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  • FIRST POST
    • CSMR
    • By CSMR 18th Oct 16, 6:58 PM
    • 14Posts
    • 1Thanks
    CSMR
    Low cost IFA for DB to SIPP pension transfer?
    • #1
    • 18th Oct 16, 6:58 PM
    Low cost IFA for DB to SIPP pension transfer? 18th Oct 16 at 6:58 PM
    I am transferring a pension from DB to a SIPP because I would like to invest it myself.

    The transfer value is £78,000. Since this is more than £30,000, I need "evidence of advice, signed by an advisor on the FCA register" to proceed.

    I was expecting to pay about £250 for about an hour's work but instead I've been given offers of 2.5-3% of total value or about £2000 which is much more than I was expecting. The IFA I spoke to said the advice would take more than a day's work, which also was much more than expected as the relevant information can be summarized in a few lines and the calculations are very simple.

    Is there anywhere I can find an IFA who can offer the minimum legally required advice at a reasonable cost? Even up to £1000 would look OK to me now.

    (I am not complaining about IFAs because their normal job is to offer advice to people who need to decide what to do and a very personalized service is expensive. I only need the advice for compliance reasons and the quality or effort is not important to me, or even whether the advice is yes or no.)

    Thanks!
Page 1
    • dunstonh
    • By dunstonh 18th Oct 16, 7:19 PM
    • 85,111 Posts
    • 50,130 Thanks
    dunstonh
    • #2
    • 18th Oct 16, 7:19 PM
    • #2
    • 18th Oct 16, 7:19 PM
    I was expecting to pay about £250 for about an hour's work
    ROFL. An hours work and just £250.

    but instead I've been given offers of 2.5-3% of total value or about £2000 which is much more than I was expecting.
    £2000 is good. Figures of £5000 are closer to the norm.

    I only need the advice for compliance reasons and the quality or effort is not important to me, or even whether the advice is yes or no.)
    It is important to the adviser though.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • AnotherJoe
    • By AnotherJoe 18th Oct 16, 9:11 PM
    • 4,148 Posts
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    AnotherJoe
    • #3
    • 18th Oct 16, 9:11 PM
    • #3
    • 18th Oct 16, 9:11 PM
    The issue is not so much the work, but the liability insurance the FA needs to be able to pay for when in ten years time you come back complaining the advice was bad and you want compo.

    There's even a case where someone advised not to transfer, the person transferred and they still got compo for the advice not being strong enough not to transfer ! So some IFAs simply wont even touch these cases now especially as people like you want it done for peanuts which isn't worth the risk to them.

    Which might also give you cause to ponder as to whether this is a wise thing to do.
    • tacpot12
    • By tacpot12 18th Oct 16, 10:01 PM
    • 369 Posts
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    tacpot12
    • #4
    • 18th Oct 16, 10:01 PM
    • #4
    • 18th Oct 16, 10:01 PM
    I paid £1000 for a report on whether to transfer 2 x DB pensions. The IFA was happy to do it for this fixed fee on the basis I would do all the transfer work myself. Their recommendation was to leave the pensions where they were. By coincidence the total transfer value of these two pensions was £70k, the pension benefit payable was about £2200 per annum in today's money.

    The IFA was based in Sheffield.
    • Kendall80
    • By Kendall80 18th Oct 16, 11:16 PM
    • 818 Posts
    • 529 Thanks
    Kendall80
    • #5
    • 18th Oct 16, 11:16 PM
    • #5
    • 18th Oct 16, 11:16 PM
    I'm in a similar situation to the OP. Its not the 'advice' I require but rather a sign-off to say i've consulted with an IFA. I've already weighed up the pros and cons of the transfer myself.


    I understand there is a liability issue for the IFA as stated above. Maybe there is a template/procedure they have to adhere to. I don't suppose there is some kind of waiver I could sign to take on full responsibilty for the transfer? My CETV is only 3k above the 30k threshold too.


    EDIT: If advice is obtained and is 'against' the transfer then does the IFA take on no liability? Presumably one can go ahead with the transfer.
    Last edited by Kendall80; 18-10-2016 at 11:20 PM.
    • Linton
    • By Linton 18th Oct 16, 11:21 PM
    • 6,944 Posts
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    Linton
    • #6
    • 18th Oct 16, 11:21 PM
    • #6
    • 18th Oct 16, 11:21 PM
    I paid £1000 for a report on whether to transfer 2 x DB pensions. The IFA was happy to do it for this fixed fee on the basis I would do all the transfer work myself. Their recommendation was to leave the pensions where they were. By coincidence the total transfer value of these two pensions was £70k, the pension benefit payable was about £2200 per annum in today's money.

    The IFA was based in Sheffield.
    Originally posted by tacpot12
    Did you accept the IFAs recommendation or try to transfer anyway?
    • dunstonh
    • By dunstonh 18th Oct 16, 11:30 PM
    • 85,111 Posts
    • 50,130 Thanks
    dunstonh
    • #7
    • 18th Oct 16, 11:30 PM
    • #7
    • 18th Oct 16, 11:30 PM
    'm in a similar situation to the OP. Its not the 'advice' I require but rather a sign-off to say i've consulted with an IFA. I've already weighed up the pros and cons of the transfer myself.
    The "sign off" by the IFA means that they take liability for giving you advice. They cant just sign it and do nothing other than that.

    understand there is a liability issue for the IFA as stated above. Maybe there is a template/procedure they have to adhere to. I don't suppose there is some kind of waiver I could sign to take on full responsibilty for the transfer? My CETV is only 3k above the 30k threshold too.
    The FOS does not recognise waivers signed by people. It takes the view that the average consumer is not in a position to know what is right for them in complex areas and therefore not able to waive their rights.

    EDIT: If advice is obtained and is 'against' the transfer then does the IFA take on no liability? Presumably one can go ahead with the transfer.
    The IFA has liability for the advice. If you go against the advice, that is your choice and in theory, the IFA should not suffer the consequences. However, there was an FOS outcome against an adviser earlier in the year where they recommended it was not transferred but the FOS felt they do not make the reasons against strong enough.

    Most compliance firms position it with advisers that if a complaint goes to the FOS over a defined benefit transfer, they will nearly always uphold the complaint.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • sandsy
    • By sandsy 19th Oct 16, 8:17 AM
    • 969 Posts
    • 550 Thanks
    sandsy
    • #8
    • 19th Oct 16, 8:17 AM
    • #8
    • 19th Oct 16, 8:17 AM
    I'm in a similar situation to the OP. Its not the 'advice' I require but rather a sign-off to say i've consulted with an IFA. I've already weighed up the pros and cons of the transfer myself.
    Originally posted by Kendall80
    Whether you think you need advice or not, you are required by law to take advice. Chances are that unless you're an adviser yourself, or at least read up widely on pension transfers, you've probably missed some of the pros and cons. What critical yield did you come up with?

    I understand there is a liability issue for the IFA as stated above. Maybe there is a template/procedure they have to adhere to. I don't suppose there is some kind of waiver I could sign to take on full responsibilty for the transfer? My CETV is only 3k above the 30k threshold too.
    Originally posted by Kendall80
    Nope, waivers don't count. Adviser still has liability for the advice.


    EDIT: If advice is obtained and is 'against' the transfer then does the IFA take on no liability? Presumably one can go ahead with the transfer.
    Originally posted by Kendall80
    Adviser carries liability for the advice no matter what the advice is. For a limited number of people, it might be better to transfer and if the advice is not to transfer then it would be poor advice.
    • Linton
    • By Linton 19th Oct 16, 9:17 AM
    • 6,944 Posts
    • 6,540 Thanks
    Linton
    • #9
    • 19th Oct 16, 9:17 AM
    • #9
    • 19th Oct 16, 9:17 AM
    .....

    EDIT: If advice is obtained and is 'against' the transfer then does the IFA take on no liability? Presumably one can go ahead with the transfer.
    Originally posted by Kendall80
    As long as your chosen new provider is prepared to accept you on that basis.
    • Silvertabby
    • By Silvertabby 19th Oct 16, 12:52 PM
    • 372 Posts
    • 401 Thanks
    Silvertabby
    dunstonh and sandsy are right - reputable IFAs just won't take the risk of being sued when clients have spent all of their 'easy access' pension funds and are facing retirement without their final salary pension income.

    I'm a retired LGPS administrator, and dealt with a lot of transfer out applications (from current members and well as deferred members) when the pension freedoms were announced. Some pension fund members tried more than one IFA (I think the record was 4) before finding one who would 'recommend' the transfer.

    People don't read the small print - they just see £ signs and pick up the pen.

    A little off track, but I have bad memories of a case a few years ago when I had to tell a just widowed lady that the LGPS wouldn't be paying her the widow's pension she had expected and was banking on. Her husband had transferred his LGPS benefits into a private pension scheme so he could take the lump sum and an annuity at 50 (LGPS minimum age was 60). It seems that when he received his annuity offer, he just looked at the highest pension - ie, the one without widow's benefits. According to his poor wife, he told her that as his private pension wouldn't go to her, that must mean that her widow's pension hadn't been transferred and so she would have to claim it from the LGPS when he died.
    Last edited by Silvertabby; 19-10-2016 at 12:54 PM. Reason: typo
    • CSMR
    • By CSMR 19th Oct 16, 6:08 PM
    • 14 Posts
    • 1 Thanks
    CSMR
    I paid £1000 for a report on whether to transfer 2 x DB pensions. The IFA was happy to do it for this fixed fee on the basis I would do all the transfer work myself. Their recommendation was to leave the pensions where they were. By coincidence the total transfer value of these two pensions was £70k, the pension benefit payable was about £2200 per annum in today's money.

    The IFA was based in Sheffield.
    Originally posted by tacpot12
    I've managed to find someone now at a similar price on bark.com.

    My pension is about £4500 but only the same value as yours. Because I'm 30yrs from retirement. Young people get a bad deal in DB/DC pensions, same contributions but the benefits are further in the future so lower value. Probably a good strategy to go with an SIPP pension when a long way from retirement and DB pension later.

    The valuations seem pretty generous for all of us though, based on low interest rates.
    • CSMR
    • By CSMR 19th Oct 16, 6:19 PM
    • 14 Posts
    • 1 Thanks
    CSMR
    The FOS does not recognise waivers signed by people. It takes the view that the average consumer is not in a position to know what is right for them in complex areas and therefore not able to waive their rights.

    However, there was an FOS outcome against an adviser earlier in the year where they recommended it was not transferred but the FOS felt they do not make the reasons against strong enough.
    Originally posted by dunstonh
    Insanity. This is raising the prices of so many things. Lawyers are extracting so much money from consumers and holding back business. Governments don't understand that that it is precisely consumers that are hurt by this exaggerated "consumer protection" through inflated prices.
    • AnotherJoe
    • By AnotherJoe 19th Oct 16, 6:34 PM
    • 4,148 Posts
    • 4,175 Thanks
    AnotherJoe
    dunstonh and sandsy are right - reputable IFAs just won't take the risk of being sued when clients have spent all of their 'easy access' pension funds and are facing retirement without their final salary pension income.

    I'm a retired LGPS administrator, and dealt with a lot of transfer out applications (from current members and well as deferred members) when the pension freedoms were announced. Some pension fund members tried more than one IFA (I think the record was 4) before finding one who would 'recommend' the transfeR.
    Originally posted by Silvertabby
    Are you sure they needed someone who recommended yes? It's my understanding that all you need to have is taken advice, you can still go ahead even against advice? Or do you insist that there must be a yes answer?
    • CSMR
    • By CSMR 19th Oct 16, 6:36 PM
    • 14 Posts
    • 1 Thanks
    CSMR
    I'm in a similar situation to the OP. Its not the 'advice' I require but rather a sign-off to say i've consulted with an IFA. I've already weighed up the pros and cons of the transfer myself.


    I understand there is a liability issue for the IFA as stated above. Maybe there is a template/procedure they have to adhere to. I don't suppose there is some kind of waiver I could sign to take on full responsibilty for the transfer? My CETV is only 3k above the 30k threshold too.


    EDIT: If advice is obtained and is 'against' the transfer then does the IFA take on no liability? Presumably one can go ahead with the transfer.
    Originally posted by Kendall80
    I actually got two <£1000 quotes now and can put you in touch with those IFAs if you would like. My case is pretty simple though and I gave them a 1/2 page summary of all the info.

    If the advice is against the transfer then some pension companies won't accept the transfer in. However you can always transfer your pension in to a third company that accepts "insistent clients", and then transfer out to a company of your choice. You will pay an exit fee but it should be smaller than hiring another IFA.

    My personal advice is don't do this unless you have a good idea what critical yield means and whether you are likely to achieve it . I'm not an IFA so you can't sue me .
    • AnotherJoe
    • By AnotherJoe 19th Oct 16, 6:37 PM
    • 4,148 Posts
    • 4,175 Thanks
    AnotherJoe
    Insanity. This is raising the prices of so many things. Lawyers are extracting so much money from consumers and holding back business. Governments don't understand that that it is precisely consumers that are hurt by this exaggerated "consumer protection" through inflated prices.
    Originally posted by CSMR
    The alternative is that stupid, greedy or naive and trusting people get fleeced by get rich quick schemes. And sob stories in the Daily Mail from such people take precedence over unseen generic losses.
    • Silvertabby
    • By Silvertabby 19th Oct 16, 7:14 PM
    • 372 Posts
    • 401 Thanks
    Silvertabby
    “ dunstonh and sandsy are right - reputable IFAs just won't take the risk of being sued when clients have spent all of their 'easy access' pension funds and are facing retirement without their final salary pension income.

    I'm a retired LGPS administrator, and dealt with a lot of transfer out applications (from current members and well as deferred members) when the pension freedoms were announced. Some pension fund members tried more than one IFA (I think the record was 4) before finding one who would 'recommend' the transfeR.
    Originally posted by Silvertabby
    Are you sure they needed someone who recommended yes? It's my understanding that all you need to have is taken advice, you can still go ahead even against advice? Or do you insist that there must be a yes answer?
    Another Joe - yes, the IFA had to recommend the transfer. Mind you, I've been retired for a while now so I don't know if this has changed.
    • sandsy
    • By sandsy 19th Oct 16, 7:32 PM
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    sandsy
    Are you sure they needed someone who recommended yes? It's my understanding that all you need to have is taken advice, you can still go ahead even against advice? Or do you insist that there must be a yes answer?
    Originally posted by AnotherJoe
    It doesn't have to be a yes. The requirement is to take advice - the transfer can happen no matter what the outcome of the advice.

    But many advisers won't do the transaction if they don't think it should be done. And many providers won't take the funds if the advice suggested it wouldn't be in the person's best interests to do the transfer.
    • CSMR
    • By CSMR 19th Oct 16, 9:06 PM
    • 14 Posts
    • 1 Thanks
    CSMR
    The alternative is that stupid, greedy or naive and trusting people get fleeced by get rich quick schemes. And sob stories in the Daily Mail from such people take precedence over unseen generic losses.
    Originally posted by AnotherJoe
    Agreed but it just goes too far! Losses due to gross incompetence and misrepresentation should be sued about. If people want more than that, they can buy extra insurance.
    • RickyB2000
    • By RickyB2000 19th Oct 16, 10:32 PM
    • 253 Posts
    • 156 Thanks
    RickyB2000
    The issue is not so much the work, but the liability insurance the FA needs to be able to pay for when in ten years time you come back complaining the advice was bad and you want compo.

    There's even a case where someone advised not to transfer, the person transferred and they still got compo for the advice not being strong enough not to transfer ! So some IFAs simply wont even touch these cases now especially as people like you want it done for peanuts which isn't worth the risk to them.

    Which might also give you cause to ponder as to whether this is a wise thing to do.
    Originally posted by AnotherJoe
    Do you have the link for this? I vaugly remember reading something, but I think the issue was that the client was blind or disabled in some way, the advisor was found not to have properly explained the risks (in a way someone disabled would understand) and the advisor actually did the transfer after advising against it. Though I guess it was the fact the advice was not clear enough that led to the liability which makes it scary to even think about writing it. Anyway, be good to read the case again.
    • AnotherJoe
    • By AnotherJoe 20th Oct 16, 8:20 AM
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    AnotherJoe
    Ricky, They were not able to read. It was still (IMO) a terrible precedent, as CSMR implies, it all contributes to a high cost CYA nanny culture where people want to have their cake and eat it and the majority get additional costs for taking their own decisions,
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