Insistent clients can exist in any form and be insistent about any particular investment or strategy.
“They are ultimately acting against an advice recommendation and hence, in the view of the financial adviser, taking a decision which is not in their best interests,” says Ryan Markham, head of member options for Hymans Robertson.
But while this might cause some to question why the powers that be simply rule out any possible harmful activity, this would go against the freedom and choice principles.
The problem is, very insistent clients can do something that ends up not just hurting them, but also the advisers who dealt with them, even in a minor way.
For example, in 2015 Financial Adviser reported on the case of a mortgage broker who helped a woman remortgage her property to free up some funds for her, only for her to go and blow it all on a spurious Bulgarian buy-to-let scheme.
She then took the adviser to the Financial Services Ombudsman to claim if he had not allowed the remortgage, she would not have been tempted by a scheme she had seen.
Despite all logic, the Ombudsman upheld her complaint, even though the broker in question had no way of knowing she was speaking to another offshore adviser about investing in Bulgarian buy-to-let. More than 110 comments supported the adviser in question.
However, the question of insistent clients becomes most problematic in the case of defined benefit (DB) transfers.
Sankhar Mahalingham, head of DB growth for Xafinity, comments: “A DB transfer is very valuable, especially in the current environment.
“It is generally the largest or second largest asset an individual has. Transferring is an irreversible decision and, of course, very important.”
A spokesman for the Personal Investment Management and Financial Advice association (Pimfa), attempting to transfer a DB scheme to a defined contribution scheme is an example of a “most extreme and high-profile” instance of potential self-harm.
The spokesman explains: “DB pensions usually carry guaranteed benefits, with the risk of poor investment performance carried by the employer, rather than the employee.
“Legislation in recent years has forced firms to offer members the option of a transfer, albeit they must demonstrate they have taken regulated advice.”
In a nutshell, while pensions freedom rules mean people do have the right to get at their money, legislation also exists to mitigate the likelihood of them transferring against their best financial interests.
This illogical situation has created a minefield for advisers and pension transfer specialists, who are finding more than ever that prospective clients are coming to them not asking what they should do but rather telling the adviser what they have decided to do.