ifa moving to True Potential

Joey_Soap

Linton said:

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.

Tell me how many have been closed down and/or prosecuted? (I)FAs are incentivised by their own terms of business to sign as many people up for ongoing "advice" as possible.

Albermarle

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

[Deleted User]

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

Joey_Soap

ZingPowZing said:

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

ZingPowZing said:

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

Exactly right, on both points.

Albermarle

ZingPowZing said:

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

Point 1) is a good point , it is captive market.
Point 2 ) could apply to many situations . For example when I go to Currys/PC world and ask for the best laptop for me , I fully expect that the salesperson will recommend one that is more expensive than necessary and/or they have a lot of stock of and/or they earn the biggest commission on. My interest will be low priority .

Prism

ZingPowZing said:

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

Surely, from a purely self interest point of view the IFA is best served by a happy customer. I run my own non financial business and a happy customer is the first priority. Profits is secondary as they don't continue without priority number 1.

So an IFA could invest someone in a higher risk pot hoping to get a bigger % but eventually, probably during a downturn the customer will surely be unhappy at the significant losses. They could play too safe and the customer will be unhappy with their returns. One thing an IFA does not make additional money from is high fund fees, generally poor investment performance and high management fee's which makes them too expensive. These interests all seem to align.

[Deleted User]

Albermarle said:

ZingPowZing said:

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

Point 2 ) could apply to many situations . For example when I go to Currys/PC world and ask for the best laptop for me , I fully expect that the salesperson will recommend one that is more expensive than necessary and/or they have a lot of stock of and/or they earn the biggest commission on. My interest will be low priority .

Imo DB pension transfers are not comparable to your example, Albermarle. My first adviser made a negative recommendation in March 2018. Whilst I recognise the luck of timing, that recommendation has since resulted in a variance of over £200,000 on a relatively modest pension valuation. That figure is as real as income forgone by any other means (moreso, since it is tax free) but I knew, and my adviser knew I knew, that he was making his recommendation according to the interest of his company. To be fair, the adviser was a nice guy and the company lawyers probably allowed him little, if any, latitude. But most people would have accepted the advice at face value. And, Linton, there would have been zero chance of a future claim against inappropriate advice on the basis of opportunity cost.  

Prism

ZingPowZing said:

Albermarle said:

ZingPowZing said:

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

Point 2 ) could apply to many situations . For example when I go to Currys/PC world and ask for the best laptop for me , I fully expect that the salesperson will recommend one that is more expensive than necessary and/or they have a lot of stock of and/or they earn the biggest commission on. My interest will be low priority .

Imo DB pension transfers are not comparable to your example, Albermarle. My first adviser made a negative recommendation in March 2018. Whilst I recognise the luck of timing, that recommendation has since resulted in a variance of over £200,000 on a relatively modest pension valuation. That figure is as real as income forgone by any other means (moreso, since it is tax free) but I knew, and my adviser knew I knew, that he was making his recommendation according to the interest of his company. To be fair, the adviser was a nice guy and the company lawyers probably allowed him little, if any, latitude. But most people would have accepted the advice at face value. And, Linton, there would have been zero chance of a future claim against inappropriate advice on the basis of opportunity cost.  

Surely in your particular case we won't know if it was the correct decision for many years to come. The stock markets could return close to zero in real terms over the next 20 years for all we know yet. Isn't that the main problem that the IFAs have in making this judgement? 

NottinghamKnight

The nature of sales is that it is dependent on the transaction, simply split into small value and frequent as opposed to larger value and infrequent. So a car salesman for example is involved in an infrequent but high value purchase and so is more incentivised by a sale rather than an ongoing relationship, as opposed to a food vendor with small and frequent interaction. IFA would obviously prefer to align themselves with professional suppliers like solicitor and accountants, and may well have a relationship with such firms. However the business model they employ is generally dependent on regular income as opposed to the transactional advice that would be more common with people like solicitors, evident from the lack of opportunity to engage IFAs for one off transactions. In terms of investment profile or selection then it would seem more prudent for an ifa to invest a client portfolio at a slightly lower risk profile, reducing the possibility of regulatory action and having a very small impact on earnings assuming payment is by percentage of pot size. 

[Deleted User]

Prism said:

ZingPowZing said:

Albermarle said:

ZingPowZing said:

Albermarle said:

Likewise, I don't see how advisers can act without being in a conflict of interest. 

To some extent , all selling of services and goods raises a conflict of interest between vendor and customer .

Well, yes, but the special circumstances distinguishing financial advisers from salespeople in the matter of DB pension transfers are:
1) To put the process in train, the customer has no choice other than to buy the services of the adviser.
2) Conflict of interest can lead advisers to give advice directly against the interest of the customer.

Point 2 ) could apply to many situations . For example when I go to Currys/PC world and ask for the best laptop for me , I fully expect that the salesperson will recommend one that is more expensive than necessary and/or they have a lot of stock of and/or they earn the biggest commission on. My interest will be low priority .

Imo DB pension transfers are not comparable to your example, Albermarle. My first adviser made a negative recommendation in March 2018. Whilst I recognise the luck of timing, that recommendation has since resulted in a variance of over £200,000 on a relatively modest pension valuation. That figure is as real as income forgone by any other means (moreso, since it is tax free) but I knew, and my adviser knew I knew, that he was making his recommendation according to the interest of his company. To be fair, the adviser was a nice guy and the company lawyers probably allowed him little, if any, latitude. But most people would have accepted the advice at face value. And, Linton, there would have been zero chance of a future claim against inappropriate advice on the basis of opportunity cost.  

Surely in your particular case we won't know if it was the correct decision for many years to come. The stock markets could return close to zero in real terms over the next 20 years for all we know yet. Isn't that the main problem that the IFAs have in making this judgement? 

No, I don't accept that and think it something of a cop out.
Sure, fundamentals may reverse but today I could easily buy back the pension I gave up. 
We cannot "know" that my decision was "correct" more than we know that a British Steel pension transfer was not. 
But we can make a pretty good guess in either case!