Half of advisers looking to quit DB transfer market: survey
Almost half of advisers in the UK are doubtful they will still be providing defined benefit (DB) transfer advice this time next year, according to a new survey conducted by Royal London and LCP.
Next month the FCA introduces a ban on contingent charges, which essentially marks the end of the fee-based model of financial advice.
The report also published the responses of advisers who had already ceased to offer DB advice in the past three years. Of these, 81% said the decision had been at partly due to professional indemnity insurance (PII), 42% cited low risk appetite and 40% blamed high levels of DB regulation.
If we are to see a new wave of interest in DB transfers, it is especially important that those members are able to access good quality advice at a price they can afford."
The report's authors warned: "Later in 2020 financial pressures on households because of the current economic crisis may lead cash-strapped over-55s to look very closely at their DB pots as a way of accessing relatively large amounts of cash relatively quickly."
"If we are to see a new wave of interest in DB transfers, it is especially important that those members are able to access good quality advice at a price they can afford."
Steve Webb, LCP partner and former pensions minister, said: "Pension schemes have an important role to play in ensuring that members are fully informed about their options and can access high quality advice."
"Growing numbers of schemes have chosen to appoint one or more advice firms to support members as well as subsidising the costs of advice. Members benefit from the reassurance that the scheme has undertaken due diligence on the advice firms involved as well as from reduced advice costs where the scheme is making a contribution."
The report concluded: "The message from advisers surveyed for this paper is clear. They are looking for regulatory certainty and a solution to the issue of apparently ever-increasing costs for PI insurance."
The RL/LCP survey canvassed the views of 500 IFAs across the UK.
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