ifa moving to True Potential

bowlhead99

ZingPowZing said:

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! 

But that is because you took the CETV, dumped it into Apple etc before Apple etc went through the roof, and are now sitting pretty with your £200k profit thinking oh that was easy, and of course I am £200k up so I could simply re-buy the guaranteed annuity that I sold even though bond yields this year are considerably lower than they were a couple of years ago. With hindsight, you can say that you were pretty damned correct to take the money and dump it into the particular set of investments you bought, because it worked out OK, and now even if they lose money from now on you are quids in... because you could use the original capital to buy something safe while continue to take an ongoing punt with the profit.

At the time of the transfer, the IFA was quite entitled to presume that you wouldn't put it into something that would rocket up in value, and that instead - in seeking to dodge the perils of Brexit by buying equities in companies with high dollar revenues in a self-select SIPP - you would have bought something like Exxon (which for the last nine months has been in the $40 range from $80 two years prior) or Delta Airlines ($40 vs $60 a couple of years earlier).

So rather than making a favourable variance of £200k, you might have lost a third or a half of the value instead, and been in no position to just buy back the pension you gave up.

Subsequently at some point, a person encountering that sort of loss (even though they were willing to sign a piece of paper saying they would never sue the IFA for helping them to sell their pension rights) may have complained that he shouldn't have let them sell their nice safe pension rights. And even though only a scoundrel would behave in such a way, someone who is down tens or hundreds of thousands might pretend that they didn't remember signing anything about not suing him and suggest that he probably faked the paperwork, or perhaps that it was not worth the paper it was printed on because it was signed without fully being understood ; that they only went ahead with the transfer because if he had really meant that it was not in their interests to transfer he would not have sold a report that was able to be used to facilitate the completion of the transfer process.

Advisors who are dealing with people who want to dump their DB pensions, especially those who would do so against advice, quite reasonably expect that if the person is later unlucky rather than lucky with their personal finances they will come back and complain and sue for a missale, and they know the FCA has a history of being customer-friendly in that situation. So the advisors' employers are going to tell them they should err on the side of caution when dispensing the advice.  It's not the regime that many of us would prefer where someone can truly take responsibility for their own action or inaction and simply turn off the 'nanny state' consumer protection.

Likewise it would be better if we could save money by not buying a car with seatbelts and crash protection, because we have no intention of crashing and if we don't crash we would have a 'favourable variance' from the money saved. It is in the car salesman's interest to sell us all cars that are more expensive than we want and which carry more safety features than we want, because it stops his employer getting put out of business by a health and safety regulator and if we live to drive another day we may come back to buy another car. Unfortunately the damn bureaucrats say that cars should have seatbelts as they wouldn't want someone to skimp on crash protection and then paralyse their mother-in-law while being underinsured, because the state would be responsible for her NHS care even if she signed a form saying she knew it was a risk to get in a car with no crash protection.

[Deleted User]

bowlhead99 said:

ZingPowZing said:

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! 

But that is because you took the CETV, dumped it into Apple etc before Apple etc went through the roof, and are now sitting pretty with your £200k profit thinking oh that was easy, and of course I am £200k up so I could simply re-buy the guaranteed annuity that I sold even though bond yields this year are considerably lower than they were a couple of years ago. With hindsight, you can say that you were pretty damned correct to take the money and dump it into the particular set of investments you bought, because it worked out OK, and now even if they lose money from now on you are quids in... because you could use the original capital to buy something safe while continue to take an ongoing punt with the profit.

At the time of the transfer, the IFA was quite entitled to presume that you wouldn't put it into something that would rocket up in value, and that instead - in seeking to dodge the perils of Brexit by buying equities in companies with high dollar revenues in a self-select SIPP - you would have bought something like Exxon (which for the last nine months has been in the $40 range from $80 two years prior) or Delta Airlines ($40 vs $60 a couple of years earlier).

So rather than making a favourable variance of £200k, you might have lost a third or a half of the value instead, and been in no position to just buy back the pension you gave up.

Subsequently at some point, a person encountering that sort of loss (even though they were willing to sign a piece of paper saying they would never sue the IFA for helping them to sell their pension rights) may have complained that he shouldn't have let them sell their nice safe pension rights. And even though only a scoundrel would behave in such a way, someone who is down tens or hundreds of thousands might pretend that they didn't remember signing anything about not suing him and suggest that he probably faked the paperwork, or perhaps that it was not worth the paper it was printed on because it was signed without fully being understood ; that they only went ahead with the transfer because if he had really meant that it was not in their interests to transfer he would not have sold a report that was able to be used to facilitate the completion of the transfer process.

Advisors who are dealing with people who want to dump their DB pensions, especially those who would do so against advice, quite reasonably expect that if the person is later unlucky rather than lucky with their personal finances they will come back and complain and sue for a missale, and they know the FCA has a history of being customer-friendly in that situation. So the advisors' employers are going to tell them they should err on the side of caution when dispensing the advice.  It's not the regime that many of us would prefer where someone can truly take responsibility for their own action or inaction and simply turn off the 'nanny state' consumer protection.

Likewise it would be better if we could save money by not buying a car with seatbelts and crash protection, because we have no intention of crashing and if we don't crash we would have a 'favourable variance' from the money saved. It is in the car salesman's interest to sell us all cars that are more expensive than we want and which carry more safety features than we want, because it stops his employer getting put out of business by a health and safety regulator and if we live to drive another day we may come back to buy another car. Unfortunately the damn bureaucrats say that cars should have seatbelts as they wouldn't want someone to skimp on crash protection and then paralyse their mother-in-law while being underinsured, because the state would be responsible for her NHS care even if she signed a form saying she knew it was a risk to get in a car with no crash protection.

Is that what I did? Is that what I'm thinking? It is Christmas Eve so Thanks for the clarification, bowlhead.

Merry Christmas all.