Pension has finally landed - As an insistent client acting against advice -*DOORS CLOSED 03/09/2021*

RoadToRiches

Dale72 said:

While the world of investments goes in cycles there must be a point at which you could look at a Sipp and say I think the IFA was wrong to advise not to transfer. At what point is that? (Sipp up 14%)

When SIPP has exceeded the TVC value at NRD provided in the IFA report, but even that is flawed as it includes a spouse annuity and if you have no spouse then it would be a lot lower to buy an annuity to cover the DB Benefits, and if you have favourable terms for buying an enhanced annuity they are not covered too..

Dale72

Thrugelmir said:

Dale72 said:

Maybe it will, but the only determining factor in that will be the actual Sipp value at the time of deciding whether the advice was good or bad. So at this moment, it was bad.

Unfortunately while humans possess the tangible skill of hindsight , foresight is still under development. 

Foresight is still under development, but we'll still tell you what will happen if your allowed to manage your own investments.

Dale72

Pablo7474 said:

I really hope Dale72 keeps in touch with this thread long term. 

I wasn't planning on it but I can if you wish. I've been dealing in stocks for over 25 years, do you think 8% is an acceptable annual return? Interesting.

Pablo7474

8% every year over 25 years? Are you investing in individual shares or funds? It would be interesting to know how it goes. 

Malthusian

Dale72 said:

While the world of investments goes in cycles there must be a point at which you could look at a Sipp and say I think the IFA was wrong to advise not to transfer. At what point is that? (Sipp up 14%)

That is exactly why so few advisers will advise on DB transfers at all.

The big worry is not the market rocketing up but the client dying shortly after the advice not to transfer is given.

I am not aware of any Ombudsman cases in which the client was compensated on the grounds they should have been recommended a more risky option. Not saying it's never happened.

The problem for anyone trying to bring such a case is that capacity for risk is correlated to the investor's experience and level of interest in their finances. This means that the more risk-seeking you are, the more the onus is on you to say to the adviser that you want more risk, or sack them and do your own thing.

Dunstonh noted a few pages back that the trigger phrases for the Ombudsman are things like "vulnerable" "low knowledge" "cautious" "lack of resilience". Trying to win a case on the opposite basis is not necessarily impossible but it's unknown territory, it's not a CMC's usual tried-and-tested strategy.

If someone complains about advice to leave a DB pension where it is on the grounds that they were a risk-seeking investor and should have been advised to transfer, the obvious defence from the adviser is "if they wanted the risk so badly why didn't they just transfer against advice". If the response from the complainant/CMC is "it sounded like a faff and I couldn't be bothered", I think even the FOS will struggle to find sympathy with that one.

jimi_man

Dale72 said:

While the world of investments goes in cycles there must be a point at which you could look at a Sipp and say I think the IFA was wrong to advise not to transfer. At what point is that? (Sipp up 14%)

Surely that's rather a superficial way to look at it - purely on the basis of value of whether a SIPP has gone up or down relative to the original DB pension? There are a whole raft of other factors that come into play - health, inheritance, spousal benefits, flexibility, inflation, security, investment risk etc. If the (I)FA is only looking at potential SIPP value then I'd have thought that was a little narrow minded. In some cases the person might well expect to gain more via a SIPP - at the expense of some of the factors above. 

Indeed just because a SIPP rises in value more than the DB doesn't mean that the person was wrong to transfer. Advice, whether it is financial or otherwise, is based on the facts at the time. That doesn't necessarily render that advice invalid or incorrect further down the line. Hindsight is a wonderful thing.

Also, I'm nowhere near as experienced as some others in the world of stock markets, but basing it on a sustained period of growth over the last few years probably gives a slightly distorted perspective.

Dale72

Pablo7474 said:

8% every year over 25 years? Are you investing in individual shares or funds? It would be interesting to know how it goes. 

Individual shares, 14 of them in the AJ Bell Sipp, all researched or already held elsewhere before the funds arrived, and if I can't do better than 8% a year over any time period then I'll hold my hands up. Not anticipating the need to though.

Dale72

Malthusian said:

Dale72 said:

While the world of investments goes in cycles there must be a point at which you could look at a Sipp and say I think the IFA was wrong to advise not to transfer. At what point is that? (Sipp up 14%)

That is exactly why so few advisers will advise on DB transfers at all.

The big worry is not the market rocketing up but the client dying shortly after the advice not to transfer is given.

I am not aware of any Ombudsman cases in which the client was compensated on the grounds they should have been recommended a more risky option. Not saying it's never happened.

The problem for anyone trying to bring such a case is that capacity for risk is correlated to the investor's experience and level of interest in their finances. This means that the more risk-seeking you are, the more the onus is on you to say to the adviser that you want more risk, or sack them and do your own thing.

Dunstonh noted a few pages back that the trigger phrases for the Ombudsman are things like "vulnerable" "low knowledge" "cautious" "lack of resilience". Trying to win a case on the opposite basis is not necessarily impossible but it's unknown territory, it's not a CMC's usual tried-and-tested strategy.

If someone complains about advice to leave a DB pension where it is on the grounds that they were a risk-seeking investor and should have been advised to transfer, the obvious defence from the adviser is "if they wanted the risk so badly why didn't they just transfer against advice". If the response from the complainant/CMC is "it sounded like a faff and I couldn't be bothered", I think even the FOS will struggle to find sympathy with that one.

It was a bit tongue in cheek. I transferred anyway against advice, so it was more me thinking out loud about asking for my money back from the FA for poor advice, rather than bringing any action.

RoadToRiches

Dale72 said:

Pablo7474 said:

8% every year over 25 years? Are you investing in individual shares or funds? It would be interesting to know how it goes. 

Individual shares, 14 of them in the AJ Bell Sipp, all researched or already held elsewhere before the funds arrived, and if I can't do better than 8% a year over any time period then I'll hold my hands up. Not anticipating the need to though.

Are they all UK shares by any chance or US?

Prism

Dale72 said:

Pablo7474 said:

8% every year over 25 years? Are you investing in individual shares or funds? It would be interesting to know how it goes. 

Individual shares, 14 of them in the AJ Bell Sipp, all researched or already held elsewhere before the funds arrived, and if I can't do better than 8% a year over any time period then I'll hold my hands up. Not anticipating the need to though.

I assume you mean over a long time period you might expect to do better than 8%? Over a short time period like lets say 10 years we can have no idea how well shares will do. Could be a negative result, could be positive.