Using an advisor for drawdown

tjh64

I am 64 (and threequarters) and looking to retire soon. I have a deferred Final Salary scheme and a Money Purchase pot. As the FS meets the rules of adequacy, it seems to me to be a slam dunk to take the MP as drawdown, however the scheme provider (Aviva) says that I need to use an advisor to do this. Is it really necessary to pay someone to borrow my watch and tell me the time? - or should I hang on until next April and hope that the rules are simplified?

dunstonh

, it seems to me to be a slam dunk to take the MP as drawdown

If you need the income at this time, then maybe. If you dont need it then leaving may be better.

however the scheme provider (Aviva) says that I need to use an advisor to do this. Is it really necessary to pay someone to borrow my watch and tell me the time?

No. You can DIY. However, you cant DIY with providers that require you to use an intermediary.

or should I hang on until next April and hope that the rules are simplified?

If you DIY then these are things you are meant to have worked out for yourself. Or perhaps your watch is not that good at telling the time

atush

How is your MP invested now? Did you do that yourself? Do you have S&S isas that you run yourself?

sandsy

You can either hang on until next year and hope they let you do it at that point or transfer now to a different provider who will let you do it without advice.

SallyG

I reckon a lot of people will face this dilemma.
Assuming Aviva require you to take advice from an IFA - not just someone called an adviser on their own staff - what extra protection would you get from using an IFA - eg if an IFA recommended specific investments for your drawdown fund but you lost money on those investments could you achieve redress for any losses because you took advice from an IFA ?

bmm78

tjh64 wrote: »

I am 64 (and threequarters) and looking to retire soon. I have a deferred Final Salary scheme and a Money Purchase pot. As the FS meets the rules of adequacy, it seems to me to be a slam dunk to take the MP as drawdown

Just checking - there will be at least £12,000 in secure pension income payable in this tax year?

This often caught people out with the previous £20,000 Minimum Income Requirement. The £12,000 limit is obviously less restrictive, but always best to check these things.

bmm78

SallyG wrote: »

I reckon a lot of people will face this dilemma.
Assuming Aviva require you to take advice from an IFA - not just someone called an adviser on their own staff - what extra protection would you get from using an IFA - eg if an IFA recommended specific investments for your drawdown fund but you lost money on those investments could you achieve redress for any losses because you took advice from an IFA?

An IFA is responsible for the advice they have provided.

If investments fall in value or under-perform, this is only grounds for a complaint if it can be proven that the advice was unsuitable. If the client's Attitude to Risk had been assessed properly, the agreed investments took into account the client's objectives and their ability to absorb any losses, and the client was aware of the risks and willing to take them, the advice is still suitable.

If there were deficiencies in this process, such as recommending high-risk investments for people who couldn't afford any falls, FOS are likely to view this as unsuitable advice.

dunstonh

Assuming Aviva require you to take advice from an IFA - not just someone called an adviser on their own staff - what extra protection would you get from using an IFA - eg if an IFA recommended specific investments for your drawdown fund but you lost money on those investments could you achieve redress for any losses because you took advice from an IFA ?

The IFA has to consider options and suitability. The IFA is not responsible for investment returns. At this time, drawdown is still considered a high risk transaction that is unsuitable for the majority of people.

bmm78

I think people also need to consider why many firms refuse to allow drawdown without advice. Things can and do go wrong, the potential liability for the regulated firms involved is greater, and as there are more considerations it is more difficult to demonstrate that the client was put in a fully informed position.

This isn't the same as saying that everyone "needs" advice, as there are plenty of people more than capable of making sound financial decisions. However, DIY should be done for the right reasons ("I know what I'm doing and I'm happy to take responsibility for my own decisions") rather than the wrong reasons ("I don't know what I'm doing but I'm not willing to pay anyone for help").

kidmugsy

bmm78 wrote: »

"I don't know what I'm doing but I'm not willing to pay anyone for help".

With the coda "and anyway if it goes wrong some beggar will have to pay me compensation".

mgdavid

bmm78 wrote: »

Just checking - there will be at least £12,000 in secure pension income payable in this tax year?

This often caught people out with the previous £20,000 Minimum Income Requirement. The £12,000 limit is obviously less restrictive, but always best to check these things.

er, it'll be next tax year when the OP retires.