Advisers have accused Prudential of a “land grab” in its latest digital push after it launched an online service allowing customers to bypass their advisers and withdraw funds from pension pots without advice.
The retirement giant emailed advisers at the end of May, announcing it was launching a “guided cash out service” for customers using a Prudential retirement account.
According to Prudential’s website, the service, which allows all customers including clients of IFAs to withdraw cash from their account without speaking to an adviser first, is designed to “help [consumers] considering taking money out of their account”.
But advisers said the move feels more like “a client grab” than better customer service.
Mike Jordan, IFA at Jordan Financial Management, said: “[Prudential is] expanding the online access clients have; it is no longer just a valuation but instead creates decision trees so clients can make decisions without advice or their adviser.
“I feel this is an attempt to bypass IFAs and perform a client grab. These are clients we have introduced to Prudential to use PruFund, and [it is] not honouring the basis of the relationship by now trying to bypass the adviser, at the risk of client detriment.”
Mr Jordan said the Prudential website offered his clients five alternatives to using their IFA, adding he was “extremely unhappy about this”, and that it “trampled over the IFA relationship without any regard for the advisers”.
Dave Penny, managing director at Invest Southwest, said it was “wholly inappropriate” for a provider to be targeting clients for risky procedures such as fund withdrawal.
He added: “It is a land grab by Prudential, and one which could be very damaging to the best interests of our mutual clients”.
Prudential said it would “strongly recommend that advised clients speak to their adviser before making any changes to their savings”.
A wider problem
Some advisers said the move is another example of a “worrying trend” of providers not treating the adviser as their client, instead looking beyond the IFA to the end consumer.
Julian Pruggmayer, owner of Financial Services Risk Management, said “all life companies are doing it”, while Alan Lakey, director at Highclere Financial, said: “This confirms the worrying trend of companies wanting their cake and wanting to gulp it down.”
Their comments were echoed by those of Scott Gallacher, director at Rowley Turton, who said: “It’s what all providers do at some point. It’s a grab for the client.
“How difficult would it be for Pru to separate its advised clients, offer the new service to them but have a link or mention of their adviser in the process?”
The concerns come at a time when advisers said they were battling declining level of service generally, leaving them scrambling for answers from “faceless companies”, which often resulted in frustrated clients and lengthy delays.
Too complex
Other advisers said they had concerns about the tax implications of pension withdrawals, claiming it was not the sort of action to take without proper advice.
Mark Hale, an adviser at Sandycross Wealth Management, said: “It’s not a good idea for clients to do their own taxable pension withdrawals without advice due to the complexities of the tax system and the effect on the sustainability of their funds.”
But other advisers were less worried. Andrew Oliver, of Andrew Oliver and Co, said: “Personally if a client chose to do it themselves rather than pay me a fee, then either I have not sold the value of my involvement sufficiently or I am happy for them to do so.”
Ian Porter, director at Roberts Clifford Wealth Management, said although he was concerned it was being made available to advised clients, the actual guidance engine produced by Prudential was “comprehensive” and did “ask the right questions” around the client’s circumstances.
A spokesperson for Prudential UK said: “The online service gives customers a view of their savings with us and effectively digitises a service that has always been available to them by phone.
“It has been developed to highlight the value and importance of taking financial advice, as well as all of the potential implications of not doing so, to those who insist they want to take money out without speaking to their adviser.”
The spokesperson added Prudential respected the importance of the relationship between the adviser and their client and would “never seek to intervene” in that relationship.
imogen.tew@ft.com
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