Adviser fined £1.3m after pension transfer failures

bostonerimus

Deleted_User said:

bostonerimus said:

I heard Prof. Atul Shah on Radio 4 today and he has a pretty jaundiced opinion of the UK financial industry and the general way that people deal with their finances, particularly the amount of debt. His thoughts align pretty well with mine and I'm glad that I have never felt the need to employ a financial advisor. 

https://www.bbc.co.uk/sounds/play/m000yldz

I couldn’t get passed Professor’s claim that shareholder capitalism is “unethical”. And his field is financial education?  Thats like giving responsibility for teaching chemistry to an alchemist. BBC is weird.  Glad I don’t have to pay for it. 

The core of his talk was that there is great potential for conflicts of interest and that personal ethics are often compromised by the emphasis on consumption and the need to take on debt to satisfy that encouraged, but only perceived, need. When he says that the current system of shareholder capitalism is unethical, I assume he is criticizing the laser focus on "shareholder value" at the expense of ethical considerations. I think that maybe there are signs that shareholder activism is changing that emphasis and that there's a place for state ownership in sectors like utilities and transportation.

The comment that stuck with me the most is that we should be encouraging "thrift and saving rather than debt and excess" as that is in line with the way my mum and dad lived their lives and brought me up. Who knew that the attitude to personal finances of a couple of methodists from North Yorkshire would be so close to that of Jainism.

[Deleted User]

There are different IFAs. Same as in any field.  The minimum required training for IFAs is a bit pathetic but thats a separate issue.  Like in any field, there are circumstances when taking the advice from a consultant is wise.  Transfer out from a DB pension is one of those cases (also UK forces one to take advice).   

In this particular case the firm and the advisor screwed up. I do think the individuals receiving the advice bear a lot  of responsibility.  Its their money.  Did they do due diligence on the firm? Did they understand how the advisor was paid and incentivized? Did they research the issues so they can ask the right questions?  Did they read and understand what was given to them? Did they look at a range of opinions? 

Thrugelmir

Diplodicus said:

Unwarranted pile on to bostonerimus imo, particularly if you haven't listened to the link.

I don't expect representatives of the financial services industry to act "ethically;" they take no hipppocratic oath, after all.

Equally, I don't buy the idea that "good" and "bad" are the two types of (I)FA (with a tiny minority of "bad" ones being responsible for all the trouble).

If there are two types (I)FA, imo, they are the greedy and the fearful. But, being human, each is a mixture of the two, to varying degrees. If you use an (I)FA -particularly if you have to use an (I)FA - I believe the expectation that the (I)FA will act in their own interest will save the client much future disappointment. 

Jeff Bezos thanked the employees and shareholders of Amazon for making his space voyage possible. The investors who've made bucket loads of money don't care a hoot. That's the world we live in. Me first. Grab the biggest piece of the pie at the expense of others. 

bostonerimus

Malthusian said:

bostonerimus said:

I heard Prof. Atul Shah on Radio 4 today and he has a pretty jaundiced opinion of the UK financial industry and the general way that people deal with their finances, particularly the amount of debt. His thoughts align pretty well with mine and I'm glad that I have never felt the need to employ a financial advisor. 

https://www.bbc.co.uk/sounds/play/m000yldz

You might have to give us more to go on than a BBC login page if you wanted that to be a debating point. 

The link looks ok, maybe it just took a while to load?

Diplodicus

Deleted_User said:

There are different IFAs. Same as in any field.  The minimum required training for IFAs is a bit pathetic but thats a separate issue.  Like in any field, there are circumstances when taking the advice from a consultant is wise.  Transfer out from a DB pension is one of those cases (also UK forces one to take advice).   

In this particular case the firm and the advisor screwed up. I do think the individuals receiving the advice bear a lot  of responsibility.  Its their money.  Did they do due diligence on the firm? Did they understand how the advisor was paid and incentivized? Did they research the issues so they can ask the right questions?  Did they read and understand what was given to them? Did they look at a range of opinions? 

Really? Most engaged with an (I)FA who forwarded them on to PTS Geoffrey Armin for process. 
You're saying they should have seen beyond the assurances of their (I)FA and done "due diligence" on the next step, almost as if they were fools to trust the original (I)FA. Is that right?

dunstonh

You realise, don't you, that Geoffrey Armin was based in Derbyshire, far away from most of the British Steel pensioners?

You must know that most transferees were introduced to him by another financial adviser?

It appears his firm was getting people referred to it and set himself up with them as the target market.    Many companies are based in locations that are different and many companies have a trading name/style that is set up to deal with certain bits of the market (in all walks of life).

You realise that the ongoing kickbacks mentioned upthread (£6,000 for every year each worker stayed with the new investment) didn't go to Armin but the (I)FA who used him as a conduit?

Nothing wrong with that. The FCA found no issue and the investor could turn that off at any time.

I'm saying (I)FAs are neither saints nor sinners but the same as everybody else:- self interested. 

The vast majority are ethical.  The complaints stats seem to support that.    However, every industry has bad apples.   And this outcome shows that the protections in place work where there is a firm that is not acting ethically.     

The job of an IFA is so much easier if the work is done correctly and ethically.   

Diplodicus

dunstonh said:

Nothing wrong with that. The FCA found no issue and the investor could turn that off at any time.

 

Plenty wrong with that. 
The financial adviser fee make the transferee penniless many years before it should.
It may be legal, but it is not ethical.

[Deleted User]

Diplodicus said:

Deleted_User said:

There are different IFAs. Same as in any field.  The minimum required training for IFAs is a bit pathetic but thats a separate issue.  Like in any field, there are circumstances when taking the advice from a consultant is wise.  Transfer out from a DB pension is one of those cases (also UK forces one to take advice).   

In this particular case the firm and the advisor screwed up. I do think the individuals receiving the advice bear a lot  of responsibility.  Its their money.  Did they do due diligence on the firm? Did they understand how the advisor was paid and incentivized? Did they research the issues so they can ask the right questions?  Did they read and understand what was given to them? Did they look at a range of opinions? 

Really? Most engaged with an (I)FA who forwarded them on to PTS Geoffrey Armin for process. 
You're saying they should have seen beyond the assurances of their (I)FA and done "due diligence" on the next step, almost as if they were fools to trust the original (I)FA. Is that right?

Yep. One man advising you something is just that, whatever letters he has. He is not the decision maker. That would be you.  You are responsible for the due diligence on the advisor and for the ultimate decision. 

And the advisor had a massive incentive to provide the advice with a certain slant. As part of due diligence you need to understand incentives. If its an important decision (like the livelihood of your family), you need to make sure you listen to more than one source of information and know enough about the subject to fully understand whats behind the advice.  

And to be fair to the advisor, as Mr d. has noted, we are seeing a lot of people coming here with “I want to transfer, how do I get the advisor to tick the box quickly?” So, the advisor was probably faced with millions of pounds of annual revenue over many years and customers demanding a transfer. Could have said “dont do it” but many would be tempted. 

woolly_wombat

bostonerimus said:

I heard Prof. Atul Shah on Radio 4 today and he has a pretty jaundiced opinion of the UK financial industry and the general way that people deal with their finances, particularly the amount of debt. His thoughts align pretty well with mine and I'm glad that I have never felt the need to employ a financial advisor. 

https://www.bbc.co.uk/sounds/play/m000yldz

I heard the interview yesterday evening and found it quite fascinating. 

I didn’t think that he was particularly against financial advisors, but was extremely critical of the UK financial industry

He is, rightly in my view, concerned that just about everything has now been monetised. He singled out property, now viewed as an investment rather than just somewhere to live. He is not alone in his observation that modern capitalism is failing the majority whilst greatly enriching the minority; this conflicts with his own cultural and religious beliefs (Jainism) - an interesting topic in itself.

 He also pointed out that there has been a major market crash every decade since the 1970s.

He is a passionate advocate of financial education, something he shares with the founder of MSE.

Definitely well worth a listen.

Malthusian

Diplodicus said:
I don't expect representatives of the financial services industry to act "ethically;" they take no hipppocratic oath, after all.

Nor do doctors.

Both doctors and financial advisers are governed by a regulatory and legislative framework that serves the purpose that the Hippocratic Oath did 2,500 years ago, only better.

If you use an (I)FA -particularly if you have to use an (I)FA - I believe the expectation that the (I)FA will act in their own interest will save the client much future disappointment. 

The other good thing about it is that the alternative -  the expectation that the IFA will act against their own interests - is completely deranged.