Novia launches new service to help advisers with DB transfers.
Novia, the wealth management and wrap-platform provider, has reacted to the surge in defined benefit (DB) transfer requests by unveiling its new Transfer Value Analysis System (TVAS) service. The service provides advisers with the facility to compare the benefits of a DB scheme with the Novia Sipp. It was built by the in-house Novia team and externally reviewed and validated by financial services technology firm Dunstan Thomas.
Novia, administering approximately £4.7bn worth of assets, says the service has been designed for advisers to conduct detailed analysis of DB to defined contribution (DC) transfers. It comes as low gilt yields prompt a jump in the number of transfer analysis requests more broadly. Provider Selectapension said it received 5,000 analysis reports in November 2016 – a rise of almost fivefold since January 2015.
Shaun Allwright, commercial director at Novia, said: “Pension freedoms have highlighted the need for an overhaul of the pensions system, and with the flexibility this provides, along with the record low gilt rates, could increase the level of enquiries advisers receive for pension transfers.”
Chris Read, CEO at Dunstan Thomas, said: “With this TVAS service, Novia has a facility that advisers are going to find invaluable as a reporting tool to help in achieving the best outcomes for their clients in retirement.”
The growing rise in DB transfer requests represents both an opportunity and potential banana skin for advisers. On the one hand, the recent rise in cash equivalent transfer values and greater flexibility available since pension reforms has created a raft of consumers desperately seeking advice on whether to transfer out from a DB scheme.
On the other, the mechanics of DB and DC schemes means comparing the potential gains or pitfalls is far from straightforward, and the implications for selecting the wrong path are severe.
The FCA is very much aware of these recent trends and is regularly reminding advisers about the inherent risks as well as its expectations of appropriate due diligence.
For that reason, the timing of Novia’s new TVAS system is sensible. Advisers need to help in this area and that is exactly what the service provides. The tool is free to use, but Novia’s interest will be in boosting its own business levels. Comparisons can only be made with its own self-invested personal pension (Sipp).
That being said, though, advisers will be well aware that due to the client penalties for miscalculating the benefits of a potential transfer, and with the regulator ready to pounce, this service could play a role in helping them recommend the right course of action.