Advisers could end up turning away business generated by the pension freedoms because it does not suit their business models, specialists have warned.
Not all of the industry would be able or willing to accommodate demand generated by the reforms, from transactional clients to those with small pension pots, despite Pension Wise signposting people to take independent advice.
Paula Steele, managing director of London-based John Lamb, said: “The pension freedoms could be a massive regulatory failure waiting to happen. There is not a broad spectrum of advisers offering to all affordability levels.”
Ms Steele warned that her firm was currently receiving three large enquiries a day and would have to turn away business, particularly if some cases did not make commercial sense.
She said: “If someone came to us with a £20,000 pension we might charge a base meeting fee of £500 for an hour-and-a-half worth of chartered financial planning work and a follow-up letter. But that is still a lot for someone with a small pension to have to pay.”
Paul Evans, pensions technical manager for Sipp specialist Suffolk Life, claimed that not all advisers would be interested in business generated by the changes, including transactional clients.
He said: “You cannot lump advisers together as one. They cover such a variety of business models. Advisers who are chartered will have a long-term relationship, for example, and may not want transactional clients.”
But he stressed that advisers had the right to make their own decisions, saying: “Advisers have to decide if it works for their business. They are not obliged to do it. It is up to them.”
John Joe McGinley, the founder of Edinburgh-based Glassagh Consulting and former head of Aegon’s Business Brain, said: “A lot of advisers are looking at what the pension freedoms mean for their businesses and what processes they need to put in place.
“There is more regulation to come in and more tinkering around the edges. Some advisers are saying business generated by the reforms is not for them while others are waiting to see what happens in terms of regulation.”
Mr McGinley also claimed that consumers would be waiting for clarity on the final options available to them following the reforms.
Others were more positive about the changes and how both advisers and consumers could react to them.
John Porteous, head of client proposition for national advisory firm Towry, said: “There is an exciting marketplace which is likely to grow with the emerging savings gap and the pension reforms. These changes will increase the opportunity for client propositions to be segmented, to ensure that all clients get the most suitable service for their individual needs.
“New ways to engage, educate and serve clients will evolve at an increasingly rapid rate over the coming months and years.”
Duncan Shaun, chartered adviser for Keyte Chartered Financial Planners, said: “This is a case where clients have to shop around for the best deal.”