accelerated drawdown - " regulatory risk"

bigadaj

The problem is there's so many variations out there in terms of investors.

I never saw a lot wrong with the situation before last week, ok there were arguments about application of gad limits and the level of secure income for flexible drawdown and how that came about, but the principle looked fine.

The number of pension scams that we see on here promoted by unregulated firms also makes me worry that unsophisticated people could actually be conned more easily than now.

gadgetmind

Aegis wrote: »

That's really worrying.

Agreed. A low-fee multi-asset fund might be a better option than a rebalanced portfolio of component funds, or equally well it might not be as they really aren't that different under the skin.

dunstonh

gadgetmind wrote: »

Agreed. A low-fee multi-asset fund might be a better option than a rebalanced portfolio of component funds, or equally well it might not be as they really aren't that different under the skin.

I find the worrying bit that the ombudsman decided that:
1) cheapest is best (surely that is opinion and choice)
2) single sector funds are specialist investments. (which they are not)

What if the portfolio was a collection of index trackers with one for each sector? it may fit cheap but it would be classed specialist with that ombudsman. Since when has a UK equity fund been classed as specialist?

atush

Perhaps we need new ombudsmen, and they need better training?

gadgetmind

Said ombudsman is probably sat on a final salary pension and wouldn't know a balanced portfolio from a balanced flu!

atush

Indeed. I am now even more worried for D and others like him due to all the numpties with pensions out there.

I read your letter Gadget, and I think it was great. But I wish I was as sure of the numptyism level of those with DC pensions, as I fear it is greater than you think.

Someone said something like a small amt of your pension, invested in a fund/annuity sort some sort of product to pay the amt of pension credit would help? Something to protect the taxpayer in some small way.

Or at least that there is some sort of situation where IFAs are not penalised by the ombudsman when the idiot runs out of money and sues for misselling.

I am quite happy with my OH to sit down and work out what to do with our money. I am quite happy with high risk to balance our pot of at the moment useless cash. And things in between. I am quite happy using my knowledge to work out LE for both of us (he will live longer than me I think as we both are fairly healthy but I may have a few bad genes lurking). We will see.

But from what I see here day to day, I am not so sure about many others.

But something to protect them and the taxpayer, yet would leave people like you to run their own affairs is I agree the best way forward. How to sort the wheat from the chaff?

hazelh

I think your last comment indicates you think there should be a rule for those who can make their own plans and decisions and another for those who can't. How would that work.
With drawdown you have always been to make your decision of whether you want to make none or up to maximum drawdown and the IFA does a summary of your risk assessment and you sign away at your review to say you agree with their report essentially. I can't see how things will change with the new rules.
Many people will be able to live on the house and other assets they have accumulated, probably very few have pension pots of a size of any merit where they have not accumulated these other assets as well.
Also the tax implications will obviously have an impact on decisions people make about the amount they drawdown.
Now people with a £30K pot will be able to take it in cash and then rely on their state pension later. No difference with a larger pot but for both parties you will have greater control on how you invest/spend. For me there is no doubt that these changes mean that I can at least control my own destiny while still alive. I have seen too many people forced to take out an annuity and then live for a couple of years only.

atush

I agree that it would be nearly impossible to sort these people out (hence my wheat from Chaff comment you may have missed).

I don't know how this would be done, maybe something from the face to face? I do know that polling suggested that shortly after the budget only 5% would buy an annuity and some 42% plane to withdraw 100% of their fund.

Kind of proves my point.

zagfles

Surely any decent advisor would simply state that an annuity is the only guaranteed way of securing an income for life. If the punter then draws the whole lot out and blows it against that advice, then what possible comeback do they have, they've ignored the advice given.

It's like endowments, the mis-selling occurred because lots of dodgy, commission hungry or simply incompetant advisors told people the endowment would definitely pay off the mortgage. When they should have explained there was a significant risk it wouldn't, and the only guaranteed way was to use a repayment mortgage.

atush

We aren't really sure how the 'free face to face' thing will go.

Might be just to explain all the options available (kinda like here really) w/o actually giving any advice or being regulated for compensation?

But as said above and elsewhere, Barclays just had a complaint upheld when they had to pay compensation where they had not advised anything but instead was DIY and the person involved lost money by themselves.