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.
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.