He added: “It is important you give this advice. This is the normal advice process. If the client insists on doing something, or not doing something, then you can’t bypass what you have to do as an adviser.”
However, delegates still sought reassurance from the regulator on how potential complaints from these clients will be handled.
During an ensuing question and answer session, one adviser in the audience gave a comprehensive example of an individual who came to him to seek advice on whether he should transfer from a DB into a DC scheme. After a discussion between the two, the adviser said that the individual chose to remain in a DB scheme, but later died.
“He didn’t have a partner, but he had a son, who then says: ‘My dad came to see you. If he had transferred I would now be getting £100,000 tax-free.’ Where do I stand from a complaint from the son?” the adviser asked.
Mr Percival’s initial response was that the adviser would not have to worry about a claim made against him if the advice given was correct.
However, the adviser pushed further. He said he had simply just given the facts about the advantage of DB schemes and transferring into a DC scheme.
In response, Mr Percival said that if that was all the adviser had done then they might have an issue. “You haven’t done what the rules say you need to do, which is to give suitable advice. You need to find out what the client’s objectives are and then you need to give your advice as to what you think is a suitable course of action in light of those objectives.”
However, there is an added caveat. The adviser has to present options, but ultimately it is for the client to make the decision on which solution to choose.
Advice costs
Another sticking point revolves around the cost of financial advice. In his Keynote speech, Mr Lewis explored the situation of a fictional character, called Maria, who has a £30,000 pension pot.
Maria desperately requires an adviser to outline the different facets when it comes to retirement planning, but she might not be willing to pay for financial advice. In addition, the adviser might not be willing to offer their service for a pension pot of that value, he said.
Citing the latest Unbiased study which found that advisers typically charge £1,750 for advice on converting a £100,000 pension fund into a lump sum and annuity, Mr Burrows expressed the need to tackle the advice gap. He added that robo-advice could help to plug this gap, but only in tandem with traditional advice.
