ sales

Many banks, building societies and specialist brokers will talk you through your different options but then leave it up to you to decide which product to take.

Be aware that this doesn’t protect you against investment losses if the market goes up or down.

Is advice the same as guidance?

The main difference between advice and guidance is that professional advice will make clear and specific recommendations about what you should do with your pension pot while guidance will inform you of your options but not make any specific recommendations.

Regulated financial advice is protected which means if you end up with an unsuitable product after receiving financial advice you can take your complaint to the Financial Ombudsman Service and claim compensation.

Should I use a financial advisor for my pension?

We would always recommend speaking to an independent financial adviser for the best retirement advice and so that you can understand how your personal circumstances affect your pension options.

How do I withdraw my defined contribution pension?

From 55, under the pension freedom act 2015, you now have a number of choices when it comes to withdrawing your pension. These are:

  • Annuities.
  • Drawdown.
  • Take your pensions as a number of lump sums.
  • Take your whole pension in one go.
  • A mixture of the above.

From 55, and sometimes earlier, your scheme administrator will send you a ‘Wake Up Pack’ – A gentle push to remind you to think about your pension options…

Here we go into the different withdrawal methods…

Before we do. One of the big questions people want to know the answer to, is… can I retire at 55?

Once you’ve answered the bigger questions about what you want to do at the various stages of your retirement, choosing the right withdrawal method for each stage will be a lot easier.

Annuities – Guaranteed income

The withdrawal here is essentially the buying process itself. You withdraw money from your pension pot and use it to buy an annuity, guaranteeing your income for an agreed period of time.

When you purchase an annuity, you may be liable to pay income tax depending on your earnings in the tax year you take them.

Drawdown and taking your pension as a number of lump sums.

When you choose pension drawdown as a method of withdrawing money you can take upto 25% of your pension pot tax free.

If you choose pension drawdown, you’ll need to decide how to invest the remainder of your pension pot. You can:

  1. Buy an annuity with the remainder
  2. Leave the rest in drawdown and take a number of lump sums over time (subject to income tax)
  3. Take the whole pension as a lump sum at a later date.

If you withdraw more than 25% as a lump sum in one go, you’re liable to pay income tax at the standard rate as you cross each personal allowance threshold for the year. You may fall into a higher tax bracket if you withdraw large amounts from your pension pot.

You must be aware of the charges associated with taking a number of lump sums, it’s possible that you could pay more in fees than you would income tax. Do I need a financial advisor to withdraw my defined contribution pensions

What exit fees are associated with defined contribution pension transfer and withdrawal

From 2017, Christopher Woolard, Executive Director of Strategy and Competition at the FCA introduced the 1%, of the total balance, cap on early exit charges for existing pensions, and a 0% cap on new contracts.

This is so that current and future savers will not be deterred from accessing their pension pots by excessive charges.

Don’t take our word for it…

Meet some of our clients and see what they think of us,
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Independent Financial Advisors - Our experts can advise you on:

  • When you can afford to retire
  • How much money you'll need in retirement
  • How to make the most of your pensions and other assets to fund your lifestyle
  • Pension Drawdown
  • Annuities
  • Taking Your Tax Free Lump Sum
  • Tax Efficient Pension Withdrawals
  • Equity Release Advice
  • Will Writing
  • Lasting Power of Attorney
  • Care Fees Planning

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