Financial Advice wanted!

[Andy K]

Hi All - My sister has been having great difficulty finding a Financial Advisor who is prepared take her on as a potentialy 'Insinstent Client' wishing to transfer from a DB scheme to drawdown. I know there are a number of IFA's within the club - if any of you think you might be able to help, please PM me and I can give you more background. Thanks.

[Phil H]

Hmm. I'm not a financial adviser but I worked with pensions actuaries for a good while. I'd assume that the reason she can't find anyone to advise her on this is because, on the face of it, it sounds like a mad thing to do.

[Andy K]

On the face of it yes.... but in this case there is very good reasoning behind her wish.

[Paoloblanc]

Hi Andy
I’m not an IFA but I am a freelance training consultant and often train IFAs on this sort of topic.
To be honest I’m not sure why your sister is meeting such resistance. I’m guessing it might be an insurance issue. IFAs must have professional indemnity cover and I suspect that most if not all policies will exclude transfer business transacted on an ‘execution only’ basis.

However, the fact that IFAs are running scared of this should not put her off.

Coming at it from another angle, pension regulation currently dictates that a transfer from DB to DC scheme cannot take place without analysis and advice.

Scheme trustees are required to check that the member has received advice from a suitably qualified IFA by checking that they are on the FCA register before allowing a transfer. But, importantly they are NOT required to check the nature of the recommendation given – just the fact that it has been given by someone with appropriate FCA permissions. They don’t even have to see the advice.

Your sister therefore has no choice but to obtain advice from a suitably qualified IFA based on a TVAS report. However, I would recommend that she keeps quiet about her intentions until she has the report in her possession. She can then take it to the trustees and insist on a transfer if she’s adamant that’s what she wants.

A few other things to bear in mind,
1. The IFA will charge a fee for the advice which she will have to pay out of her own resources (rather than have it facilitated from the transfer value). Expect £2-3k.
2. Generally speaking trustees cannot refuse to transfer and must complete the transaction within broadly 3 months of a request.
3. If she’s in an unfunded public sector scheme like the civil service, teachers or NHS schemes, a transfer is NOT possible under current government regulations.
4. If her Transfer Value is less than £30k, an IFA does not need to be involved, and Trustees can allow a transfer without advice checks.

Hope that helps
Paul White

[Andy K]

Paul,

Thank you very much for the information.

I am aware of a lot of this as my sister has already been burnt once. In short, after contacting around 20 IFa's it became apparent that most were very reluctant to accept potentially 'Insistent Clients'. However, one responded positively and put her in touch with a Pensions Advisor who stated they were accepting Insistent Clients. They spelt out a three stage process - Initial Financial Review, followed by Fully Regulated advice, followed by Implementation. After charging for the Initial Review they arbitarily refused to move to the next stages stating the risk was too great! Leaving my sister out of pocket and with a worthless report.

So if you do know of any IFA's that are prepared to fully support the insistent Client process, I would be very grateful.

Thanks

Andy

[Paoloblanc]

Hi Andy,

I'm somewhat perplexed by this.

The IFA just needs to complete the second stage and charge their fee for the work involved. Even if the advice is leave it where it is there is no risk to the IFA, - s/he's done his/her job.

Your sister can then go to the trustees and request a transfer. It's only at that stage that she becomes 'insistent'.

I'm assuming she has a suitable DC product to accept the transfer in which case she doesn't need an IFA to complete the implementation.

I'm reluctant to give you any names of other IFAs at the moment as they will need to start from stage one and will charge to repeat the initial review.

I feel her best step is to ask the IFA that completed the initial review to produce a report for her and put their advice in writing and charge accordingly. If the advice is leave it where it is they can put enough disclaimers in there to mitigate any risk of her action coming back on them.

If they are still reluctant you could always threaten to complain to the Financial Ombudsman. That comes with a £400 cost to them and potential repetitional damage.

[Andy K]

Thanks again Paul,

We too are perplexed!

We have written to the company several times asking for an explanation of the risk they perceive and requesting they reconsider and move to stage 2. We have also confirmed that in the event of my sister being an insistent Client she would be prepared to sign any reasonable disclaimers, including, if necessary, a hand written, in her own words disclaimer.

The company has not responded with any detail on their assesment of 'too risky' and they refuse to move to stage 2. They have now closed the file and have ceased corresponding with us!

My sister would be prepared to go through the whole process again, including the initial review if she were certain that in the event she were to become an Insistent Client, the process would be taken through to its conclusion.

[Paoloblanc]

OK, i'll ask around a few contacts.

Can you PM me,

The name of the scheme.
The approx transfer value.
Her current age
and the name of the firm that she had the initial review with (I wouldn't want to re-approach given the history)

[Andy K]

Will do - thanks again!