Defined Benefit  

Robo-adviser to launch abridged advice tool

Robo-adviser to launch abridged advice tool

Wealth Wizards is working on a tool for advisers to allow them to offer abridged advice.

The robo-adviser plans to offer the service to advisers as a white label product that firms can integrate with their own platforms.

Andrew Firth, chief executive of Wealth Wizards, said he supports the regulator’s proposal for a middle ground advice between triage and full advice on defined benefit pension transfers and that a solution was “quite doable using the right digital approach”.

Abridged advice, first mooted by the FCA in a DB transfer paper in July, is expected to include an introductory chat with the client, where the adviser can get some high-level information about their circumstances and determine that the consumer isn’t a viable candidate for a transfer.

The result of abridged advice can only be not to transfer, and the adviser is expected to conduct a full fact-find and risk assessment, including an assessment of the client’s attitude to transfer risk in line with the FCA’s guidance on assessing suitability.

This means that some consumers may receive a personal recommendation not to transfer without an adviser having to collect detailed scheme data, undertake an appropriate transfer analysis or provide a transfer value comparator.

Many financial advisers have said they won't offer abridged advice due to concerns it could leave them more exposed to complaints and that they won’t be able to offer the service at the low cost the regulator expects.

But Mr Firth told FTAdviser: “The status quo is quite unsatisfactory, because you have a situation where someone might have to pay £2,000, £3,000, £4,000 to get what is a simple no, ‘it's not suitable for you’.

“That seems unnecessarily expensive for consumers and an unnecessary amount of work for an adviser.”

Mr Firth explained that Wealth Wizards is working on a three-stage solution.

First, clients would receive in-depth education and guidance.

“Anybody that is contemplating a transfer probably needs to be spending at least half an hour or an hour getting themselves educated on what they are thinking about doing,” he noted.

The second stage would be a digital abridged advice process where the consumer would answer between 10 and 20 questions which would be presented in a straight forward format.

He said: “This could allow us to filter out effectively quite a high proportion of people for whom a transfer would not be suitable. And they wouldn't need to be speaking to an adviser to be reaching that conclusion.

“There may be an adviser looking at things in the background, there may be some who need to have a conversation with an adviser, but fundamentally this could be delivered as a digital journey.”

The final stage would be the full advice service, which would only be offered to those who are seriously likely to be suitable candidates for a transfer, he added.