According to Alistair Cunningham, financial planning director at Surrey-based Wingate Financial Planning, around one in five individuals that contact his firm asking for a transfer recommendation end up taking advice in other areas.
The number of cases where his firm recommends a pension transfer is very low.
He said: “If we speak to 20 people about final salary transfers, 19 of them we will not even give advice to [transfer].”
As an example, Mr Cunningham told FTAdviser about a client that was offered £4.5m in a DB transfer.
He said: “For various reasons he will not transfer out, but now he wants us to help him to just take the benefits.
“So, what he is probably going to do is rather than transferring out when he is 55 into a defined contribution (DC) scheme and take benefits immediately, he will probably take it in five years’ time, so we are helping him with that.”
After pension freedoms, savers have been seeking to take advantage of the high transfer values of DB schemes and to move their nest eggs into DC plans.
Figures published by Mercer in April showed that as much as £50bn has been pulled from final salary pension schemes in the last two years.
Typically, Mr Cunningham’s clients are senior executives or owners of businesses that are at the point of retirement.
They will have generally 10 to 15 years in DC or a self-invested personal product (Sipp), and maybe 10-15 years in a final salary scheme, he said.
He said: “About two thirds of what I do is pensions [related].
“[Business is getting better], but without the risk of doing all the stuff that we do not want to do.”
Other advisers are also reporting an increase in selling satellite services to potential pension transfer clients as people who would never have sought financial advice are now having to due to pension freedoms.
Under the rules introduced in 2015, savers with a DB pension pot higher than £30,000 are obligated to seek regulated financial advice.
Gem Durham, independent financial adviser at Obsidian, highlighted a recent case where she ended up providing more services than the initial request from the client.
She said: “I did some income protection for someone who came in looking for a DB transfer. In that case, the DB transfer might go ahead.”
Ms Durham argued that it is really beneficial for these savers “to get financial advice, and not only for their DB transfer”.
She said: “I enjoy this work, because I feel that I help them more in a way.
“But there are challenges, because we have a different way of speaking to them. We need to be really sure that they understand what we are saying without patronising them.”
According to Jonothan McColgan, director and chartered financial planner at Bath-based Combined Financial Strategies, the demand for defined benefit transfer advice is having a beneficial nudge effect on many more people.
“It happens in all kinds of things, not only DB transfers. People come in with a fixed idea. They have been worrying about something and that is what prompted them to get in touch.
“But that might just be a symptom of the overall financial problem that the adviser needs to help them with, and it is important to open their eyes to the wider area of things.”
Mr McColgan, who only takes in final salary transfer clients that agree with an overall financial assessment, argued that this is what makes financial planning important.
He said: “People come to see you with an issue that leads into a lot of other areas that they are just not aware of and that you can help them with.”
maria.espadinha@ft.com
