Advisers ‘damned if they do or don’t’ on insistent clients

Speaking today (17 April) during a live FTAdviser video webinar on how retirement planning advice will change, Mr Ellison said that the spectre of clients seeking to go against advice made for “tough days” for advisers.

“It is one of the times I’m glad I’m a solicitor not a financial adviser,” he said. He added that advisers that wished to continue to support clients should document their dissent in an effort to protect against future claims.

Fellow panelist Billy Burrows, director of Retirement Intelligence, also reiterated the advice of the regulator and told viewers the first thing advisers must do is document what has happened, though he said they would be on “strong ground” if they refused to undertake a transaction.

The debate has come to dominate the post-freedoms advice landscape, amid concerns that clients who go against advice but who continue to receive support from an intermediary to implement their decision could make a claim if things go wrong later.

In particular, there is concern that the ombudsman may decide any help provided could be construed as advice, exacerbated by the service not being constrained by prevailing regulations.

Earlier this week, the Financial Conduct Authority told FTAdviser advisers need to keep “clear records” of both their recommendation and the client decision to ignore this if they process transactions, but that it could not make guarantees over complaints.

The Financial Ombudsman Service said it is still the early days and it has not yet seen any ‘insistent client declarations’. It also similarly emphasised it could not guarantee a way to avoid claims, but said it was rare to find against firms over non-advised processes.

Personal Finance Society chief executive Keith Richards has told advisers not to process insistent business unless regulators guarantee they will not face claims. He has also said transacting such business undermines the value of advice.

Elsewhere in the debate, there was discussion surrounding whether or not there would be a shift from pension cash into multi-asset options or buy-to-let property.

Maria Municchi, multi-asset investment specialist at M&G Investments, agreed that there was potential for a shift from pension cash into multi-asset alternatives and cited “lots of new multi-asset income funds [which] have launched in the last 18 months”.

Mr Burrows added: “I’m very interested in multi-asset products that are more tailored towards drawdown.”

In terms of buy-to-let, the grass is always greener, Mr Burrows said, believing that there will be a cohort of ‘middle England’ who will find buy-to-let too hard to take on.

Mr Ellison said: “There’s been lots of talk about it, but it is much harder to do in reality. I’m not worried about it. There’s money around to do it but it won’t be as big as people think it will be.”

Previous discussions among advisers have focused on the tax liabilities that would be faced by pension savers, who could be taxed at higher rates on the way out of the fund and throughout the year, as well as for the property purchase and on its later sale.

Others have cited the illiquidity of property as being a drawback and that any fall in yields in years to come could leaves investors significantly out of pocket.

However, one viewer of the debate commented: “It’s interesting hearing the thoughts of those on the banks of the Thames with a view the City of London regarding buy-to-let.

“At the coal face I can tell you that property is probably the only asset class the general public truly know and trust and many will invest in BTL even if it is fool-hardy.”

ruth.gillbe@ft.com

Additional reporting by Ashley Wassall

If you watched the debate and want to claim your 30 minutes of CPD minutes, click here. An On Demand version of the debate is available here.