Don't use Hargreaves Lansdown

bowlhead99

ZingPowZing wrote: »

If you take control of your pension, it seems logical to decide both how to grow it and when to spend it. I have no idea what percentage of the 60b transferred out of DB schemes has simply ended up in the hands of other fund managers - that course makes no sense to me. But it is a matter of temperament and circumstance.

I would assume the majority has ended up 'in the hands of other fund managers'. How does it make no sense?

To take a route away from the secure DB income, by managing and growing your assets through retirement to provide sufficient income for the whole retirement and potentially inheritances etc, without erosion by inflation or investment losses, typically involves using collective investment schemes -where risk is diversified across assets, and losses shared by groups of investors rather than borne by just the one investor (yourself).

By contrast, for someone to take their DB 'income for life' and blow it on a fast car or having a punt on their favourite couple of stocks - *that* makes no sense to me, unless they truly don't need the retirement income that they had earned for theirselves through the lifetime of employment.

xylophone

What I did not know was the qualitative difference between their advice and that of an IFA.

As far as I can make out, you had decided (come what may), that you wanted to transfer out of your DB pension.

You had obtained a CETV and therefore knew that the advice of a Pension Transfer Specialist was required.

Presumably you also knew that the legal requirement was to obtain the advice, not necessarily to take it.

It was therefore up to you to check with the PTS before engaging him that regardless of whether or not his advice was positive, he would still provide

a written statement confirming all of the following:


They have provided financial advice to the individual on the proposed transaction.
They have the appropriate permissions to carry out the transaction.
The adviser's FCA registration number to carry out the transaction.
The individual's name and the name of the scheme in which they have the safeguarded benefits.

on the basis that

The adviser does not necessarily have to agree with the proposed transaction to provide this confirmation. They are simply confirming that they have provided advice on the proposed transaction to the individual.

Once you had this statement, you then needed to find a Scheme to accept the transfer.

According to the Pru


"However, although most schemes provide the right to transfer, not every scheme has to accept an incoming transfer.

A stakeholder pension scheme is currently the only type of scheme which must accept any transfer from another registered pension scheme."

The last I heard, AJ Bell was a provider that would accept a transfer without a positive recommendation.

Really then, your problems arose from insufficient research before going to HL?

[Deleted User]

xylophone wrote: »

As far as I can make out, you had decided (come what may), that you wanted to transfer out of your DB pension...
Really then, your problems arose from insufficient research before going to HL?

No to the first and yes to the last.
I did say upthread I believed there was a good case to transfer but that I was willing to be persuaded otherwise.
Again, not really excusing a novice's mistakes but HL do come across as plausible advisers on DB transfers. That is really the point of this thread.

[Deleted User]

May I please check something stated by SonOf ?

"All advisers have to be authorised by the FCA. However, not all advisers are equal. The major difference is FA vs IFA. FAs are allowed to restrict their advice. IFAs are not allowed to restrict their advice. That is why you always see people stating that if you need advice you should use an IFA. Not an FA."

Now, in my case, one of the factors that made me believe I had reason to transfer was the health of my other investments, which I proposed to dip into if needed whilst leaving my transferred DB pension uncrystalised. This intention was made clear at the outset.

The HL report states:
"At your request, I have focused my advice on the analysis of the proposed transfer of your pension. You have neither asked for nor received advice relating to any other aspects of your financial planning or areas such as your other investments, estate planning or protection."

But would an IFA have to weigh up those considerations (IHT, my other investments) - is that what is meant by not restricting advice?

SonOf

The HL report states:
"At your request, I have focused my advice on the analysis of the proposed transfer of your pension. You have neither asked for nor received advice relating to any other aspects of your financial planning or areas such as your other investments, estate planning or protection."

But would an IFA have to weigh up those considerations (IHT, my other investments) - is that what is meant by not restricting advice?

Both FAs and IFAs can focus on certain areas without looking at others. That is not restricting. It is focused advice. Restricting is more about reducing solutions that need to be considered by the adviser. In its most common form, it is purely to reduce the number of providers and investments available and removing higher risk advice areas (such as EIS & VCT, ITs & ETFs etc).

[Deleted User]

Thank you,

[Deleted User]

So, the difference between restricted and non-restricted advice would not have impinged on a client such as myself, it having been established at the outset that I would have complete control of the destination of my investments.

However, it seems that many transfer out of a DB pension simply to hand the keys to their fortune to another fund manager! In that case, avoid an in-house adviser.

Which is not to say that the insistent client who knows her own mind should use HL either - quite the opposite, as my case shows.

SonOf

So, the difference between restricted and non-restricted advice would not have impinged on a client such as myself, it having been established at the outset that I would have complete control of the destination of my investments.

It may have done. When calculating things like critical yield, their software may be configured for the options they would use. That could easily add another 1% to the critical yield compared to an IFA and that could be the difference between a pass or a fail.

[Deleted User]

As on outsider, I found the critical yield something of a bogus measurement.

As I understand it, it measures the rate by which a transferred pension must appreciate on the open-market to buy an open-market annuity at the age of 63.

Far too soon to judge the merit of a transfer imho.

I believe the FCA instruct advisers not to decide on critical yield alone.

SonOf

ZingPowZing wrote: »

As on outsider, I found the critical yield something of a bogus measurement.

As I understand it, it measures the rate by which a transferred pension must appreciate on the open-market to buy an open-market annuity at the age of 63.

Far too soon to judge the merit of a transfer imho.

I believe the FCA instruct advisers not to decide on critical yield alone.

It is one part of the equation. However, if it is high, then it can be a significant blocker.