Luckily, we’re here to help you stick to them. Here’s what you need to know about taking fees from the pension, straight from the Verve compliance team.  

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Quick refresh: Adviser charging and pensions

Let’s start with a quick refresher.  

Adviser charging allows for fees for financial advice to be paid directly from a client’s investment or pension pot, rather than cash. Post-RDR these arrangements became more common but they are subject to strict FCA rules.  

It’s important to distinguish between:

• Initial fees for setting up advice or new investments

• Ongoing fees for continuous management and ongoing support

It’s important to note that providers may allow adviser charging, but their rules vary and not all schemes permit 100% of fees to be deducted from the pension. Always check!

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When you can take fees from the pension

As a general rule, you can take fees from the pension if:

• The advice and ongoing service relate directly to that pension

• The provider allows deductions for both initial and ongoing fees

• The fee is proportionate and clearly linked to the pension service provided

Here’s an example:  

If you provide ongoing pension review and retirement planning advice, you can usually charge all or part of your fee from that pension, as long as you follow the provider’s rules.

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When you can’t take all fees from the pension

Problems arise when:

• Your advice covers multiple assets, such as ISAs or protection policies, in addition to the pension

• You try to use the pension to pay for advice on unrelated products. FCA rules prohibit cross-subsidisation

• You fail to clearly document the fee’s link to the pension, potentially falling foul of the Treating Customers Fairly principles

Another example:

If a client receives advice covering both their pension and their savings account, taking the entire fee from the pension could be non-compliant. Fees should correspond to the service provided.

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Compliance considerations and best practice

To stay compliant when taking fees from a pension, advisers should:

• Get explicit client consent for the fees deducted

• Ensure fees are fair, proportionate and documented

• Keep accurate records showing the link between the fee and the service provided

• Review fee arrangements regularly, especially when clients’ circumstances or pensions change

If you’re in any doubt about any aspect, contact us. We’re on hand to help you structure correctly, implement efficiently, reduce your risk of errors and avoid FCA breaches.  

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Key takeaways

• Yes, fees can come from the pension when the advice is directly related to that pension

• Always ensure clarity, fairness, and provider alignment

• If in doubt, get an expert second opinion