Pension Advice -- Servicing Rights of Policies

[rr]

Mrs R and I are getting pensions advice, The advisor is asking us to sign letters to "transfer the servicing rights of my policies that are listed below along with any on-going and outstanding adviser charges or commission" to them, is this normal or wise?

[De Sisti]

I'd be very cautious about signing anything. 'It doesn't smell right'.

[hellymedic]

So would I!

I am pretty ignorant about these thing but don't trust many others.

[sib]

Check with the "The Pensions Advice Service" - government advisory service (free).

[Ham]

It's normal if you want to do it, your adviser should have explained to you that they receive income from the renewal of the policies, also given you details of the commission they will receive. As financial advisor they are entitled to be paid for their work, that's one of the main ways they get paid, apart from any charges they may make to you directly as consultants.

If they haven't, a stick of fuck-off rock is in order.

[rafletcher]

If they're going to act for you then yes, sign it. As Ham says they derive income from that management - the advice isn't free. And they need to make sure you don't take their advise and go back to your original agent with it.

[Adam]

Policies set up before 1.1.2013 often had renewal commission built into them for the original adviser.  Typically 2.5% pa of any ongoing premiums for life or pension policies or 0.5% pa of the fund value for investment policies.  The cost of that was all accounted for in the charging structure of the plans, and if say the advising firm went out of business, then the insurance company simply kept the money, as generally there's no provision for altering the charges due to the policy provisions.

Adviser Charging is an explicit cost which is now transparently shown as a specific deduction, and so can be stopped, started or the rate altered at any time, and the policy owner has to agree to the amounts to be paid to the IFA firm.

It's a common thing for the renewal commission to be signed over to a new adviser, to offset the costs involved in dealing with a new client.  However, if any IFAs receive any ongoing commission on policies transferred to their agency, they have to provide an ongoing service.