According to Trevor Goodbun, chartered financial planner at Norwich-based IFA firm Wensum Financial Planning, a sales person from lead generator Appoint UK contacted him and opened by asking if he knew most pensions had fallen in value since 2007.
Mr Goodbun said the call was the latest of several he received last year from the same firm, which takes a fee from advisers for prospective clients its passes over for a free review of their pensions.
The information quoted by the sales staff was based on a chart in a Daily Mail article from February 2012 showing that many pension providers were paying out less than they were in 2007, just before the financial crisis.
The article was focused on with-profits savers in particular, who the paper said were being hit by a perfect storm of declining final bonuses on their with-profits funds and falling annuity rates which were limiting the amount of income they could buy with their eventual payout.
Dan Morrell, operations manager at the call centre which is operated by Core Ventures, told FTAdviser that this information is currently being updated and is only supposed to be provided upon request.
Mr Morrell said: “The companies we work with are smaller IFA firms who want to help the ‘orphan’ generation. This is a high volume low margin model which only works this way.
“I am sure that you understand we receive a fee from these companies but we do act as one of many marketing channels for them. We do not receive a financial commission ourselves, though.”
Mr Goodbun said the sales pitch raised concerns over the quality of the leads and the potential for clients to get the wrong impression.
“I’m buying leads from someone how do I know what that lead generator is saying? It’s almost a due diligence point of view.
“One of my worries of late when seeing new clients was that you could clearly show them a chart with that big dip. If you show them the five-year performance is will look stinking, but show them the six-year [version] and it will look OK.”
He also raised concern over the risk less scrupulous advisers may seek to ‘churn’ clients following the initial free review.
“Even in the post-[Retail Distribution Review] world, even though you are charging a fee the vast majority of our businesses are still based on a transactional model.
“If you have been offered a free review the only way an adviser could make money was to do something. [It is] tempting for the less scrupulous at the very least.”
Mr Morrell said his salespeople are not permitted to even refer to annuity rates.
“We are not an advised business, we do not even mention the word annuity as this is a product and would be classed as inducement, our calls purely relate to a regulated firm reviewing their pension at no cost... We do not suggest anything relating to advice nor can we.
“The regulated companies do the review for the customer and if they decide not to go ahead then there is no cost. If they decide to proceed then [the] IFA has to advise the customer of the fees he will charge or the percentage he will take prior to them making that decision to comply with [Financial Conduct Authority] legislation.”
