Why do I have to use a Financial Advisor?

Silvertabby

“ Over the years *far* too many people have lost some/most/all of their pension pot to scammers and bad investments. To prevent this happening, the government put various pieces of legislation into place to protect people from themselves.

You might insist that you know what you're doing, but then so did many of the people who got scammed.
Originally posted by Ergates

Sadly, some people see £ signs and common sense goes out of the window.

Some time ago (before the pensions freedoms) a woman who had held a quite senior executive post in Local Government finance wanted to transfer her (substantial) LGPS benefits to a hardwood plantation in South America for a 'fabulous' investment return.

On being told that the LGPS wouldn't/couldn't transfer her benefits to a non HMRC authorised pension scheme, she threw a hissy fit and threatened to sue the LGPS for her loss of investment returns.

Nothing came of the threat - but she did transfer her benefits into a SIPP, after telling us that if that was the only way she could control 'her' money then so be it.

Would be interested in knowing what happened after that.

drumtochty

[FONT=&quot]Grady[/FONT]

[FONT=&quot]You are making a fool of yourself here.[/FONT]

[FONT=&quot]If you are such an expert you would not have to come here to ask questions about your pension. I am no such expert and take advice here, therefore you are not that up to speed on your pension re getting a transfer.[/FONT]

[FONT=&quot]People that appear to know a lot more than you, have asked you if there are any special returns you would receive on this pension or other reasons that you need financial advice.[/FONT]

[FONT=&quot]You either know that answer and are not prepared to give the answer it as it does not suit your rantings. Or you have got yourself into such a "Tissy" about not needing professional financial advice and you can no longer talk to the provider.[/FONT]

[FONT=&quot]Just stop doing this, take one step at a time and get the questions answered in a reasonable manner.[/FONT]

Boringfrog

I am in the same situation as the OP, my DB pension does have benifits but only if I am married with children. Luckily I have neither. The company my pension is with has gave me a final transfer figure and also stated I need to see a FA and enclose a written statement from said advisor with my transfer application. When I went to see a FA I told him exactly what I wanted and my circumstances, ie transfer my DB to a SiPP that I already have. After a 'free' hour of listening to him and a leaflet with their prices I feel I'm no further forward and think he didn't want to do what I asked.

AnotherJoe

Boringfrog wrote: »

I am in the same situation as the OP, my DB pension does have benifits but only if I am married with children. Luckily I have neither. The company my pension is with has gave me a final transfer figure and also stated I need to see a FA and enclose a written statement from said advisor with my transfer application. When I went to see a FA I told him exactly what I wanted and my circumstances, ie transfer my DB to a SiPP that I already have. After a 'free' hour of listening to him and a leaflet with their prices I feel I'm no further forward and think he didn't want to do what I asked.

You "think"? Did you ask him?
Note that only 1 in 10 FAs are even qualified to manage this and of those a vast % are stopping work on it.

Boringfrog

He did mention people suing FA's which I didn't believe but doing research it seems there's a lot of claims going in for SIPPs gone bad. When I said I already had a SIPP, he asked why did I have one.

zagfles

Boringfrog wrote: »

He did mention people suing FA's which I didn't believe but doing research it seems there's a lot of claims going in for SIPPs gone bad. When I said I already had a SIPP, he asked why did I have one.

It's not "SIPPs going bad", it's that transferring might not be in your best interests, and IIRC the regulator sees transferring from DB as misselling unless proved otherwise.

Basically an IFA needs a good justification to recommend a transfer, and their costs will include a big chunk to pay their indemnity insurance in case you sue them for misselling, ie you're paying for their potential mistakes!

Boringfrog

How you can sue or claim against a IFA if they let you take out a "Self" invested pension and manage to lose all your cash is beyond me?

zagfles

Boringfrog wrote: »

How you can sue or claim against a IFA if they let you take out a "Self" invested pension and manage to lose all your cash is beyond me?

Because then you'll have clearly been better off in the DB scheme! It's the transfer out of DB that's the issue.

dunstonh

DB transfers are the highest risk transaction that an IFA can carry out. It is also a current hot potato with the FCA. Until a few weeks ago, only around 1 in 10 held the authorisations to do DB transfers. However, the FCA, at short notice upped the FOS limit and this saw as many as half of IFA firms suddenly find their PI insurance non-compliant. The FCA contacted all firms giving them 5 days to notify them of their actions. Most of the PI insurers affected by the FOS increase decided to continue offering cover at the higher level in all areas of business except DB transfers. So, firms had to decide to drop their DB transfer permissions or change their insurer in a very very hard market.

Plus, the FCA treat DB transfers as missold unless proven otherwise and historically, only 1 in 10 people is the normal ratio for suitability to transfer.

Unfortunately, the complaints system is open to manipulation by people completely chanigng their position. i.e. now they say they want to transfer and know what they are doing. 10-15-20 years from now they will complain saying they didnt know what they were doing and want compensation. Claims companies encourage it too

So, you are pretty much asking an IFA to do the highest risk transaction at a very difficult time whilst it is under intense scrutiny.

lisyloo

Boringfrog wrote: »

How you can sue or claim against a IFA if they let you take out a "Self" invested pension and manage to lose all your cash is beyond me?

Because they clearly gave bad advice ! And the A stands for advisor !

If you want someone to take professional responsibility, you firstly have to satisfy them so they are willing to sign off on it and you have to pay their insurance (as well as their costs e.g. office, costs).

No one is going to take the liability for free !