Can I get rid of my useless financial adviser and manage my pension myself?

A few years ago I hired a financial advisor to combine all my company pensions and my personal pension into one pension.

They advised me to take out a plan with a large, well-known pension company.

Since signing up for the plan, I now pay a percentage of the value in fees to the financial advisor every year and I don’t feel like I’m getting my money’s worth.

In principle, I have an annual overview in which they advise not to do anything with the pension.

Do I need a financial adviser or can I arrange my own pension?

Tanya Jefferies, from This is Money, replies: We often get questions from readers who have been well helped by a financial advisor in setting up a pension plan, but don’t want to pay hefty annual contributions for the rest of their lives in exchange for little or nothing.

Advisors can usually justify their initial fees for setting up work, especially when someone is retiring and wants a suitable investment portfolio and a completely new income withdrawal plan.

But they would have to work to keep your business and continue to provide value for money and personal assistance if they expect to continue to charge an ongoing percentage of your pension for many years to come. Our retirement columnist, Steve Webb, previously gave advice on this topic to a reader here.

There are pros and cons to taking initial financial advice about a retirement – while frankly it can be invaluable, especially for avoiding unknown pitfalls – and taking care of your own investments from then on.

You need to weigh this up carefully, as a good advisor should keep you up to date with major changes in legislation, investment risks, how much income you should receive, tax rules and so on, all of which will change over time.

But if you think you’ll only need help in the beginning, or run away at some point in the future, or switch to a different advisor, it’s best to avoid a long-term contract with a financial consultancy or placing your pension fund. in their tied, or white-label, internal investment funds and platforms.

Instead, try to find a company that uses cash and an investment platform that is readily available to all DIY customers and also other advisors in case you decide to switch later on.

To answer your question and explain how you can leave your financial advisor amicably if you wish, we’ve asked influential industry veteran Henry Tapper to comment below.

Henry Tapper is a financial advisor and founder of the Pension Playpen and AgeWage professional network, which analyzes pension value for money. He answers:

Marriages usually start well, but sometimes end badly.

People are often impressed with the first meetings with financial advisors and then discover that the ongoing relationship is not working. This sounds like what happened here.

There’s nothing wrong with charging from your pot, but advisors are required to provide fair value and their regulator (the Financial Conduct Authority) is is currently examining the value of this advice.

Advisory fees are ‘bundled’ into management fees and, according to financial services provider EY, you can expect a total fee of 2 to 3.5 percent for investments and advice.

That means £2,000 to £3,500 a year for every £100,000 in the pension pot.

This can severely limit the amount you draw as income and reduce growth when you roll up your pot.

You may come to the conclusion that you are not getting value for money and decide to end the relationship with your advisor. But walking away can be daunting.

Many people took financial advice to combine pots (as happened here).

This is sensible and if there are warranties in your pots then advice may be required. But once that advice is paid for, there is no ongoing obligation to take or pay for ongoing advice.

Many people stay with an advisor because they feel they are trapped – they shouldn’t be.

But you’re bound by the terms of your contract, even if it means paying to walk away.

Some contracts, such as those with St James’s Place, contain penalties for walking away of up to six years and most require a certain period of notice. (SJP has very high customer satisfaction ratings, so getting fines don’t necessarily mean poor service.)

If you have bad service and an exit fine; you can appeal to the financial ombudsman, although you will need to negotiate with your adviser and go through their complaints procedure before doing so.

Some people don’t feel empowered to walk away and here I can help with a four point plan.

Four steps to say goodbye to your financial advisor

1. Check your contract and follow the advice above.

2. Decide what to do next. Don’t cash in your retirement pot like a muppet – make sure your next steps are taken before you cancel.

3. Make sure you have a copy of your investment records. Disputes shouldn’t happen, but make sure you have all the necessary information.

4. Announce your intention neatly and honestly. The end of your relationship doesn’t have to be bitter. I find a simple factual approach easiest. Here’s a template.

I have decided that I no longer want your advice about my pension money and I want to cancel my contract per xx/mm/yy.

I appreciate the work you’ve done for me, but I feel there are better options available to me elsewhere.

I will send you instructions on where I want the proceeds of my investments to be transferred through your office.

I should be grateful if you would acknowledge this letter. I thank you in advance for your cooperation.

Just like a divorce, the hardest of the four steps can be figuring out what to do next.

It may be that you want to switch to another advisor, or that you prefer to manage your affairs yourself (you are considered ‘not advised’). This means you have less protection if something goes wrong, but lower costs.

Most “unadvised” Self-Invested Personal Pensions (Sipps) offer fees well below 1 percent per annum and some a fraction of that. Leading providers include Fidelity, Hargreaves Lansdown, AJ Bell, Interactive Investor and PensionBee. You can look up many more.

This may be a good time to look into withdrawal alternatives, and you may want to talk to an annuity broker to lock in guaranteed rates.

You will receive assistance in transferring your money to a new Sipp.

Make sure that your personal data is correctly recorded by your new Sipp office and your existing provider to avoid delays. This should take between one and ten weeks.

If you move to another advisor, you can expect their help in managing the risks of being out of the market and overpaying for transaction fees.

There are costs associated with leaving a financial advisor behind and moving money around, so be sure before you write that letter. It is better to mend a marriage than to break one.