Advisers sceptical about Pension Wise advice proposals

Advisers sceptical about Pension Wise advice proposals

Advisers have raised concerns over the suggestion that Pension Wise could operate a form of low cost advice, saying it could cause further confusion and undermine the profession.

Advisers agreed there is a need for a “simplified advice structure” to serve those who cannot afford full advice, but warned this must be operated properly.

The Association of Member Nominated Trustees (AMNT) had last week proposed that an advice service should be introduced to help those looking to transfer out of their defined benefit pensions, even if the value is less than £30,000.

It suggested the service could form part of Pension Wise, with advice being given by specially trained staff in an effort to combat pension scams.

If the service finds that the member needs more comprehensive help, they would then be passed on to an adviser for full financial advice, the AMNT proposed.

Rebecca Aldridge, managing director of Balance Wealth Planning, said while the idea of Pension Wise offering regulated advice in the sub £30,000 DB transfer area seemed sensible, she could not see how this would operate better than a pension transfer specialist or cost any less. 

She said: “Most financial planners are reluctant or unable to give advice about defined benefit pensions and it’s an incredibly labour intensive exercise to do properly, so it’s very difficult to justify the costs when it’s a small pension pot being assessed. 

“But the actual time providing that advice properly is the same, regardless of whether it’s a regulated adviser or someone from Pension Wise.”

She added: “Taking any short cuts and having non-regulated advice, or guidance, feels like a backwards step; it undermines the efforts the FCA and profession are making in the regulated space. 

“Having non-regulated advice would also create ambiguity when we are all trying as hard as possible to create more clarity about what we do, and the benefits of working with a professional.”

Meanwhile, Alan Chan, director and chartered financial planner at IFS Wealth and Pensions, said there was no need for another form of advice which would “muddy the waters further and confuse the public”.

He also questioned how such a service would be funded and raised concerns it could add to advisers’ every-growing levy costs.

Mr Chan said: “It will no doubt have to be funded by financial advisers who have nothing to do with DB transfer business and add to the already heavy burden from existing levies. 

“DB transfer advice is a complex area and it should only be provided by those with the specialist qualifications and FCA permissions as well as the right PI cover.  

“If Pension Wise starts providing this kind of advice, it will raise questions about funding for future liabilities in the event of a complaint. 

“An additional levy is something firms will not be prepared to pay for.”

In its proposal, AMNT did not detail how the service could be funded or what its liabilities were, but said further details on how it may operate could be consulted on by the wider industry.