Adviser fined £1.3m after pension transfer failures

[Deleted User]

woolly_wombat said:

Deleted_User said:

Quack views are  shared by many people indeed. The fact it’s based on religion/superstition is interesting but not helpful to making a logical argument.  He is specifically opposed to “shareholder capitalism”. Interesting theory, of course.  Lots of experimental data from countries with and without capitalism. The evidence is overwhelming. Its Ok to have quack views but does raise question about  the university that gives him platform 

A somewhat dismissive view of a qualified Chartered Accountant who worked for KPMG and who also happens to have a PhD from the London School of Economics.

You can’t get much more ‘A’ list than that.

Right.  Don’t know about KPMG but one of the other big four accounting firms right now has everyone signing with pronouns and spending lots of time on political correctness and funding far left causes while also charging the clients by the hour for unproductive work. Small and midsize accounting companies that make a living from the quality of their work tend to have better accountants.   A lot of people are getting multiple PhDs for all sorts of things. Names are good but when someone is promoting financial education and in the same breath claims that “shareholder capitalism is immoral”, I am going to take a pass. 

bostonerimus

Deleted_User said:

Quack views are  shared by many people indeed. The fact it’s based on religion/superstition is interesting but not helpful to making a logical argument.  He is specifically opposed to “shareholder capitalism”. Interesting theory, of course.  Lots of experimental data from countries with and without capitalism. The evidence is overwhelming. Its Ok to have quack views but does raise question about  the university that gives him platform 

I'm an atheist, but I don't discount all religious precepts. I'm ok with about 50% of the ten commandments. The speaker obviously took a lot form his Jainism, but the ethics and principles he described were in line with the humanist ethics that I get from my inner monologue and basic human solidarity. He was specifically against "our broken system of shareholder capitalism" and by that I think that he means there is a better system of shareholder capitalism, one that might put more emphasis on ethical considerations rather than pure materialism as its singular goal. But he was far more concerned with personal finances than any grand macro-economic theories.

Diplodicus

HappyHarry said:

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Diplodicus said:
the expectation that the IFA will act against their own interests - is completely deranged

What a strange, and ill-informed comment.

As an IFA, I charge a client a fee to do some work. It is in my best interest to charge a fee as I do not receive recompense from anywhere else.

In return for that fee, I will do the best work I can for my client.

I can't imagine a situation  where I would act against my client's best interest. They either pay me a fee or not. Why would I do something that is not in my client's best interest? I don't earn more for doing so.

Completely agree with Malthusian's quote attributed to me but believe you refer to other comments.

 (I)FAs were relied upon to act in their clients' best interests. If that model had worked, why would the FCA have had to ban contingency charging? 

Diplodicus

Deleted_User said:

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 righ

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.

Sorry Mordko, I skimmed over your posts earlier.

Are you saying it is the responsibility of the client to reinterpret advice to offset the self interest of the adviser?

bostonerimus

When dealing with the financial industry I think it’s good to approach it Wil a little cynicism. People can be too trusting and that’s when they fall prey to scams. Most advisors will be honest and see themselves as ethical, but we know the issues that can arise when kickbacks are part of a business culture. Hopefully that’s been eliminated. 

The other problem might be straight incompetence and bad advice. So we need a certain amount of regulation that will provide rules for doing business that protect the interests of the client and also mandates certain qualifications. That seems to be in place to some extent for IFAs.
But they are still part of a financial culture that often makes things more complicated than it needs to be, I think to inflate their egos.

The final component has to be personal responsibility for choices you make and advice you take. There need to be consumer protections, but you cannot legislate for instances of poor judgement like with Woodford.

dunstonh

 (I)FAs were relied upon to act in their clients' best interests. If that model had worked, why would the FCA have had to ban contingency charging? 

That model had worked for years with no issue until the factory line firms set up and abused it.    There is a world of difference between small localised firms and factory line firms.   

As it happens, the contingency charging ban increases adviser earnings and is part of a very long term trend from the regulator to reduce cross-subsidy and get everyone to pay for the work they create.   

but we know the issues that can arise when kickbacks are part of a business culture. Hopefully that’s been eliminated. 

Kick backs were eliminated with the RDR.

But they are still part of a financial culture that often makes things more complicated than it needs to be, I think to inflate their egos.

I think modern products have never been more transparent and simple.  However, plenty of more complicated options exist for those that want to use them.  e.g. master trust schemes are a complete doddle but some people think they are too simple.   So, they have SIPPs which are more advanced and complicated.

All those firms that tried their third-way products, ironically most of them American, couldn't find a market for them in the UK and shut up shop and returned to the US where they have no problem selling them.   They couldn't get UK IFAs to retail them as most saw how useless they were.

[Deleted User]

bostonerimus said:

Deleted_User said:

Quack views are  shared by many people indeed. The fact it’s based on religion/superstition is interesting but not helpful to making a logical argument.  He is specifically opposed to “shareholder capitalism”. Interesting theory, of course.  Lots of experimental data from countries with and without capitalism. The evidence is overwhelming. Its Ok to have quack views but does raise question about  the university that gives him platform 

I'm an atheist, but I don't discount all religious precepts. I'm ok with about 50% of the ten commandments. The speaker obviously took a lot form his Jainism, but the ethics and principles he described were in line with the humanist ethics that I get from my inner monologue and basic human solidarity. He was specifically against "our broken system of shareholder capitalism" and by that I think that he means there is a better system of shareholder capitalism, one that might put more emphasis on ethical considerations rather than pure materialism as its singular goal. But he was far more concerned with personal finances than any grand macro-economic theories.

That’s you point rather than his. In any case, Milton Friedman addressed your point beautifully. 

Besides being anti-capitalist, our professor claimed (in the short segment that I listened to) that nobody pays any attention to “human factors” in finance.  Thats completely false.  There is a whole branch called “behavioural finance”. 

[Deleted User]

Diplodicus said:

Deleted_User said:

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 righ

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.

Sorry Mordko, I skimmed over your posts earlier.

Are you saying it is the responsibility of the client to reinterpret advice to offset the self interest of the adviser?

When selecting an advisor it is important to align his incentives with your interests.  Any scheme paying him thousands annually while he sleeps is going to incentivize our advisor quite nicely vs the one that does not. He is human and might have kids to feed. He may think he is working in your interest but will be aware of the rewards.  Transactional payments are far better in that respect. He gives you advice; you make a one off payment for it. No strings attached.   Then you make your  decision based on advice, his detailed reasoning and whether you agree. Nobody knows your needs and circumstances better than you. 

A short answer is that we do need to understand exactly how the consultant will be compensated and his incentives 

bostonerimus

Deleted_User said:

bostonerimus said:

Deleted_User said:

Quack views are  shared by many people indeed. The fact it’s based on religion/superstition is interesting but not helpful to making a logical argument.  He is specifically opposed to “shareholder capitalism”. Interesting theory, of course.  Lots of experimental data from countries with and without capitalism. The evidence is overwhelming. Its Ok to have quack views but does raise question about  the university that gives him platform 

I'm an atheist, but I don't discount all religious precepts. I'm ok with about 50% of the ten commandments. The speaker obviously took a lot form his Jainism, but the ethics and principles he described were in line with the humanist ethics that I get from my inner monologue and basic human solidarity. He was specifically against "our broken system of shareholder capitalism" and by that I think that he means there is a better system of shareholder capitalism, one that might put more emphasis on ethical considerations rather than pure materialism as its singular goal. But he was far more concerned with personal finances than any grand macro-economic theories.

That’s you point rather than his. In any case, Milton Friedman addressed your point beautifully. 

Besides being anti-capitalist, our professor claimed (in the short segment that I listened to) that nobody pays any attention to “human factors” in finance.  Thats completely false.  There is a whole branch called “behavioural finance”. 

I don't hold Milton Friedman in much regard. His stockholder doctrine always seemed simplistic to me if it is interpreted as only maximizing monetary return and inappropriate in many parts of the economy, heath care being an obvious one. Look what it's wrought in the US.

Both of us are bringing our own biases to the Prof’s talk. You hear one thing I hear another. I think you are misinterpreting his message and I don’t expect you to agree with me. The whole talk is more about personal responsibility and how the individual should approach their financial life.

[Deleted User]

bostonerimus said:

Deleted_User said:

bostonerimus said:

Deleted_User said:

Quack views are  shared by many people indeed. The fact it’s based on religion/superstition is interesting but not helpful to making a logical argument.  He is specifically opposed to “shareholder capitalism”. Interesting theory, of course.  Lots of experimental data from countries with and without capitalism. The evidence is overwhelming. Its Ok to have quack views but does raise question about  the university that gives him platform 

I'm an atheist, but I don't discount all religious precepts. I'm ok with about 50% of the ten commandments. The speaker obviously took a lot form his Jainism, but the ethics and principles he described were in line with the humanist ethics that I get from my inner monologue and basic human solidarity. He was specifically against "our broken system of shareholder capitalism" and by that I think that he means there is a better system of shareholder capitalism, one that might put more emphasis on ethical considerations rather than pure materialism as its singular goal. But he was far more concerned with personal finances than any grand macro-economic theories.

That’s you point rather than his. In any case, Milton Friedman addressed your point beautifully. 

Besides being anti-capitalist, our professor claimed (in the short segment that I listened to) that nobody pays any attention to “human factors” in finance.  Thats completely false.  There is a whole branch called “behavioural finance”. 

I don't hold Milton Friedman in much regard. His stockholder doctrine always seemed simplistic to me if it is interpreted as only maximizing monetary return and inappropriate in many parts of the economy, heath care being an obvious one. Look what it's wrought in the US.

Both of us are bringing our own biases to the Prof’s talk. You hear one thing I hear another. I think you are misinterpreting his message and I don’t expect you to agree with me. The whole talk is more about personal responsibility and how the individual should approach their financial life.

Jainism is a puritan religion which is his version of “personal responsibility”.  Which is fine and dandy for him but I don’t appreciate proselytizing.