transfer advice

What next for DB pension transfer advice?

Pension freedoms have opened defined benefit members’ eyes to the mouth-watering transfer values currently on offer if they give up their guaranteed benefits and move to a defined contribution scheme.

At the same time, the FCA’s requirement that people transferring out of a DB scheme with a value of £30,000 or more must take regulated financial advice has increased demand for advisers’ services.

That said, the sheer volume of requests and concerns about the risk of future liability among advisers and their professional indemnity insurers have led some advisers to shy away from this market, resulting in fewer to service the demand.

Referring clients to DB transfer specialists may be the preferred option for those not active in this market. However, the news pension transfer specialist Intelligent Pensions has voluntarily suspended DB transfer advice after talks with the FCA has hammered home that even reputable experts are subject to pressure and scrutiny.

The news follows reports that Welsh advice firm Strategic Wealth UK and de Vere UK have been subject to similar investigations.

So where should DB transfer advice go from here?

Neil Wortham, Head of Partnership Support at Foster Denovo, offers his view.

“As a business, we do not advocate advisers making decisions on DB transfer advice on their own, given the high risk nature it poses. Instead,  we have a committee which meets at least weekly, and this is the platform for DB qualified advisers to present individual client cases to their peer group.”

Neil continues: “If the advice is to proceed with the transfer, the case can then go to a full detailed analysis before it is finally reviewed by the company’s designated pension transfer specialist.

This approach brings together our experience and knowledge and assesses what is right for the client, as well as the associated levels
of risk.

Even those advisers who do not possess DB transfer experience should be aware of which of their clients have been members of such schemes.”

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