Can financial advisors charge a fee for transferring a preservation fund?

Question:

Can financial advisors charge a fee for transferring a preservation fund?

Answer:

Julian, There are two things to consider. Firstly, financial advisor fees are subject to negotiation (between you and the advisor). Secondly, some service providers (mainly the insurance companies) require you to use a financial advisor. So if you go this route, you may not be able to avoid an advisor fee, but you have some leeway to negotiate what this fee will be. However, you do have the right to choose a different type of service provider (eg an asset manager such as us, 10X Investments) who does not require you to use a financial advisor when dealing with them. This means you can transfer directly across from your employer's fund to the preservation fund without any upfront or recurring charge. Proposed laws (set out in the Retail Distribution Review) will make it illegal for independent financial advisers to earn commission from selling long-term savings products. They will only be allowed to earn a fee for the financial advice they provide, This will have to be based on the time spent, the services rendered and the expertise provided. The fee can then still be recovered by way of an annual charge against the client's investments (for ongoing advice services), but the rate will will have to be negotiated and the client has the right to cancel the fee at any time.