Quote:
On the basis (as I did not know the OP's exact circumstances) of using round numbers based on:
£100,000 fund value
£1,000 flat monthly contributions
7% average annual return after fund charges
30 years of growth (the OP is 35) and 20 years of income drawdown
The answer was the annual 1% adviser fee cost the client c. £1,000,000 on his £460,000 of total lifetime contributions.
So the adviser charge was reducing the pot at a rate of over twice the amount the client invested, with the client taking all of the investment risk and the adviser taking none of this.
I said I would post other examples here, but as none will accurately represent those of each individual, I will only give a handful of examples. I am not aiming to devalue financial advice, simply to enable you to understand the cost of such financial advice, so you are able to come to your own conclusions.
Quick Samples
The impact of a 1% annual adviser charge - everything else being based upon a 7% average annual return after investment (and platform) charges:
£50,000 invested for 30 years = c. £100,000 loss.
£100,000 invested for 30 years = c. £200,000 loss
£1,000 a month invested over 30 years = c. £210,000 loss
£2,000 a month invested over 30 years = c. £420,000 loss
So my basic message is that you need to be certain you are receiving some pretty stupendous 'value' for such fees (I doubt you are though).
Obviously having a qualified and experienced financial professional available can indeed add value. But can they add more value than the compound growth you could have received on the total amount of money you invest over your lifetime (without their fees)? I think not. It is financial planning (not transactional financial advice) that adds the most value.
Whether you should move your pension to a SIPP run by the likes of Hargreaves Lansdown (there are other cheaper platforms) might depend on the exact terms of your pension but it must be worth considering. At the very least you should get your adviser to provide post charge performance figures for the last 10 years so you can see how well the investment is performing. Annualised 10 year growth of nearly 11% after charges has been seen, although of course this may or may not continue.