Why My Financial Adviser Does Not Contact Me
Published / Last Updated on 07/10/2014
Video explains why many people are not being contacted by their pension, investment, financial adviser firms. We answer the question "Why My Financial Adviser Does Not Contact Me?" The truth about hidden fees may shock you.
Transcript:
“Hello there. A very serious subject for today and that is: Why doesn't your financial adviser contact you? Why doesn't your bank who arranged some investments for you or arranged a pension for you, a few years ago, why aren’t they contacting you?
Do think it's because you've got no money? Is it because you’ve just continued to pay the premiums, so nobody is giving any service to you?
I'm gonna let you into a little secret here. It's something that I’m really passionate about and that is that: there’s being a trait over the last 10 to 15 years, where financial advisers and banking institutions and building societies and insurance companies, where they’ve sold you an investment or a pension or an ISA or something like that, they build into it their commissions that they took. They built in also an ongoing trail commission or trail fee.
Now that fee, I’ve seen many, many advisers where they quote let's say for investment they say: ‘we charge 3% plus a 0.5% trail’. [So] I get there is an upfront fee for getting advice or you may not have received advice and still had to pay that fee or it got taken in commissions or whatever. But then there’s this ongoing charge - this 0.25% pa or 0.5% pa or I’ve seen some 0.75% and 1% pa that your financial adviser, bank or insurance company are deducting, every month, from your pensions and investments affecting your investment growth. And you get nothing for it, no service, they’re not contacting you. [So} why’s that?
First things first the regulator, the Financial Conduct Authority, they’ve taken, well I believe, they’ve taken a half-hearted approach to trying to solve the problem. Where, what they’ve said is: with effect from April 2016, where these hidden ongoing trail fees or trail commissions are paid to a bank or financial advisor or insurance company, if the investment is on a 'platform' where you got lots of choice of lots of different pensions and investment funds from different companies and I won't name them, or I’ll name a few of the popular ones: Fidelity has a platform, Cofunds, who are owned by Legal and General, has a platform, Standard Life has a platform, Ageon has a platform. These sort of platforms where you log in, there’s Ascentric, Transact, there are many, many different platforms.
And what's happened, is those platforms, with effect from April 2016, that hidden trail fee, the trail commission, has got to stop but that’s only for platforms.
What about if you just invested in a Legal and General investment or a Scottish Widows investment via Lloyds bank or one via Barclays, or HSBC or whoever it might be, one of the building societies, Britannia, Nationwide whoever. I’m not picking on these firms per se, I am not accusing them of doing this but what I'm saying is where you were sold investments or pensions directly they may have also put this ongoing hidden trail fee or trail commission in.
Now, that doesn't have to stop in April 2016 provided the pension or the investment; just via a normal, traditional insurance company or investment company provided that pension or investment or ISA or anything else is touched, if it's not changed, if it's not amended, if funds aren't switched from a low-risk fund to a high fund or vice versa or anything like that; that trail fee, that trail commission can still continue.
So there you go, there's the answer potentially if your financial adviser or finance company isn't contacting you: Is it because you're paying hidden trail fees or commissions on your pensions and investments which are being deducted from your policy and provided nothing is done to that policy those commissions still continue?
Now, I don't think that's fair. That’s why we, as firm, we have always, always, we’ve pioneered working on a true, fee only basis with our clients and we stop these hidden trail fees or hidden commissions.
So just be aware, where we are today and I’m shooting this video in October 2014, if it's on a platform, one of these special, ‘new fangled’ investment platforms then any hidden trail fees or commissions have to stop and they can only continue if you give your finance company or your financial adviser written permission, written authority to continue.
But, where it's just a normal, direct, retail insurance policy or investment policy or pension policy: if there are these hidden ongoing, trail commissions being paid, if you do nothing or if they do nothing, it will still continue.
So my guidance here is get the paperwork out. Have look at it, have a look at the statements and see what the deductions are. If you are not sure, get on the ‘phone to me, book a call-back. I’ll of talk you through, I’ll have a look at your statements and see if we can try and stop these hidden commissions and hidden trail fees and if we stop them that’s more money that stays inside your investment, you get better investment growth. Thanks very much for watching.”
