Defined BenefitJun 5 2018

Momentum chiefs launch transfer advice firm

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Momentum chiefs launch transfer advice firm

Momentum Pensions chiefs have launched their own transfer advice firm, which is claiming that will provide suitability reports within 10 working days, or five working days through a premium service.

Pension Advice Specialists (PAS) is privately-owned by self-invested personal pension (Sipp) provider Momentum Pensions group chairman Mark Gaywood, chief executive Stewart Davies and UK managing director Craig Cheyne.

The firm is focusing on growing its business by providing expert advice on defined benefit (DB) transfers, “following the recent closure or suspension of several transfer firms after heightened regulatory focus on the market and problems securing [professional indemnity] PI cover”.

Pension transfer specialist O&M Pension Advice announced last month that it was forced to close down after it was unable to find PI cover at “commercially acceptable” terms.

Pension Advice Specialists, which claims to have overseas transfers expertise and advice on QROPs, is charging a fixed fee on a non-contingent basis, meaning the fee is not linked to whether the client goes head with the transfer, a practice the Financial Conduct Authority is considering banning.

The cost of the full advice service starts at £2,000 for the 10-day service, with the premium service costing £3,000. The firm also offers additional services including a transfer value analysis (TVAS) only option, tabled at £300 plus VAT.

Advisers with clients looking to transfer can request a DB advice pack from Pension Advice Specialists including the fact-find, risk questionnaire, scheme information form and adviser recommendation form.

Once these have been submitted along with cash equivalent transfer values and terms of business, the firm conducts its analysis, it said.

Analysis will include running cashflow modelling, obtaining a transfer value analysis, completing lifetime allowance calculations and preparing a suitability report, it added.

The firm will only release a Financial Conduct Authority (FCA) compliant certificate of advice after a client signs a suitability report to confirm their understanding of the risks.

Momentum Pensions was one of the Sipp providers which received pension transfers amid the British Steel scandal.

FTAdviser reported in November that several members of the British Steel Pension Scheme (BSPS) appeared to be transferring out their pensions after being lured by cheap deals by unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.

It emerged in February that the firm had advised as many as 300 BSPS clients, of which 64 proceeded to transfer out of the BSPS scheme into alternative pension arrangements without taking further advice.

Some of these clients saw their pension pots being invested in Sipp providers, such as Momentum Pensions, and managed by Gallium Fund Solutions, a Kent-based discretionary investment manager.

Active Wealth entered into voluntary liquidation on 12 February, months after the firm was told to cease any pension transfer activity by the FCA.

In December, Momentum announced that it had put all further investments and pension transfers on hold from steelworkers, and that it wouldn’t charge an exit fee to the scheme members if they decided to leave the Sipp provider.

Craig Stokes, head of pension transfer advice at Pension Advice Specialists, said that the firm won’t “recommend a transfer unless it is clear it is in the client’s best interest, and it is imperative that clients understand the risks of a transfer”.

He said: “In order to advise on the suitability of a personal recommendation we need to work closely with the adviser and have as much information as possible about the client’s circumstances, needs and objectives.

“There is far more demand for DB transfer advice than supply and independent advice needs to be much more readily available for advisers and their clients. Clearly there are currently not enough people out there offering transfer advice in the right way.”

According to Steve Carlson, chartered financial planner at Cardiff-based Carlson Wealth Management, the production of a personalised suitability report takes less than five days once you’ve got all the information.

He said: "What takes up the majority of the time is getting all of the information from the client about their personal circumstances/goals and getting all of the detailed information from the DB scheme in question, plus any other policies/assets/liabilities the client has got.

"Bearing in mind that this firm won’t be doing any of that work, their timescales and charges seem fair to me."

On the other hand, Martin Bamford, chartered financial planner and managing director of Informed Choice, argued that "good advice should never be rushed".

He said: "It might be possible to turnaround a report in a relatively short period of time, but ensuring that an adviser properly understands what the client needs to achieve, and that the client understands the advice being delivered, is an involved process.

"In the DB transfer market, speed can be a factor, as guarantee periods need to be considered. But rushing to complete analysis should never be allowed to detract from the quality or understanding of the advice."

maria.espadinha@ft.com