Alistair Cunningham, Director of Wingate Financial Planning made a medical advice analogy to explain his critical views on pension transfer rules, highlighting how some financial advisers in agreeing to review somebody’s pension transfer, telling them it’s wrong, but executing the business anyway is a bit like a bad GP.
Speaking at the Personal Finance Society’s Festival of Financial Planning on 8 November, Mr Cunningham said:
“If a doctor thinks a prescription is against your best interests, would they facilitate an outcome they think is not optimal?”
“Effectively in giving the advice and saying don’t transfer, you have left a blank prescription on the desk and someone could facilitate that advice with a third party.”
DB Transfer Risk
The issue is, that pension transfers almost always expose the client’s money to more risk by moving the pension from a scheme where the risk rests on the employer’s shoulders, to one that rests on the client’s shoulders, usually incentivised by the chance for greater returns for the client, or for other potential benefits.
What’s generally recognised in the industry, is that for most people the risk outweighs the potential reward of a transfer to something like a SIPP, meaning that if a financial adviser is being honest and acting in their client’s best interests, then they are more likely to be advising not to conduct the transfer on most occasions.
However, in some cases, financial advisers do this, but STILL execute the business, often in cases where a marketing company paid to promote certain investments has had a large influence over the client’s decision, leading them to more risk and often loss.
Mr Cunningham’s advice to financial advisers pointed out a “flaw” in DB pension transfer rules, that while a client has to seek advice for transfers over £30,000, that advice does not have to be to conduct the transfer – advice to NOT complete the transfer still ticks the box in that they have received the advice, and therefore green-lights the transfer.
Pension Transfer Claims
The Wingate Financial Director’s advice certainly mirrors the experience of many clients of Spencer Churchill Claims Advice who have since gone on to lose their pension, at least for the moment while our team of case handlers battle to recover funds from risky SIPP investments.
If you are worried about your own pension transfer from any time in the last 6 years, our team offers a FREE initial assessment to see if you can make a claim for losses over a mis-sold pension transfer.