Adviser fined £1.3m after pension transfer failures

Ibrahim5

I think for me I had this simplistic idea of a job title and what it meant. If you want someone to look after your teeth you phone a dentist. If you have a fire you call a fireman. If you need financial advice you would call a financial advisor. It shocked me that financial advisers won't have anything to do with the vast majority of the population, especially those most in need of financial advice. They will only have anything to do with people that are trying to manage a large amount of money. ie those least in need. They will only then have anything to do with them if they can see a way of getting a good proportion of that money for themselves and they can see a way of getting a continuous income stream from it. It's like phoning the dentist and being told that he only sees people who need a large number of implants, or phoning the fire brigade and them saying they only come out to big fires because there isn't enough profit in small ones.

Ibrahim5

Financial advisers would have absolutely nothing to do with steelworkers. Once it became clear that they could transfer their pensions with a large CETV the advisers would move in. The steelworkers may have had multiple advisers all trying to get the work actually getting quite nasty. The adviser would try to take a proportion of the CETV for themselves and then try to set up a scheme so they got ongoing income from the pension. After that the steelworkers would never see a financial adviser again apart from the annual meeting if that is necessary to maintain the advisers income stream. It's all about the adviser getting their money. It's not about helping steelworkers.

TriathNanEilean

Deleted_User said:

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.  

That first sentence has me scratching my head. Is Jainism "his version of "personal responsibility""? Or is it puritan religion which is? Neither interpretation makes much sense.

Jainism is an ancient Indian religion whereas puritans appeared in 17th century England (and many crossed to the USA later) and were strict protestants. Quite how the former could be a type of the latter is beyond me.

JoeCrystal

TriathNanEilean said:

That first sentence has me scratching my head. Is Jainism "his version of "personal responsibility""? Or is it puritan religion which is? Neither interpretation makes much sense.

Jainism is an ancient Indian religion whereas puritans appeared in 17th century England (and many crossed to the USA later) and were strict protestants. Quite how the former could be a type of the latter is beyond me.

The sentence does make sense if you consider puritan as puritanical instead. I understand the use of words as an adjective who be strict in religious matters or moral matters which can be applies to Jainism in this case. If Mordko uses Puritan with the capital letter then that would get me scratching my head as well.

[Deleted User]

TriathNanEilean said:

Deleted_User said:

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.  

That first sentence has me scratching my head. Is Jainism "his version of "personal responsibility""? Or is it puritan religion which is? Neither interpretation makes much sense.

Jainism is an ancient Indian religion whereas puritans appeared in 17th century England (and many crossed to the USA later) and were strict protestants. Quite how the former could be a type of the latter is beyond me.

…or you can pick the definition that does make sense. Check out number 4.  https://www.dictionary.com/browse/puritan

[Deleted User]

Ibrahim5 said:

I think for me I had this simplistic idea of a job title and what it meant. If you want someone to look after your teeth you phone a dentist. If you have a fire you call a fireman. If you need financial advice you would call a financial advisor. It shocked me that financial advisers won't have anything to do with the vast majority of the population, especially those most in need of financial advice. They will only have anything to do with people that are trying to manage a large amount of money. ie those least in need. They will only then have anything to do with them if they can see a way of getting a good proportion of that money for themselves and they can see a way of getting a continuous income stream from it. It's like phoning the dentist and being told that he only sees people who need a large number of implants, or phoning the fire brigade and them saying they only come out to big fires because there isn't enough profit in small ones.

I can’t believe I am defending financial advisors but this isn’t fair.  Everyone needs to eat and the cost of ones work has to be covered by smeone, be it NHS or the client. For some reason NHS (the taxpayer) pays most of the cost of dental work but not financial advice. 

I am sure that an advisor will provide fee based transactional advice regardless of how much money you have.  Its just that it wouldn’t make sense for someone starting a pension fund.  These days its very simple and information is readily available to anyone who can read.  There is nothing complicated in “save early and a lot”.  

Financial advice becomes useful when there are complicated transfers and tax efficiencies involved, and you need a decent fund for any resulting gains to be meaningful. Some people use advisors for hand holding and as investment pickers; thats waste of money in my book - whether you are poor or rich.  So when a guy with a few hundred pounds ask an advisor to hold his hand and the advisor sends him away, he is doing this guy a favour. 

Steelworkers with a DB fund would have been required to obtain advice if they wanted to transfer out. They would have had a decent CETV but the regulatory environment is such that many advisors wouldn’t risk this kind of business. 

TriathNanEilean

Deleted_User said:

TriathNanEilean said:

Deleted_User said:

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.  

That first sentence has me scratching my head. Is Jainism "his version of "personal responsibility""? Or is it puritan religion which is? Neither interpretation makes much sense.

Jainism is an ancient Indian religion whereas puritans appeared in 17th century England (and many crossed to the USA later) and were strict protestants. Quite how the former could be a type of the latter is beyond me.

…or you can pick the definition that does make sense. Check out number 4.  https://www.dictionary.com/browse/puritan

That works, I'll admit, though the ambiguity could have been avoided by using the adjectival form 'puritanical'.

Malthusian

Ibrahim5 said:

I think for me I had this simplistic idea of a job title and what it meant. If you want someone to look after your teeth you phone a dentist. If you have a fire you call a fireman. If you need financial advice you would call a financial advisor. It shocked me that financial advisers won't have anything to do with the vast majority of the population, especially those most in need of financial advice.

"Those most in need of financial advice" want a debt adviser (aka debt counsellor), not a financial adviser. Or some basic financial education, which is the realm of Citizens' Advice, personal finance bloggers, etc, assuming your parents/guardians weren't able to do that job already.

I agree that financial adviser is in itself a vague term, and it might be nice if there was a more specific one with enough respectability. But "doctor" is also a very vague term, and people who need their brain looked at still usually manage to end up in the same room as a neurosurgeon rather than a proctologist or a doctor of philosophy. As long as the people with no money manage to find StepChange and the people with money manage to find an IFA, there is little problem in reality, only in chin-scratching conversations on Internet forums.

There are more specific terms for "financial adviser" which indicate the emphasis on people who need advice on what to do with their money (as opposed to advice on what to do with their lack of money). "Wealth manager", for example. But "wealth manager" also carries connotations of "very expensive" so it tends to be used by those who are targeting the St James's Place end of the market and rejected by IFAs.

"Independent financial adviser" is prestigious for a reason. You wouldn't need a debt counsellor to be independent. If you want an adviser to be "independent" that indicates you expect them to do something with your money and want them to be unfettered in the solution they recommend, which in turn implies you have money to do something with.

Incidentally, your analogy doesn't work. "Fireman" can also mean someone who stokes an engine or someone who checks mines for dangerous gases. (Or a relief pitcher in baseball, but that doesn't qualify because it's an analogy rather than a literal description of the job.) Unless there's a problem with people turning up to a fire with a baseball and a giant glove it's probably fine for job titles to be internally ambiguous.

dunstonh

I think for me I had this simplistic idea of a job title and what it meant. If you want someone to look after your teeth you phone a dentist. If you have a fire you call a fireman. If you need financial advice you would call a financial advisor. It shocked me that financial advisers won't have anything to do with the vast majority of the population, especially those most in need of financial advice.

In the UK, different roles have different regulatory permissions and different qualification requirements.   If you are active in a particular area you have to be qualified and pay liability insurance and regulatory levies in those areas.       Over the decades, this has led to the partitioning of advice areas.    30 years ago, most IFAs/FAs gave mortgage advice and insurance advice.  Nowadays, most IFAs don't do mortgages and many dont do insurance.  They leave it to dedicated mortgage advisers within their firm.      Those in serious debt can use a debt counseller.    

All these roles can often be referred from an IFA firm.   It's just that you don't see many jacks-of-all-trades anymore.    And that is a good thing.      

 They will only have anything to do with people that are trying to manage a large amount of money. ie those least in need.

Why do you think that people with money have least need?   

They will only then have anything to do with them if they can see a way of getting a good proportion of that money for themselves and they can see a way of getting a continuous income stream from it. It's like phoning the dentist and being told that he only sees people who need a large number of implants, or phoning the fire brigade and them saying they only come out to big fires because there isn't enough profit in small ones.

Every business has costs.      IFAs and FAs have significant costs compared to how it used to be.    You lose around a third of income paying for the FSCS, FCA, MAS, Pensionwise, FOS, regulatory compliance and liability insurance alone.  The amount of administration nowadays on a client transaction is significantly higher. So, you typically need assistants.  Those assistants earn around £30k- £40k a year.     IFA software is a constant monthly drain but you cant do the job without it.       

In 2013, the regulator decided it wanted to reduce cross subsidy with the RDR.  MiFIDII (an EU directive) was probably the most damaging in terms of costs and further hit the cross subsidy.   This created what was known as the advice gap where it is not profitable to give advice to someone with a small amount.  There is also a shortage of advisers. The old career paths to get to an IFA have gone.   There isn't the volume of younger ones coming through.    

Financial advisers would have absolutely nothing to do with steelworkers.

Why not?

Most general practitioner firms will see most people and have a very low level of asset requirement.    I think you are getting general practitioners mixed up with wealth managers who are more likely to have higher asset requirements.

Diplodicus

dunstonh said:

I think the average person's sympathy in this case is with people gulled out of their British Steel pensions by greedy (I)FAs.. 

Although it's worth noting that this adviser was doing what people wanted.  So, a good number of these people are going to be in a position that they got what they wanted and are still going to get compensation on top of that.  

Yes, good point. The idea of putting a client back in the position he would have been in had he not made a decision is pretty inimical to the spirit of pension freedom. But, as has been written, British Steelworkers could not have been expected to know what they did not know. Before the choice was forced on them, for most the idea of transferring was about as remote as  exchanging their state pensions for a lump sum. I think they had three months to decide. With hindsight, misgivings about the business owners look justified but, once they came into contact with the financial advisers circling, for some unfortunates it was out of the frying pan and into the fire..