Why My Financial Adviser Does Not Contact Me?
The truth about hidden fees that could shock you.
If you have used a financial adviser, you may be wondering why they no longer contact you. Or possibly, if a bank arranged some investments/a pension for you, why they do not contact you anymore. You may be thinking it is because you have no money, or because you have continued to just pay the premiums and no one is actually giving any service to you. This article will highlight the truth behind these questions you have, and it’s a topic we are very passionate about.
Over the last 10 - 15 years there has been a trait where financial advisers, banking institutes, building societies and insurance companies have sold you an investment, pension or ISA etc, and built into that an ongoing trail commission or fee.
There are many advisors that will quote that they charge, for example, 3% plus a 0.5% trail for an investment. So in short, you will have to pay an upfront fee for receiving the advice, or you may not have actually received advice, however you still have to pay the fee, or you get it taken in commissions etc. In addition to this, there is an ongoing charge, sometimes 0.25% pa, 0.50% pa and it has also been known to be as high as 0.75% pa and 1% pa, that your financial advisor, bank or insurance company are deducting every month from your pensions and investments, which in turn is affecting you investment growth. You are receiving no service for this charge, you are not being contacted by them and you’re going to want to know why this is.
In my opinion, the regulator, the Financial Conduct Authority, have taken a half-hearted approach to trying to solve this ongoing problem. They have said that with effect from April 2016, hidden ongoing commissions are paid to a financial adviser, bank or insurance company for ‘platform’ investments (Meaning you get a choice of multiple pension and investment funds) will be stopped. Here are a few companies that do have platforms: Fidelity, Cofund (owned by Legal and General), Standard Life and Aegon.
There is also a risk that if you were sold investments or pensions directly via a building society such as Lloyds bank or Nationwide etc, they may have included an ongoing hidden trail fee or commission. Furthermore, this will not change from April 2016 providing that the pension, investment or ISA etc is not amended. For example, funds aren’t switched from low-risk to high risk, therefore they will still be able to charge the hidden trail fee/commission.
This potentially explains why your financial advisor/ finance company is not contacting you, you could be paying hidden trail fees/commission on your pensions and investments which are being deducted from your policy, and providing nothing is being done to the policy, those commissions will still continue.
We as a firm, do not believe this is fair and so have always pioneered working on a fee only basis with our clients, thus stopping these hidden trail fees and commissions.
At the time of writing this article, October 2014, if the investment is on a platform then any hidden trail fees or commissions must stop and can only continue to be taken if you give the financial adviser or financial company written authority to do so. However, if the investment is a regular, direct, retail investment, insurance or pension policy and there are hidden ongoing trail commissions being paid, it will still continue.
Our advice is study the paperwork, view your statements and see what the deductions are. If you are still unsure after viewing the paperwork, book a callback with us, we can take a look at your statements, talk you through it and ultimately see if we can stop these hidden trail fees and commissions, meaning more money will stay inside your investment thus giving you better investment growth.