DB Transfer

dunstonh

candie01 said:

HappyHarry said:

Yes, I do advise on transfers. Over the past 12 months I have recommend transfers more often than I recommended retaining the DB pension. However, my clients tend to be amongst the more wealthy of the population, meaning that they have other sources of retirement income.

As I said in my post, some individuals need saving from themselves, and some individuals are quite capable of making their own rational decisions to transfer, and rightly begrudge the need to pay an adviser. How legislation could differentiate between the two is a conundrum.

If you give advice not to transfer will you still help the client with an insistent transfer?

I doubt you will find any adviser that will transact the if the advice is not to transfer.    In the past you could but not since the recent FCA intervention

HappyHarry

candie01 said:

HappyHarry said:

Yes, I do advise on transfers. Over the past 12 months I have recommend transfers more often than I recommended retaining the DB pension. However, my clients tend to be amongst the more wealthy of the population, meaning that they have other sources of retirement income.

As I said in my post, some individuals need saving from themselves, and some individuals are quite capable of making their own rational decisions to transfer, and rightly begrudge the need to pay an adviser. How legislation could differentiate between the two is a conundrum.

If you give advice not to transfer will you still help the client with an insistent transfer?

As I said above, I would not assist a client in transferring against my advice.

jamesd

dunstonh said:

Standard Life told me on the phone today that they would accept a transfer into their Stakeholder product by an IFA when that IFA had advised not transferring.

Can I pick you up on that wording James.  It may be how you have written it or it may be how they meant it or how I am interpreting it

"they would accept a transfer into their Stakeholder product by an IFA "

Are they saying that they will accept it if an IFA submits the application?    As that answer pretty much goes for all providers that accept business via an intermediary.   Its when the IFA is not submitting the application that is the key problem

Your reading is entirely correct and I sought clarification and confirmation on the phone myself: they said that they require that an IFA do the transfer if advice was not to transfer. IFA OK, else not.

I didn't need any more than that for the case at hand so I stopped questioning at that point. How, or if, they would reconcile that answer with a Stakeholder must accept all transfers was left for another time. My initial question had specified consumer opening the Stakeholder and I had no need to pursue that aspect.

jamesd

Linton said:

jamesd said:

HappyHarry said:

Bear in mind too that at the time these famous 'freedoms' were introduced, there was no suggestion that the FCA and PI insurers would take their current stance...

Though worth remembering that the "pension freedoms" were designed to apply only to DC schemes, and not DB schemes.

The original pension freedoms legislation allowed transfers from DB to DC with no advice requirement at any value. Even with the 30k advice requirement there was a substantial improvement but with hindsight that requirement looks like a bad mistake on the freedom front. The FCA and PI insurers didn't originally have any impact because there was originally no compulsion to use regulated advice.

I thought the ability to transfer DB to DC already existed prior to pension freedoms legislation.  What was different then was that CETVs were too low to make it worthwhile except in extreme cases.  So issues had not arisen except perhaps for a few scams.

It existed in various aspects and the new law actually made it more restrictive in some respects, perhaps most notably in enabling the ban on transfers out of unfunded public sector schemes that we have today but which wasn't there before.

If I recall correctly, and there's substantial chance that I'm remembering wrongly, the situation was mandatory yes advice or transfer not permitted before. Then there was the draft removing advice requirement and final Act after more consultation using a 30k threshold.

Lots of other DB-specific stuff in there as well  I've linked to the explanatory notes a few times recently and they make quite interesting review reading, particularly when it comes to just how much of the Act wording wasn't about DC.

CETVs had been gradually rising for many years prior, with a very notably big private sector jump as a consequence of the financial stimulous measures introduced to escape from the 2008 financial crisis. Twenty times multiples can work and be beneficial but I'm not much of a fan of that  level at today's equity and bond prices. Given say December 2008 equity prices twenty times would look far better. 

Marcon

Linton said:

jamesd said:

HappyHarry said:

Bear in mind too that at the time these famous 'freedoms' were introduced, there was no suggestion that the FCA and PI insurers would take their current stance...

Though worth remembering that the "pension freedoms" were designed to apply only to DC schemes, and not DB schemes.

The original pension freedoms legislation allowed transfers from DB to DC with no advice requirement at any value. Even with the 30k advice requirement there was a substantial improvement but with hindsight that requirement looks like a bad mistake on the freedom front. The FCA and PI insurers didn't originally have any impact because there was originally no compulsion to use regulated advice.

I thought the ability to transfer DB to DC already existed prior to pension freedoms legislation.  What was different then was that CETVs were too low to make it worthwhile except in extreme cases.  So issues had not arisen except perhaps for a few scams.

No - the seismic change was that people could 'flexibly' access their DC pot, including the option to take the lot as cash (albeit with tax implications) rather than buy an annuity. Far too many for whom a transfer is highly unlikely to be in their best interests have been dazzled by the ££££,  as have rather too many unscrupulous/incompetent advisers.

jamesd said:

If I recall correctly, and there's substantial chance that I'm remembering wrongly, the situation was mandatory yes advice or transfer not permitted before. Then there was the draft removing advice requirement and final Act after more consultation using a 30k threshold.

Advice wasn't needed at all prior to April 2015. Only when the famous 'flexible access' became a reality for DC schemes did mandatory advice for transfers of £30,000+ come into being.

[Deleted User]

• of those clients advised not to transfer, the total number of clients the firm arranged a pension transfer or conversion for on an insistent client basis was 2,936 (8%)

Dale72

Marcon said:

No - the seismic change was that people could 'flexibly' access their DC pot, including the option to take the lot as cash (albeit with tax implications) rather than buy an annuity. Far too many for whom a transfer is highly unlikely to be in their best interests have been dazzled by the ££££,  as have rather too many unscrupulous/incompetent advisers.

What qualifies you to judge what's in other peoples best interest?

Prism

Dale72 said:

Marcon said:

No - the seismic change was that people could 'flexibly' access their DC pot, including the option to take the lot as cash (albeit with tax implications) rather than buy an annuity. Far too many for whom a transfer is highly unlikely to be in their best interests have been dazzled by the ££££,  as have rather too many unscrupulous/incompetent advisers.

What qualifies you to judge what's in other peoples best interest?

Thats the advisors job following guidance from the FCA. 

[Deleted User]

Dale72 said:

Marcon said:

No - the seismic change was that people could 'flexibly' access their DC pot, including the option to take the lot as cash (albeit with tax implications) rather than buy an annuity. Far too many for whom a transfer is highly unlikely to be in their best interests have been dazzled by the ££££,  as have rather too many unscrupulous/incompetent advisers.

What qualifies you to judge what's in other peoples best interest?

(I) FA s have my sympathy. They have been placed in a terrible vice, rather like petty officials sent abroad, ostensibly to "help" the local population in far-flung outposts of the British Empire.

The pity is, most financial advisers are nice people.

https://www.orwellfoundation.com/the-orwell-foundation/orwell/essays-and-other-works/shooting-an-elephant/

Dale72

The advisors job is to give advice, which the seeker of that advice is then free to take or ignore, depending on what they see as being in their best interest. Although my question was specifically aimed around a comment, a rather patronizing comment the like of which I've seen from several people, along the lines of 'like a lottery win' or 'they'll blow it on a new kitchen or holiday' etc etc. Why does it seem to rankle with some so much how someone else chooses to spend their money, other than a long outdated patrician notion that the 'masses' can't be trusted with too much cash. Its none of your business!!!