ifa moving to True Potential

[Deleted User]

Deleted_User said:

Malthusian said:

Deleted_User said:

They did a study in the US when doctors were rewarded for doing a particular type of operation. The number of operations of this type skyrocketed. Then it went down again when the incentive was removed.

It's even more academic in the UK where commission is banned and advisers charge whatever they want to charge for whatever they want to offer, so carrying out that kind of study in the advised financial services market would be illegal.

You could study how often IFAs recommended commuting DB pension before and after penalties were introduced. Or how often advisers approaching retirement have advised their clients that moving to True Potential would be in their best interest.  Or how often advisers are putting their clients’ money into platforms which require an adviser to act as an intermediary on a permanent basis.  Or how often they set up portfolios which are far too complex and make it more difficult to manage by yourself.  Conversely, how often do they tell the clients that charges imposed by intermediaries on an ongoing basis are not in their clients’ best interest?  I could go on but you get the drift. 

FCA have ongoing concerns re the above

number of transfers 4/15 to 9/18 234,951/ 162,047 recommended to transferout/ 70% signed up for ongoing advice

https://www.fca.org.uk/publications/multi-firm-reviews/defined-benefit-pension-transfers

When that survey started, the FCA took "no view" about the suitability of a DB pension transfer but by the time it finished had steered round to a "1 in 10" yardstick. Thus:

danger of caution

https://www.ftadviser.com/pensions/2019/11/12/fca-warned-of-25bn-detriment-in-db-transfer-scare/

With such a proportion signed up for ongoing advice and, presumably, a high correlation with the passive, unquestioning/uninterested tendency , "boiling frog" syndrome has true potential to be a huge problem later in the pension life of many, hence:

conflict of interest ongoing charges

https://www.fca.org.uk/news/press-releases/fca-acts-protect-consumers-transferring-out-defined-benefit-pension-schemes

True Potential claim to work with 20% of financial advisers. 

Prism

ZingPowZing said:

Deleted_User said:

ZingPowZing said:

Deleted_User said:

fred246 said:

Unfortunately IFAs are not very professional. Lacking in the ethics and morals department. It normally takes action by regulators to end their scams.

This is unfair. They are the same humans as everyone else and respond to incentives.   What their clients need to realize is that advisers are meant to advise and that they can be good and bad, same as with other professions.  People need to take responsibility for decisions.  In general, for routine pension investments  cutting out the intermediaries is financially smart but sometimes advice is needed. In all cases clients need to have enough understanding to make an informed decision. 

But it's not as simple as advisers advise/ clients decide because, what is the point of retaining an adviser unless you defer to him?
You're right, Mordko, to say that the buck stops with the individual: it does. But most advisers know very well that their clients expect them to do a better job than the client would do for himself. That is the basis of their relationship. The adviser generally has no problem with this because he gets paid regardless. 
Secondly, most advisers are quite engaging people. I can't speak for grinch53 but those I have known on a short term basis have been very personable. Their clients trust them. They come to their clients' houses. They build a rapport that sustains a long term relationship. So when an adviser says  "Moving to True Potential would be a good move for you" that advice may well be coming from someone the client considers almost to be a trusted friend of the family.

Converting a DB pension to a market-based investment is one example when the advice is totally warranted.
.............................
They did a study in the US when doctors were rewarded for doing a particular type of operation. The number of operations of this type skyrocketed. Then it went down again when the incentive was removed. 

How can you reconcile yourself to both positions?. Because advisers, having been appointed gatekeepers to DB pension transfers, are making decisions in their own interest.

Do you think we should go back to a model where people can perform risky operations like DB pension transfer without having to get an IFA involved? If that was the case who would take on the risk? The individual or the original DB pension holder?

[Deleted User]

Prism said:

ZingPowZing said:

Deleted_User said:

ZingPowZing said:

Deleted_User said:

fred246 said:

Unfortunately IFAs are not very professional. Lacking in the ethics and morals department. It normally takes action by regulators to end their scams.

This is unfair. They are the same humans as everyone else and respond to incentives.   What their clients need to realize is that advisers are meant to advise and that they can be good and bad, same as with other professions.  People need to take responsibility for decisions.  In general, for routine pension investments  cutting out the intermediaries is financially smart but sometimes advice is needed. In all cases clients need to have enough understanding to make an informed decision. 

But it's not as simple as advisers advise/ clients decide because, what is the point of retaining an adviser unless you defer to him?
You're right, Mordko, to say that the buck stops with the individual: it does. But most advisers know very well that their clients expect them to do a better job than the client would do for himself. That is the basis of their relationship. The adviser generally has no problem with this because he gets paid regardless. 
Secondly, most advisers are quite engaging people. I can't speak for grinch53 but those I have known on a short term basis have been very personable. Their clients trust them. They come to their clients' houses. They build a rapport that sustains a long term relationship. So when an adviser says  "Moving to True Potential would be a good move for you" that advice may well be coming from someone the client considers almost to be a trusted friend of the family.

Converting a DB pension to a market-based investment is one example when the advice is totally warranted.
.............................
They did a study in the US when doctors were rewarded for doing a particular type of operation. The number of operations of this type skyrocketed. Then it went down again when the incentive was removed. 

How can you reconcile yourself to both positions?. Because advisers, having been appointed gatekeepers to DB pension transfers, are making decisions in their own interest.

Do you think we should go back to a model where people can perform risky operations like DB pension transfer without having to get an IFA involved? If that was the case who would take on the risk? The individual or the original DB pension holder?

Absolutely, and of course the individual should bear all the risk if he decides to transfer. That is the responsibility that comes with pension freedom.   

Albermarle

Absolutely, and of course the individual should bear all the risk if he decides to transfer. That is the responsibility that comes with pension freedom.

In other words give unscrupulous 'advisers'  free reign to rip ordinary people off ., ala British Steel, NHS workers etc 

I thought from your numerous other posts , that was something you would be against ( supporting a regime that would make it easier to be  ripped off by financial advisors that is ) 

zagfles

Albermarle said:

Absolutely, and of course the individual should bear all the risk if he decides to transfer. That is the responsibility that comes with pension freedom.

In other words give unscrupulous 'advisers'  free reign to rip ordinary people off ., ala British Steel, NHS workers etc 

I thought from your numerous other posts , that was something you would be against ( supporting a regime that would make it easier to be  ripped off by financial advisors that is ) 

So how exactly would these "unscrupulous advisers" rip people off in a way that they can't already with DC pensions? The rip-off comes from what they transfer to, not from. The point is that people transferring DC pensions don't need an adviser, so they don't go looking for one and stumble across unscrupulous ones. It would likely reduce scams, not increase them. However that's not to say lots of people wouldn't make a stupid mistake.

[Deleted User]

"In other words" lol
Your assumptions are your own, Albermarle. 

It was well intentioned but naive to appoint financial advisers gatekeepers to DB pension transfers and not expect financial advisers to make recommendations based on their own interest.
Every British Steel pension transfer was subject to prior financial advice.
System working well, send more money.

dunstonh

In other words give unscrupulous 'advisers'  free reign to rip ordinary people off ., ala British Steel, NHS workers etc 

Ironically, it was the factory line services that did the damage.  Yet we know from years of people posting on here that they didn't want advice. They wanted a factory line service to get them out of their DB pension as quickly and cheaply as possible.  Those dodgy companies were giving those people what they wanted.  

[Deleted User]

dunstonh said:

In other words give unscrupulous 'advisers'  free reign to rip ordinary people off ., ala British Steel, NHS workers etc 

Ironically, it was the factory line services that did the damage.  Yet we know from years of people posting on here that they didn't want advice. They wanted a factory line service to get them out of their DB pension as quickly and cheaply as possible.  Those dodgy companies were giving those people what they wanted.  

I'll take your word that none wanted advice, nevertheless all 8,000 had financial advice under the process set up to protect them. 
New term/old theme, "the wrong type of adviser."
Still, as the opening post suggests, it's getting hard to tell which is which.

Joey_Soap

Sad to say, very often (especially when large number of ££££ are dangled in front of them) a large portion of the population don't know what they actually want in their own best interests. The posts here repeatedly wanting to transfer large sums out of DB pensions from people who don't understand the value of what they have clearly demonstrates the point.

Financial advisers of any flavour are conflicted. I don't really see a way to provide some freedom of choice where individuals are protected from their own ignorance. Likewise, I don't see how advisers can act without being in a conflict of interest. 

Linton

Joey_Soap said:

Sad to say, very often (especially when large number of ££££ are dangled in front of them) a large portion of the population don't know what they actually want in their own best interests. The posts here repeatedly wanting to transfer large sums out of DB pensions from people who don't understand the value of what they have clearly demonstrates the point.

Financial advisers of any flavour are conflicted. I don't really see a way to provide some freedom of choice where individuals are protected from their own ignorance. Likewise, I don't see how advisers can act without being in a conflict of interest. 

IFAs are incentivised to produce appropriate advice by the possibility that they could be prevented from continuing to trade should they be shown to have not done so.