Hi elacsaplau,
In this thread there have been references to both Execution-Only and Advice, which are two very different transactions for a broker.
Execution-only is where a client comes to us and says "I want to invest €100,000 in a Friends First ARF in the Indexed World Equity Fund." If the client is looking for any level of information, then it's not Execution-Only; it's Advice.
What you've described in your post above is an Advice transaction. For this, there's a number of steps that must be followed. Initial discussion >> fact-find >> recommendation and advice >> discussion of recommendation >> execution.
As a broker myself, I can give you quite a number of reasons why I would not want to publish a "once size fits all" fee on a website like this. I'm not speaking for other brokers, but my own way of dealing with advice clients is to have the initial discussion first - in person, over the phone or by e-mail - and establish just what they're looking for and for me, how much work is it likely to involve. Only then will I quote a fee, because only then do I have an idea of how much work will be involved.
Here's a random and probably incomplete list of the sort of things that will determine how much work will be involved and therefore the fee I'll quote: -
- How many pension schemes is the ARF being funded from? It's our job to deal with the paperwork to get the monies out of the transferring schemes. The more schemes; the more paperwork.
- How much explaining am I going to have to do? Client A might be an Askaboutmoney.com regular who knows all about the differences between an annuity and an ARF and the relative merits of each. Client B might not have a clue and so I'll have to explain it all from first principles. And these are complicated matters involving often large sums of money, so if I'm dealing with someone who knows little, I'll have to explain why an ARF is more suitable than an annuity or vice versa. How charges work - allocation rates, AMCs etc. The relationship between risk and reward in investing terms. Establish the client's risk profile, capacity for risk etc. Why I'm recommending Company A over Company B. The absurdly complex rules governing withdrawals from AMRFs and ARFs. (You can take up to 4% per year from an AMRF but you don't have to. You don't have to take an income from an ARF. But from the year you turn 61, you really should take a minimum income of 4% from your ARF or else suffer imputed distribution tax. That changes in the year you hit 71. Or if you have a big fund. Oh and you can take any amount you want from an ARF. Subject to tax and possibly early withdrawal penalties, but they depend on which company and product you choose. And when you hit 75, your AMRF becomes an ARF and so ARF withdrawal rules apply.) Tax treatment of an ARF on death. (Who's likely to inherit - your spouse? Your kids? If so, will they be under 21 or over 21. Different tax treatments for each of these scenarios.) Don't get me wrong - I'm not trying to make out that my job is hideously complex and therefore justify extortionate fees. But take you elacsaplau for example. Clearly you know a lot about this, either from spending way too long on Askaboutmoney or perhaps other reasons. If you walked in to my office looking for an ARF, I suspect that we could fly through the whole advice process, without cutting any corners. If Joe Bloggs walks in and only knows that he took out a pension policy because some salesman sold it to him 20 years ago and now he wants to retire, it's going to take a lot more of my time. Bluntly, I'll charge you less than I'll charge Joe Bloggs.
- Does the client want regular reviews?
- Does the client want the freedom to contact me to ask questions about the ARF in the future?
As I say, that's just a stream of consciousness list of things that will determine what I'll charge for financial advice for an ARF or anything else really. I'm only speaking for myself - the other brokers on here might disagree and be willing to quote a fixed fee.