Beware paying thousands over odds for pension advice

St James’s Place customers risk paying thousands more for specialist pension advice compared with its rivals, according to an investigation by The Daily Telegraph.

The country’s biggest wealth manager recently announced a major overhaul to its fees after caving into pressure from the financial watchdog.

Following the arrival of new consumer rules in the summer, which require companies to offer fair value, St James’s Place has scrapped its exit fees, as well as capping advice and fund charges.

The FTSE 100 company – which has more than 900,000 clients – says its total fees are below average for the service it provides and will remain so when the new pricing structure is introduced in 2025.

Yet it continues to charge clients substantially more than its rivals when it comes to a particularly niche aspect of personal finance: defined benefit (DB) pension transfers.

In a Telegraph analysis of six of the biggest and best- known firms, St James’s Place charged more than twice as much as some of its rivals for savers with large pots looking to transfer out of DB schemes. Those in this position could pay a £ 36,000 premium for choosing the company over some of its competitors. Transferring out of a DB scheme is largely considered one of the riskiest financial decisions a saver can make. DB schemes provide a guaranteed income in retirement. This usually increases every year to protect you from inflation and it may also continue at a reduced level to your partner upon death. It is because of these generous benefits that DB schemes are often referred to as “gold plated”.

St James’s Place charges up to £1,000 for a first assessment and then up to 4.5pc for the transfer. A saver with a transfer value of around £100,000 could expect to pay up to £5,500 in fees, which is broadly in line with what other wealth managers charge. However, when it comes to bigger pots, St James’s Place can be significantly more expensive. For a £300,000 transfer, a client could pay up to £14,500 in charges, compared with as little as £5,000 at other firms – equating to almost three times more.

Someone with a £1m transfer could pay up to £46,000 in fees, whereas other firms would cap the charge at around £10,000.

St James’s Place said it is important to consider that its pricing structure differs from other businesses. Because its 4.5pc fee is recouped over time, no money is taken upfront which the wealth manager said allows for investment growth on the whole pot.

A spokesman for St James’s Place said: “Given the complexity of the advice associated with DB transfers, we feel our charges reflect the costs of providing this advice and are good value for those minority of clients for whom a DB pension transfer improves their financial position.”