How much does pension advice cost in the UK?

Published 29th January 2024

When planning for your retirement, seeking professional pension advice could help you find the best option for you. Yet one common concern is the cost of obtaining this advice. Here we'll break down the various options available to you and look at the potential charges.

Research from our Get Britain Pension Ready campaign found that 28% of those surveyed rely on information and advice from family and friends when it comes to retirement planning.

1. Independent Financial Advisers (IFAs)

Independent Financial Advisers can provide personalised advice on a range of financial matters. This includes advice on pensions. One of the advantages of talking to an IFA is that they work independently. That means they're not tied to any specific financial products or providers.

IFAs typically charge for their services in a variety of ways:

1. Hourly rate: Some IFAs offer advice that can be paid for by the hour. The fee for this can range from £75 an hour to £350 but the UK average is £150 an hour.

2. Flat fee: Other IFAs charge a fixed fee for their advice. This could range from a few hundred to over a thousand pounds, depending on how complex your financial situation is.

3. A monthly fee: Another common fee is a monthly charge. This can be a fixed amount or a percentage of the assets they're advising on. This is often around 1-2% of your pension fund value but can be more.

4. An ongoing fee: IFAs may charge an ongoing fee for as long as they provide an ongoing service.

It’s worth noting that IFAs often use more than one type of charge. For example, a fixed set-up fee may be applied then a monthly or ongoing fee may be charged for managing your assets. There may also be extra costs associated with services used by IFAs, for example investment platforms, that could be passed onto you.

You can find a local financial adviser on the government's MoneyHelper site.

2. Pension Wise

Pension Wise is a government-backed service from MoneyHelper. It provides free, impartial guidance on pension options.

Pension Wise offer a phone call or an online appointment. The guidance they provide is available to anyone aged 50 or over with a defined contribution pension.

The appointment lasts around 45 to 60 minutes, and a pension specialist will explain:

  • Your pension options
  • How each option is taxed

And provide you with next steps so you’ll know how to move forward by the end of the session.

The guidance provided by Pension Wise is free of charge. Bear in mind that they won't offer personalised recommendations and they only provide a single appointment. Their service is more about providing information to help you make informed decisions.

“A lifetime annuity is just one of the retirement options available. It provides a guaranteed income for life."

Sarah Lloyd, Commercial Director at Annuity Ready

3. Unbiased

Unbiased is a website that connects users with financial advisers, including pension specialists. The advisers on Unbiased may include IFAs, mortgage brokers, and accountants.

The cost of advice through Unbiased can vary, as advisers set their own fees. Some may offer an initial consultation for free, while others may charge a fee as discussed above. Always clarify the costs with the adviser before proceeding.

4. Online platforms

In recent years, several online platforms have emerged that provide robo-advisory services. These platforms use algorithms to analyse your financial situation and provide automated advice.

Robo-advisory platforms often have lower fees compared to traditional IFAs. Fees are usually charged as a percentage of your invested assets and can range from 0.25% to 0.75%.

Tips for managing costs

1. Shop around
Don't settle for the first adviser you come across. Compare the services and fees of different advisers to ensure you're getting a service that meets your needs.

2. Clarify fees upfront
Before engaging with any adviser, make sure to ask about their fees. Understand how they charge, whether it's a flat fee, a percentage or another structure.

3. Consider your needs
If you need personalised advice due to a complex financial situation, paying for an IFA's expertise may be worth the cost. If your situation is simpler, free guidance from services like Pension Wise might be enough.

4. Understand the service
Different advisers and services offer varying levels of support. Ensure you understand whether you're receiving guidance, information or personalised advice.