DB Pension transfer - IFA costs

jimi_man

ZingPowZing wrote: »

I could buy back all the benefits of my DB pension easily.

Interesting. Does that mean you have the ability to reverse your decision and go back into the pension again? That’s probably quite a good deal.

ZingPowZing wrote: »

Given ongoing performance, the day when the value of my SIPP once more falls below that of my former pension may never arrive but, if it does, and I turn up with a claim for compensation, I would expect to be shown the door.

I'm sure but the sad reality is that it doesn't stop and hasn't stopped people trying, sometimes with 'altered circumstances'. It seems that the more money it is, the more it encourages claims. The recent PPI claims have shown that it doesn't necessarily matter what the circumstances were.

ZingPowZing wrote: »

So the notion that pension freedom will lead to an avalanche of claims legitimised by the regulator and the courts is questionable imo; certainly the evidence has yet to be presented, (bowlhead put up a strawman.).

What yesterday's exchanges do show, I think, are the persisting attitudes of the industry: concluding, with no apparent irony, that things would be all right if only the public were less greedy, on a Moneysavingexpert forum.

At heart, I think many who work or worked in the field still hanker for the days when the consumer's engagement with his pension was an annual-statement, six-months in arrears. That's human nature too.

As I’ve said before, it is rather early on the process to make judgements as to whether its right or wrong. However clearly there are concerns:

https://www.ft.com/content/607678d5-f39d-4eb2-9cf1-4744c018ecc3

The article from a few days ago (I'm not a subscriber but it came up on my computer easily enough - I've saved the text if it doesn't) is quite interesting. It makes mention of several of the common phrases I see on here; ‘prioritising the inheritance tax advantages of transferring…’, and mentions generic phrases… ‘taking control of their pension’…. It also states that the FCA are writing to 76% of the firms offering transfer advice, about ‘potential harm’, whatever that is. It does seem an excessively high percentage of issues though.

I think what the exchanges do show, is that there seems to be one attitude from those within the industry – a sensible and careful approach, and another attitude from those who aren’t – laypeople if you will – who tend to err the other way. Personally I don’t work in the industry – at least not in that area – but I do get to see a lot of the fallout from when it goes wrong. And I would imagine that those who work in the field, don’t hanker after those days of yore that you mention, since I would guess that the more consumer interaction they have, the more in fees they can charge?

What I do find interesting (and slightly depressing) is the lack of value shown towards DB pensions and the massive underestimation of their worth. There seems to be little thought given to the package as a whole – guaranteed income forever, inflationary protection, spouse protection, lack of stress, no upkeep -, and most value is placed upon the headline transfer figure: the multiplier (over 30 times good/under 30 bad, without any thought as to context) and meaningless trite phrases like ‘taking control of your pension’, as the article says. I mean seriously? It was bad enough when people used the 'taking back control' as a Brexit argument, but to do the same with a pension just shows a total lack of understanding and it seems to be used as a justification for greed.

Clearly time will tell in the future if people have made the right decision, but obviously it’s not just about the actual amount received, there are many other factors in play too, which I’m still not sure that people appreciate.

Mick70

MarkCarnage wrote: »

I think there's been a couple, but I would agree, not many. There are also some, and OP in this case may be one, where the combination of specific circumstances may make it a deal that's got a high probability of being attractive for a variety of reasons. I put my DB transfers in that category - I don't think I posted the details on here.

i was offered £1.7m cetv v £26.2k db rising with rpi (albeit from age 50) . Although I have said to my IFA that I would like to accept, It has certainly not been an easy no brainer decision for me

MarkCarnage

i was offered £1.7m cetv v £26.2k db rising with rpi (albeit from age 50) . Although I have said to my IFA that I would like to accept, It has certainly not been an easy no brainer decision for me

Well said. It's very attractive, but a lot to weigh up and you rightly took your time over it.

[Deleted User]

MarkCarnage wrote: »

Where do you get evidence for 'persisting attitudes of the industry' from? A lot of people have disagreed with you here who are not IFAs nor have any axe to grind on their behalf. The evidence is all over site. I make no pretence to being impartial but lets not pretend vocal defenders of the system have no axe to grind.

The irony comes from yourself - it is true that many members of the public are greedy, they might not call it that, and some certainly expect it to be risk free greed too. They are unhappy that they can't get their hands on a very large sum of money (in their eyes) without a good number of checks and balances being in place. I think it's entirely appropriate that MSE posters castigate that as it's rest of us that pay the cost of their greed ultimately. The assumption that a financial adviser knows better his client not only what is best for the client today but how that client is going to act in future is not only condescending and insulting but easily refutable in cases such as mine: I can easily buy back all the benefits of my DB pension now, and there would be no justification for future compensation if I choose not to. The fact that you blame this mess on people who have exercised the right to control their pensions re-enforces the first point, the financial services industry has a lingering sense of entitlement to our pensions. It's a legacy from the good old days when a consumer's involvement amounted to reading an annual statement.
Self-interest, or greed, is neither good, bad nor the privilege of a few but universal and constant. Difficulties arise when this is forgotten. With good motives, the regulator set up financial advisers as gate-keepers to DB pensions but naively underestimated their propensity to act in their own self-interest, before when the cases were flooding through or now when they are blocking them. That's why the system is broken.


Your bitterness towards a personal matter regarding your pension transfer, which may have been unfortunate, but the Ombudsman disagreed, persists on here in almost every comment.

I made peace with the Ombudsman's decision a while ago. A much bigger deal, and a matter of ongoing - most likely lifetime - regret would have been if I had followed the adviser's advice not to transfer. I want to help others, new to the process, avoid certain pitfalls and not necessarily follow some assumptions trotted out regularly on here. I'm not looking for allies. I expect representatives of the financial services industry to fight their corner.

MarkCarnage

The assumption that a financial adviser knows better his client not only what is best for the client today but how that client is going to act in future is not only condescending and insulting but easily refutable in cases such as mine: I can easily buy back all the benefits of my DB pension now, and there would be no justification for future compensation if I choose not to. The fact that you blame this mess on people who have exercised the right to control their pensions re-enforces the first point, the financial services industry has a lingering sense of entitlement to our pensions. It's a legacy from the good old days when a consumer's involvement amounted to reading an annual statement.
Self-interest, or greed, is neither good, bad nor the privilege of a few but universal and constant. Difficulties arise when this is forgotten. With good motives, the regulator set up financial advisers as gate-keepers to DB pensions but naively underestimated their propensity to act in their own self-interest, before when the cases were flooding through or now when they are blocking them. That's why the system is broken.

I think that the regulator expects the adviser to act the way you describe in the first sentence above. Indeed, in a number of Ombudsman judgements, it has been said that the adviser has an overriding duty of care to the client's best interests even when this means not agreeing with the client to the degree of refusing to act on execution only,

I encountered this personally when transferring my two small DB pensions to SIPP. The adviser work was fine and there was agreement to transfer, but there was a regulatory issue arose, from the FCA, that expressed unease that the adviser wasn't going to be in control of the future investment strategy!! I had specifically approached the adviser on the basis that it would be self managed, they agreed with this, based on a review and knowledge of the situation and we were all happy until the regulator came in with this. I agree that this may appear condescending and insulting, but I think that it's not right to blame the adviser for this, based on my experience at least.

I have to axe to grind here. I saw some dreadful IFA and FA behaviour in the past, but in this case I sympathise with those IFAs who would like to do a professional job here but are being prevented from doing so.

The regulator is in a difficult position to a degree, in that by removing valuable future benefits which are if not guaranteed, at least fairly well underpinned, there is a very real risk that reckless or even just unlucky behaviours might mean that people end up as a burden on the state who shouldn't have been. They will play this politically and are doing so.

I don't 'blame it the mess on people who have exercised the right to control their pensions', at least by no means universally, but I think that there is plenty of evidence on these forums of people who really aren't in a good place to control them well, and who would be materially disadvantaged financially if they didn't. The problem is that the current system doesn't lend itself to dealing with the position well. The FCA haven't acknowledged that there has been a major change in the fundamentals underlying the financials of a transfer decision, and that there are very different drivers of the actions of DB Scheme Trustees and individuals, which are entirely rational on both sides. This increases the subset of people for whom transfers are likely to be a sensible option, but the emphasis is on probabilities not guarantees, albeit guarantees that may not be as valid or valued by some beneficiaries, sometimes rightly so.

The problem for me is that the regulator and Ombudsman don't see that self interest and greed can be on both sides of the fence. In some cases, it's uninformed too which leaves the door open for very vociferous 'regret' factors.

I am glad that you are now reconciled to the FoS decision. I took something to them as well a while back and it didn't go my way. I wasn't expecting to get a lot of monetary compensation anyway, but rather to highlight inconsistencies and anomalies in Scheme rules, which were amended later anyway!

[Deleted User]

Thank you for interesting replies.

Nobody would celebrate the eradication of compensation culture with more zeal then I; but if pension freedom does lead to a claims scramble, don't blame me. Figures like me won't be in the queue or, if we are, our claims will be readily dismissed.

Above all, don't blame the guy you will encounter from the half-million who have transferred DB pensions. He's been given the right to move his pension, been forced to take advice from someone deemed to know better; assured by that person that a transfer is in his best interest, on condition he continues to hold the hand of his adviser; encouraged into a silo like True Potential where lifelong management, platform and adviser fees (plus constant transaction charges every time his portfolio rebalances to reflect his risk profile) will erode his fortune over time. Don't blame that guy.
Blame the process that infantilised him.

happyandcontented

We are at the beginning of this process and we feel as though it is a fight, not a process of us receiving advice.

ZPZ do you self manage your funds now?

Thrugelmir

happyandcontented said:

We are at the beginning of this process and we feel as though it is a fight, not a process of us receiving advice.

When two parties are starting at opposing ends of the spectrum hardly surprising. 

[Deleted User]

happyandcontented said:

We are at the beginning of this process and we feel as though it is a fight, not a process of us receiving advice.

ZPZ do you self manage your funds now?

I do, and am very happy, but I had to be persistent. 
Do ensure at the outset that, in the event of a negative recommendation, your adviser will sign a declaration (simply to the fact that he has provided advice) on the pension transfer form of the chosen provider. Mine would not and I hired another FA to effect the transfer, while still having to pay the fee of the first.

Aegis

ZingPowZing said:

happyandcontented said:

We are at the beginning of this process and we feel as though it is a fight, not a process of us receiving advice.

ZPZ do you self manage your funds now?

I do, and am very happy, but I had to be persistent. 
Do ensure at the outset that, in the event of a negative recommendation, your adviser will sign a declaration (simply to the fact that he has provided advice) on the pension transfer form of the chosen provider. Mine would not and I hired another FA to effect the transfer, while still having to pay the fee of the first.

You should consider a formal complaint for that.  The confirmation that advice has been given should have been included as part of the service, so you shouldn't have needed to pay twice.  I believe this was the subject of an Ombudsman case a while back which resulted in a complaint being upheld for the client.