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Even in these gender-fluid days I have to confess to being entirely male, as far as I know. This means that I will never truly experience what it feels like to be a women patronised by a man. I will never know what it’s like to be treated as a second class citizen by a financial adviser or mortgage broker.

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It’s that time of year again when pension savings statements are being issued. They should have been issued by 6 October following the end of the relevant tax year, so will be sent out about now for the 2016/17 tax year.

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Recently I’ve been thinking about the word ‘intentionality’. Some things just happen, but most of the time there is something or someone influencing an outcome. We can influence by accident, or we can set out to do something deliberately.

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So the totem pole has been dismantled, the teepees taken down and all the Powwowers have moseyed on back to their ranches with the sun setting on another Paraplanners Powwow.

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Pension scams come in many guises and cold calling is just one unwelcome activity that can easily target the vulnerable and lonely. 

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Paraplanning has never been so exciting. In June we had the 2017 CISI / IFP Paraplanner Conference and a couple of weeks ago we had the Report Writing HowWow from the Paraplanners PowWow movement. These two events had similar but different aims.

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I went into a meeting for only a couple of hours and come out to find out that for many the state pension age will be 68 rather than 67 as they were expecting, for me however there is no change – well not yet anyway.

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There has been a lot of coverage in the financial media lately about the FCA’s plans for changes on Defined Benefit (DB) transfer advice.

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I’ve been getting through an awful lot of printer ink recently. With our friends in Canary Wharf embarking on a publication spree this summer, the latest 114 pages to roll off my trusty HP LaserJet finished off yet another cartridge.

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The FCA this week revealed plans for changes on DB transfer advice, including scrapping guidance that the adviser should start from the assumption that a transfer will be unsuitable.

The proposed changes also include requiring transfer advice to be provided as a personal recommendation, and replacing the current transfer value analysis with a comparison to show the value of the benefits being given up. 

Claire Trott, head of pensions strategy at Technical Connection, gives her view on the story.

DB transfers – this has been a long time coming

I started my career doing pension and FSAVC review calculations, I took what I had learnt and moved into advising on pension transfers both for direct clients and on behalf of other advisers.

This background has given me a good foundation in what the FSA then, FCA now, were looking for within their suitability reports.

I have to say up until the pension freedoms I agreed with their stance on most of it, but things change and now over two years later the FCA seem to have finally noticed.

The most recent consultation paper CP17/16 is most welcome in my eyes as it gives the advice profession a chance to give some real life input into what the FCA deem suitable for a changing world.

The biggest and most welcome change is the fact that the FCA recognise that the starting point for advice should be neutral and not deemed wrong for the client. It has felt to me, that starting from a negative would nearly always mean that should there be an issue down the line, then the adviser would be on the back foot.

Adding to the guidance on suitability and personal recommendations can only be a benefit to advisers so they know what is expected. For too long there have been things that the FCA have expected but were not clearly documented, such as guidance and not rules.

It has been implied for a few years now that the receiving scheme and underlying investments must be included in the transfer or conversion advice, but adding this to the actual guidance will remove any doubt.

The majority of advisers would do this by default, as they would be advising the client holistically, but for those who may only be undertaking the transfer as a standalone piece of work, it will ensure that the whole picture is looked at in detail.

In many cases the transfer may be suitable if the client is investing in one portfolio or asset and unsuitable should they decide on another route entirely. Given death benefits have always been, and are increasing, a catalyst for transfers, it is again good to see that they are addressed in the guidance on suitability.

An overhaul of Transfer Value Analysis (TVA) is long overdue, being unchanged since the introduction of pension freedoms where the purchase of an annuity became the least likely option at retirement, if at all in the client’s lifetime.

The proposals focus more on what the client needs rather than what they are giving up, which is a positive and will help advisers in their conversations with clients.

It is on a regular basis that we hear that the adviser can’t recommend a transfer even though the client doesn’t need that level of income in their retirement.

On first read, the majority of the consultation makes sense and I hope that advisers and providers will respond in full to help the FCA make the appropriate amendments, to give freedom to pension scheme members while protecting them and their advisers from harm.

 

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