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Financial Adviser Letters

Financial Adviser Letters

The chocolate teapot that is equity release

So 75 per cent of advisers are wary of equity release (July 29).

Could it possibly be because these advisers know these are products only to be suggested in the most desperate of circumstances and are the biggest rip-off in financial services has yet to receive the full light of day.

Look at the charges – some of which are hidden. Commission is still paid – outrageous or what? Even worse, rebating the commission does not result in better terms. 

Lifetime mortgages are the worst option and regrettably the most common. You do not have to live that long before the property is no longer yours at all. Shared equity is a little better as at least the provider is there to share the pain when prices slide (as they have in London).

Either way, the amount advanced against value is for most as useful as a chocolate teapot. In most cases, trading down will yield a better return – particularly in better-off areas where £1m properties are not uncommon.

Harry Katz
HA7 Consulting

 

DB advice – who needs it?

I read with interest your article regarding the Financial Conduct Authority’s new consultation (July 30).

Personally, I agree with the ban (for the majority of cases) as I have always charged an up-front fee for advice rather than contingent charging.

My rate of recommendation to transfer out is very low, soI have always got paid for the work.

This said, is the FCA missing a very important point?

It states too many advised cases have a recommendation to transfer out.

Maybe this is too high if you look at just the number of advised cases, but what percentage of the total defined benefit plans is this?

It could well be just 10 per cent of people with a DB obtain advice; the other 90 per cent already know they have a good solution in place.

In my experience, I only get clients asking for advice when they already have a reason for considering a transfer.

Martin Coggins
MC Financial 

 

FCA flogging a dead horse

Regarding your piece on DB transfers contingent charging (July 30), I don’t see why the FCA is bothering.

The DB transfer market is now virtually dead, due to the PI insurance premiums and additional restrictions.

The “insistent clients” - that is, those who wish to cash in their pensions for their own personal reasons, such as to pay off debt or have health issues - will likely not be in a position to pay for adviser fees with their own funds.

This is the FCA pandering to the likes of Frank Field MP. In my opinion, the FCA are wasting their energy and resources on something that is terminally ill anyway.

Clive Farrell
Galleon Wealth Management