Much of my last 12 months has been spent touring the UK, talking to advisers about pension freedoms. Whilst I still have a few sessions to go, I’d like to share a few interesting findings with you.
As 6 April fell at Easter there was a bit of an enforced break until restarting a few weeks ago. Since then I have begun each session with some questions for the advisers in the audience. The answers to these questions have shown that a number of lessons and trends are starting to emerge.
From an advised perspective, there has been a bit of an upturn in people interested in taking their money out. Everyone seems to have had a few enquiries, but not the rush that was predicted.
On further discussion the conclusion seemed to be that more people without an ongoing relationship with an adviser would be likely to seek encashment, probably directly with the drawdown provider concerned, i.e. the first telephone number to ring would be the one listed on pension plan documentation.
There have been a few issues with insistent clients when advisers have been contacted for encashment assistance and, after being told that this would actually be against advice, a number were referred on to the Pension Wise service for further guidance on the issues.
The two subjects that seem to have most relevance for the adviser audience seem to have been defined benefit transfers and the new death benefit regime.
One issue that surprised me was the confirmation that several advisers had been contacted by clients to obtain a signature to say they had given advice on a defined benefit transfer, when such an exercise had not been completed. One individual also expected no charge for such a service.
On the subject of defined benefits transfers, I do believe there is the real danger of a disconnection between what individuals want and what advisers are advising - invariably the discussion turns to insistent clients, FOS and PI insurance.
The one explicit question I have put to each group of advisers has been:
“A potential client contacts you with, say, a SIPP worth £1 million plus other bits and pieces. You meet them and find out that in the weeks beforehand their SIPP was transferred from a defined benefit scheme against the wishes of their existing adviser. Would you take the business?”
I know this is not scientific and there are a number of assumptions made but, interestingly, the answers from those who were prepared to express a view have fallen into two pretty equal camps (with a couple of small caveats).
About half of the advisers said “no problem”, and stated that they would do business with the client as they would not be liable for the DB transfer as this was done before they were involved. A few added that the important job after the transfer would be to get the investment portfolio under advice.
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The other half answered that they would “probably not” as this was evidence of a client who would not necessarily take the advice they provide ongoing. Who was to say that having not taken it before they would not take it again in the future? (The caveat was from the second group of advisers, where some said they would have a discussion first to see if the potential client was one that they would be happy to work with.)
Notwithstanding my clumsy survey, I do think there is work to be done one how individuals perceive their relationship with their adviser, and the true value that advice can really give to them.
The trends that come from the pension freedoms regime will undoubtedly be closely tracked and commented on. It’s early days yet but some interesting findings nonetheless.