Foster Denovo will be providing financial advice to Friends Life customers about their retirement from next Monday’s pension freedom day, in a deal announced a day after the shock announcement that the insurer’s sister advice network Sesame was to abandon retail advice.
Friends Life said customers who contact them about their retirement options will be referred to Foster Denovo if they request financial advice, unless they already have an existing relationship with another financial adviser.
The provider will also inform customers of their options to contact Pension Wise, or to find an adviser through Unbiased, to ensure that customers have clear information about the range of choices available to them.
Until the announcement yesterday that Sesame would cease operating in the retail investment advice space, including pensions, it would have been expected that any referral arrangement would have gone in-house.
Yesterday (31 March), Sesame Bankhall Group, whose parent is Friends Life, said it will no longer offer a network home for retail investment advisers, in a move it has blamed on an RDR-driven “natural migration” towards direct authorisation that is ‘challenging’ the network model.
Aviva, which recently confirmed the takeover of Friends Life, threw doubt on the future of SBG at the start of the year, pointing out that the distribution business is only viable thanks to currently “open-ended” financial support.
Friends Life began a strategic review of SBG in early 2013 in order to address the financial uncertainty of the businesses and to “address the structural issues so as to reduce or remove the need for financial support”.
The review already moved it to a wholly restricted advice model, operating through two strands including a panel-based service. Deals with providers as part of this were responsible for a regulatory penalty of £1.6m last year, one of three fines in recent years.
Andy Curran, UK chief executive at Friends Life, said that with more options at retirement comes more need for regulated advice to ensure they are making the most appropriate decisions.
“Many of our customers do not have a relationship with a financial adviser so we want to ensure that they have access to quality professional advice.
“Our new referral service with Foster Denovo enables us to offer our customers who do not have an adviser access to robust financial advice to support them with the important decisions they need to make about their retirement income.”