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DB transfer advice: has the FCA’s clampdown changed anything?

'A modern approach'

Dominic James Murray, chief executive and IFA at Cameron James, offers an abridged advice service free of charge.

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He says the business decided to give it a go as it is a “modern approach” to DB advice and while there are things not possible under this form of advice, such as cash flow modelling, it does allow advisers to start gathering information about the client before going on to full advice.

“You do a huge amount of work with about 25 or 30 PDFs on [a client’s] situation and their transfer analysis, but we prefer saying to clients, 'Look, we're going to work for free on the abridged report. Once that report comes back, if we really think a transfer is against your best interest, we will tell you at that stage. If we can't determine whether a transfer is suitable for you or not, we will go ahead to the full advice stage',” James Murray says.

“But we do turn down quite a few clients at the abridged stage, which obviously they find pretty valuable.”

Another business that offers this service for free is Hub Pension Consulting, part of Just Group.

Andy McBride, senior pension consultant at the company, says abridged advice offers a lot of benefits for clients and gives advisers more things to talk about.

“It gives a few more touch points, which when we're talking about a subject matter as complex as pension transfers, can only be a good thing,” McBride says. 

“Certainly for those that are a few years off accessing benefits, it can quite often give them a recommendation to stay in the scheme but at much lower cost than having to pay for full advice.”

But not all who give abridged advice do it for free, with others claiming offering this as a pro bono service could be seen as a “conflict of interest” and would see the adviser hit with significant costs through time, resource and potential liability.

Carla Langley, owner of Langley Consultancy Service, says: “On the face of it, free abridged advice simply means that the firm is better off if the client goes to full pension transfer advice, and are worse off if they provide a retain recommendation. So although the FCA clearly states in their guidance paper that a firm can provide abridged advice free of charge, I am not sure how any firm can justify this, and argue that it is in the client's best interest.”