Pension Planning...

LHW99 · 8 March 2018 at 10:30PM

I haven't posed the question of whether or not they will advise me if I want to manage my own funds. That would be a deal breaker for me - I would walk away if they insist on managing the funds for me. Ain't paying for that when - again - I can do it myself.

If they don't manage the funds after transfer it increases the risk, and it seems from comments on here that many IFA's won't advise.
As Sandsy says, you may need to accept IFA management initially and consider a second transfer at a later date.

bigalxyz · 8 March 2018 at 10:34PM

Oh boy. This is starting to feel like money for old rope!

dunstonh · 9 March 2018 at 2:20AM

bigalxyz wrote: »

Oh boy. This is starting to feel like money for old rope!

Its a transaction that historically is considered unsuitable in 4 out of 5 cases. It is a transaction that the regulator considers missold unless proven otherwise. It is a transaction that costs advisers more (if they do them) in PI insurance. And they carry that liability for the life of the company (or their own life if self employed or partnership) as there is no time limit on complaining.

The last time people went crazy with DB transfer which were no brainers to do, about 5 years later, it was decided that retrospectively, they were missold.

That is why it costs money.

bigalxyz · 9 March 2018 at 12:42PM

Fair enough. I know these exercises need to be done carefully and I understand (as a self employed contractor) that things like PI cover can be very costly in some cases, so I do get that a fairly substantial fee will be involved.

The "can't advise without also implementing and managing" thing bothers me a great deal though. I've emailed the IFA just now to see if this is the case. I'll be a bit irritated if it is tbh. I don't really want to pay hefty fees for something I'd be quite confident of doing myself.

Also sounds like scope for a conflict of interest perhaps, since if the best advice for the client is "leave everything where it is", an IFA who stands to gain from implementing and managing a new arrangement may be tempted to nudge the client in that direction without good reason. Maybe I'm mistaken, I don't know. I'm not an expert in these matters.

dunstonh · 9 March 2018 at 1:08PM

The "can't advise without also implementing and managing" thing bothers me a great deal though. I've emailed the IFA just now to see if this is the case. I'll be a bit irritated if it is tbh. I don't really want to pay hefty fees for something I'd be quite confident of doing myself.

An IFA is not allowed to insist on ongoing servicing. It has to be optional. However, the investment recommendation is going to be different in that scenario.

However, there are some boutique advice firms that use the IFA tag incorrectly and are really FAs. They run one business model and insist you fit it. A number of these have moved to FA status (often after FCA intervention). If you get a firm like that who is referring to themselves as IFAs then avoid them.

Also sounds like scope for a conflict of interest perhaps, since if the best advice for the client is "leave everything where it is", an IFA who stands to gain from implementing and managing a new arrangement may be tempted to nudge the client in that direction without good reason. Maybe I'm mistaken, I don't know. I'm not an expert in these matters.

The way the FCA monitors DB transfers, it wouldnt be worth a genuine firm doing that. For example, at the end of 2018, the FCA is going to request the files for at least one DB transfer case of every advice firm out there (regardless of status). The FCA will pick the case. Not the firm. The problem area is the "pop up" type firm that is doing transfer advice on a factory line style basis. They will make hay while DB transfers are viable and then close down and dump the liability on the FSCS leaving the good firms to pick up the bill.

Despite the negativity, the vast majority of firms are doing these fine. Its mainly costs and some are greedy. £2k to £5k is in the reasonable range.

bigalxyz · 9 March 2018 at 1:12PM

Thanks for taking the time to write all that - much appreciated.

I'm playing email tennis with the IFA at the moment to get to the bottom of what exactly is on the table.

Re: your point about "boutique" firms - how does one spot them? The company I'm talking to does come recommended by someone whose advice I trust, and seems to be well-liked in terms of online reviews, etc. but one can't be too careful!

(I've deliberately not named them on here - I'm assuming that sort of thing is not really cricket on forums like this)

bigalxyz · 9 March 2018 at 1:33PM

ok, IFA has confirmed that he won't advise on DB transfers without also managing the funds (and charging fees accordingly). £2k for advice stage, £5k for implementation of transfers to a new vehicle (if agreed to be worthwhile) and then an annual charge of about 1.25% thereafter. Not what I wanted! I think I'm going to politely decline and keep looking.

dunstonh · 9 March 2018 at 1:34PM

Re: your point about "boutique" firms - how does one spot them? The company I'm talking to does come recommended by someone whose advice I trust, and seems to be well-liked in terms of online reviews, etc. but one can't be too careful!

Generalisations can always lead to errors......

However, most boutique firms are slick in presentation (how the office looks, how the brochures look etc). If they run only one model, they can use a professional printing firm for the bulk of their literature. Whereas a general practitioner IFA wouldn't as they have so many different providers, products, funds, options etc that they have to rely on the office laser printer. They dont know if the next client through the door is going to end up with Aviva, Royal London, Aegon, Std Life or whoever or whatever. They dont know if it will be servicing or transactional. Whereas a boutique firm with one model knows exactly where they want to put that person. Boutique firms are universally expensive. All that gloss is being paid for out of client fees.

They tend to use discretionary investment managers only. And will pour scorn on the thought of using a mainstream option or "just an IFA". If you are getting that tone, then be on guard.

The wording tends to be wealth management with not as much focus, if any, on the fact they are IFAs (assuming they are IFAs). Almost trying to distance themselves.

Now you know there are different advice models, you should be able to pick things up in the tone.

All that said, just because a firm operates that way does not make them bad. There is one near us who is very honest and does an excellent job and is a stickler for presentation and he is very knowledgeable and would give me no concerns at all. I dont know how he can get away with using the IFA tag still (probably as no-one has told him not to). He is expensive but he focuses on the top end of the wealth market. It just seems that the boutique firms seem to be suffering more firms that are greedy and not really operating as an IFA but an FA.

bigalxyz · 12 March 2018 at 7:17PM

Update: have found an IFA offering to advise on my 3 DB schemes for a total fee of £3,000. No obligation to then have him manage things thereafter - quite happy to see me set up my own SIPP if transfers are deemed worthwhile. Progress, perhaps...(still not cheap though!).

dunstonh · 12 March 2018 at 7:27PM

bigalxyz wrote: »

Update: have found an IFA offering to advise on my 3 DB schemes for a total fee of £3,000. No obligation to then have him manage things thereafter - quite happy to see me set up my own SIPP if transfers are deemed worthwhile. Progress, perhaps...(still not cheap though!).

That is cheap.

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