16th April 2012

MetLife: IFAs "Will cut fees for small pension pots"

Nearly two thirds of IFAs (64%) would be prepared to reduce the fees they usually charge for clients with pension pots worth less than £50,000, new research* from MetLife has found.

The nationwide study of financial advisers found advisers believe there is strong demand for advice from clients with pension funds of less than £50,000 with 63% of advisers saying they believe clients would be willing to pay.

Just 27% of advisers believe clients with smaller pension pots would not be willing to pay for advice. Dominic Grinstead, Managing Director of MetLife UK said: "Retirement income decisions should be about much more than just getting the best annuity rate and it is crucial people receive advice.

"With the onset of auto-enrolment in October 2012 and the predicted sharp rise in small
pension pots, it is encouraging that the majority of advisers would be willing to offer advice at a reduced cost to those with savings worth less than £50,000.

"The importance of good quality financial planning cannot be under estimated particularly
for those with small amounts of saving.

"With RDR just around the corner, this is an issue that will need to be addressed and it seems that the IFA community is not only available but also willing to be at the forefront of solutions."

Advisers in the South West are the most willing to reduce advice fees with 81% happy to cut prices while the least willing were located in London with only 17% of the capital's IFAs prepared to reduce charges for those with smaller pension pots.

Advisers in the South West believe there is more potential business with on average 57% of clients having funds of less than £50,000 while just 17% of IFAs in London saying they see clients with smaller funds. Advisers in the South West are the most worried about advice standards for smaller pension pots with 88% expressing concern about how well clients with smaller pension pots are treated.

Nationally, the study found that the average client approaching advisers has a pension pot size of around £68,000 with nearly two-fifths (37%) valued at under £50,000.
Advisers in London see clients with average pension pots of around £86,700 - more than £30,000 higher than the average of £54,000 for the North West.

Pensions