Forced to use a financial adviser?

hosk

I am not a fan of financial salesman and having worked in the industry for several decades I know the true value of their service, so it concerns me that some financial service companies are forcing people to use IFAs and pay for a service they do not need. I recently contacted Scottish Widows about transferring one of my pension funds into theirs and, apart from being extremely unhelpful about that, they stated “We are unable to accept transfers into our personal pension policies without you receiving financial advice”.

No doubt any IFA will say that’s common sense (they have Porsche’s to pay for, after all), but what about people who don’t need or want their advice? I recently transferred a significant sum to Alliance Trust and they never forced me to get financial advice. I think it is illegal to force someone to use an IFA and I feel a complaint to the FCA coming on. What do you guys & gals think?

Mike

soulsaver

You may be stirring up a hornets nest... again:
See my posts & vitriolic responses here... and take a look look at my links, too..
https://forums.moneysavingexpert.com/discussion/5581279

jamesd

Some firms simply make a choice to sell only via advised channels and not directly to consumers . They do have the right to do that if they want to and you have the right to take your business elsewhere.

dunstonh

I am not a fan of financial salesman and having worked in the industry for several decades I know the true value of their service, so it concerns me that some financial service companies are forcing people to use IFAs and pay for a service they do not need.

If you have worked in the industry for several decades you would know that today it is nothing like what it was 10 years ago or 20 years ago. You would also know that financial services companies are not forcing people to use IFAs or pay for a service they do not need.

I recently contacted Scottish Widows about transferring one of my pension funds into theirs and, apart from being extremely unhelpful about that, they stated “We are unable to accept transfers into our personal pension policies without you receiving financial advice”.

Scottish Widows legacy plans were sold via intermediaries. They do have a small direct to consumer arm using their retirement account but its not very good. However, if you are topping up one of their legacy contracts they will often do it without advice but on transfers, given the increased risks, they will usually require advice. On occupational pension transfers, they it is would be most of the time.

No doubt any IFA will say that’s common sense (they have Porsche’s to pay for, after all), but what about people who don’t need or want their advice?

No doubt you are wrong. If you read this forum often you would know that the IFAs here have no issues with people going DIY. Some can do a very fine job when they DIY. Some can make a right pigs ear of it but that is their choice.

You claim you have knowledge but its interesting that you are wanting to top up what is likely to be an obsolete, low quality and more expensive pension. So, perhaps advice would be better for you. However, you dont need to have it. If you want to DIY then use a DIY provider. If you want to use a provider that retails (or retailed if old plans) via intermediaries then that is their choice to say you need an intermediary.

I recently transferred a significant sum to Alliance Trust and they never forced me to get financial advice.

Exactly. You have rebutted your own argument. A DIY provider.

I think it is illegal to force someone to use an IFA and I feel a complaint to the FCA coming on. What do you guys & gals think?

its not illegal. The police would laugh at you. The FCA would not be interested. You are not being forced to use an IFA as you already know from your own experience.

Amolad

Couldn't agree more Mike. I've been complaining about a similar problem on the thread:
https://forums.moneysavingexpert.com/discussion/5580911


This one caused by government regulations requiring an IFA to provide advice/sig-off certain pension transfers.

dunstonh

Amolad wrote: »

Couldn't agree more Mike. I've been complaining about a similar problem on the thread:
https://forums.moneysavingexpert.com/discussion/5580911


This one caused by government regulations requiring an IFA to provide advice/sig-off certain pension transfers.

Your scenario is different. You are doing a transaction that the FCA classify as mis-sold unless proven otherwise and historically is considered to be wrong in 9 out of 10 cases. Your requirement is set by legislation.

Mike is a different scenario. His is akin to asking to buy a product direct from the factory when that particular manufacturer doesnt retail from the factory but only from shops. You cannot force retail methods on people. It would be like forcing Apple stores to sell android phones. he has the very simple choice of picking a provider that caters for the direct to consumer market.

hosk

Dunston- Thanks for your forensic analysis of my post and detailed advice. I'm not sure if I'm better off for it but I'm clearly not qualified to make that decision. Do I now have to give you 25% of the initial premium for the remainder of the policy term subject to indexation, inflation and an annual policy review?

BananaRepublic

You may well be better off transferring your money into a SIPP. Setting one up is very easy, and the larger providers have a far wider range of funds than companies such as SW, and they charge lower fees. I have a (small) pension with one large company, L&G or somesuch, and they charge 1% per year for investments in external funds, in addition to the fund charges, which is outrageous, but reflects the fact that many people are not up to speed with their pensions and tend to have company pensions which were set up for them.

The safest and easiest route is to use an IFA which is fine if you want an easy life. Alternatively, spend some time reading, and learning, and take control of your funds yourself. Knowing which funds to invest in requires some skill and knowledge (but not much), and time of course. However, most people have pensions with L&G et al and spend no time thinking about them! Which is why I suspect most pensions underperform.

HappyHarry

hosk wrote: »

Dunston- Thanks for your forensic analysis of my post and detailed advice. I'm not sure if I'm better off for it but I'm clearly not qualified to make that decision. Do I now have to give you 25% of the initial premium for the remainder of the policy term subject to indexation, inflation and an annual policy review?

The bottom line is just that you need to chose a pension provider that deals direct with consumers, rather than a pension provider who only deals with intermediaries.

However, why be so insulting?

Many of the posters on here are regulated advisers, and they do not get paid anything when helping posters with questions or concerns.

You posed a question, you had a detailed response, and then, instead of saying "Thank You", you went out of your way to insult the person that responded.

That kind of attitude can only put off those with knowledge from responding to questions on this forum. Over time, this could leave a much poorer forum, without input from qualified professionals.

If you don't want responses from IFAs, then may I suggest that you post any future financial questions on a non-financial forum.

dunstonh

Do I now have to give you 25% of the initial premium for the remainder of the policy term subject to indexation, inflation and an annual policy review?

What you describe is not possible. initial fees cannot be open ended or increase or be subject to indexation. They have to be paid within a 12 month period only. Annual policy reviews are optional as well and you are not forced to have them.

I do find it strange that you want to top up a SW plan that is likely to be more expensive than a fee based option via an IFA. Breakeven point would typically be around 4 years. Ironically, your negativity towards fees could cost you more.

In your attempt to insult, you again are showing your lack of knowledge. Which is strange given your opening on how much you say you know.

steampowered

Out of interest, why are you so determined to transfer your pension to Scottish Widows rather than a DIY provider?

Particularly as dunstonh has very helpfully pointed out that SW is a high cost provider.