***BREAKING NEWS***
Pension transfers to SIPPs
I knew this was going to be the next item in the spot light. For many years international advisers serving expat clients have used “bonds" as oppose to platforms as the investment wrapper/account for the pension fund, this was common practice for pension transfers into both SIPPs and QROPS.
There are costs to financial advice and pension transfers are no different, ´good advisers and firms´ used commission paying bonds as a way to provide a choice to clients in terms of how they wish to pay for the cost of the advice whilst ´not so good firms´ abused the clients in taking out bonds that paid 7% commissions that was totally unsuitable.
Sometimes you do get good advisers working for firms that perhaps due to the remuneration structure would force advisers down the commission paying bond route because he/she would not earn much otherwise. THIS IS A REAL CONFLICT. I would advise those advisers to find a new firm to work for or join a network and work for yourself.
The amount of work that goes into providing advice on pension transfers is massive and advisers need to be confident in ensuring clients understand this otherwise, it will be a race to the bottom in terms of fees. Clients might think a race to the bottom is a good thing because its cheap for them, but what happens when that advice firm goes bust because they have been trading at a loss?
We have already seen pension providers like Standard Life stopping pension transfers to SIPPs if there is a bond underneath, therefore it will not be long before the FCA bans this practice completely. And no doubt that soon the ban will reach pension transfers into QROPS.
For advisers like ourselves who are already ahead of the game with using platforms and clearly outlining our fees, this ban would be welcomed as it is in the clients best interest. For those commission hungry firms (I won´t name them), time to get your act together or you will be left behind. Pension transfers is a specialist area of advice and needs to be treated appropriately.
Read the FCA news here:
https://www.fca.org.uk/news/news-stories/transferring-switching-uk-pensions-international-self-invested-personal-pensions