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Building on an excellent question and answer I want to ask a follow-up, or more specific question.

I'm now self employed and I have a pension pot from when I was employed. I've got about 20 years left before retirement. My existing pensions are nothing fancy; just the default stakeholder type offered by the employer; not defined benefits /final salary or anything like that.

I want to move my money into a different fund because the current fund invests in fossil fuel companies, which I feel a moral obligation not to profit from.

In the UK, a few years ago the govt. introduced "auto-enrollment" which meant that all employers had to be paying into a pension for employees. To help mop up all the employers that didn't actively choose a fund, they set up the govt backed Nest. Nest offer a fossil fuel free fund, and they focus on making things easy for people; no transfer fees; low (0.3% fund) management charges, although they do charge 1.8% on new contributions - but as I have a bit of a pot already, this works out as a fairly low annual fee in total.

PensionBee also offer a fossil fuel free pension fund.

If I use an IFA to choose a pension, I'm looking at 2.5% of my pot upfront for the advice/move and then annual fees (for ongoing IFA advice + fund management fees) well in excess of double those of Nest (or PensionBee).

From speaking to IFAs and reading elsewhere on the web, it seems that IFAs won't / can't / shouldn't guarantee performance of a fund, but more that you'll get the "right product for your goals". I'm just trying to figure out if this means anything! Is it still the "right product" if I have less money at retirement?

It sounds like they're selling peace of mind, but ironically I worry that I'd shell out a lot of money and end up worse off. Or perhaps they're reducing risk and you accept a reduced result for the peace of mind that it's apparanetly a lower risk.

An IFA becomes responsible for the product they sell and I can seek compensation if they mis-sell it to me. So if I said to an IFA that it's important that I can pause contributions and they sold me one that doesn't let me do that, then I could seek compensation. But it seems this sort of thing is very clear from services like Nest, so the value of theoretical compensation seems small.

Any fund can go the wrong way. But as long as the funds are covered by the FCA, there's a bit of a safety net, and there's the FSCS too if it gets really bad. I can't see how Nest - a government backed default - could be a bad choice, with the exception that there may be other funds that out perform it, or of course if I was starting from £0, since then the fees would be nearer 2.1%/year.

Struggling for an analogy: I'm a web developer. But when people come to me and what they need is very basic, I just recommend an off the shelf DIY site from one of those cheap providers because while I do understand a lot more about x, y, z, and I can make something that's exactly what they want with the flexibility to add new things in the future, I know that I'll have to charge them £5k+ and it will take a while. Sure, for some organisations it's worth every penny because they plan for great things/need certain data protected better etc. But for simple cases, I don't try to push my services when I know they can get 90% of what they want much cheaper and easier elsewhere. I've just never met an IFA who takes this approach.

Are an IFA's services really warranted here? Are there other benefits? Is there another way I can understand the value they offer?

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    I suspect this will be closed as opinion based, so all I can say is that in your shoes I would not bother with an IFA. IFAs come into their own when you have complex affairs or really have no idea what the options are, neither of which are the case here.
    – Vicky
    Oct 14 '21 at 18:29
  • If someone wants you to pay them thousands and thousands of pounds over the time period you might be using their services (possibly hundreds of thousands, over an investing career), and yet you cannot see any clear value in what they're offering you - compared with cheaper options - that's probably a pretty clear sign you don't need them and shouldn't use them.
    – timday
    Oct 18 '21 at 11:44
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If you do want to understand the advisers' world better, have a browse of their own industry news sites like https://www.moneymarketing.co.uk/ to see what sort of things preoccupy them; how they justify their cost and value to clients is a certainly recurring topic.

There have been some attempts to quantify the impact of advisers on outcomes; for example Vanguard did an interesting (US-based) paper https://www.vanguard.com/pdf/ISGQVAA.pdf which is fairly positive (although note that Vanguard do offer an advice service - including now in the UK). Of the 3%pa benefits claimed, it reckons around half come from "behavioural coaching" ie stopping the investor making the "buy high, sell low" mistakes that plague novice un-advised investors. Of course there would seem to be nothing to stop DIY investors educating themselves to "be their own adviser" as there is nothing on Vanguard's list (asset allocation, awareness of costs, withdrawal strategies...) that advisers have a monopoly on.

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