Anyone looking to transfer out of a final salary pension worth over £30,000 must take financial advice by law. It is great to see the government recognise the value and importance of financial advice through this legal mandate.
But that still leaves many people wondering how to find an adviser you can trust, and how to know that they will give you the best advice for your circumstances.
A transfer out of a final salary pension is a life-changing decision that cannot be reversed. By transferring, you lose all the guaranteed benefits that come with your final salary scheme and swap those for a capital sum that usually goes into a private pension.
This has many benefits and is a fantastic opportunity for some, but it requires complex technical knowledge and experience to assess transfer suitability. It is crucial to get specialist, independent and holistic advice on your unique circumstances to be sure that a transfer is right for you.
Holistic advice means it does not focus on the transfer only but on all your financial circumstances. This includes looking at your other sources of income, savings, investments and other financial products. It also involves assessing your attitude to risk and loss; understanding of and comfort with investment markets; and overall life goals.
You also need to make sure you are paying in the right way for advice on a final salary transfer.
Beware anyone offering ‘free’ transfer assessments. This could mean that they only get paid if the transfer goes ahead. Also, beware those that get paid significantly more if the transfer goes ahead.
This creates a potential bias towards recommending a transfer, even if it is not in your best interests.
Surprisingly, given the huge numbers of people transferring out of final salary schemes, there has not been much in the consumer press about biased charging recently.
At Final Salary Transferwise, we use a charging structure that is very competitive compared to other advisers, and which aims to avoid bias and align our interests with yours. We do this by charging one amount (£2,500) for the initial advice and suitability recommendation, regardless of whether it is to stay in your scheme or transfer. Then we charge an additional 1% for the time we spend on implementation if the transfer goes ahead.
We will lay out the reasons for our recommendation clearly in our report, based on a holistic assessment of your circumstances and life goals.
It takes just as much work to recommend staying in a final salary scheme as it does to recommend a transfer.
If staying in would benefit you more in the long run, then our advice will put your mind at rest that you are doing the right thing. The clients we have advised to stay in their schemes believed it was well worth paying a fair rate for that advice.
You also need to beware firms that give advice on the transfer but then pass the job of investing the transferred money to another party. If they do this, they must explain clearly where and how the money is to be invested and why that is right for you; and be sure you are comfortable with the new arrangements.
The financial regulator has said is not acceptable for one firm to claim to be advising on the pension transfer without accounting for the assets in which the funds will be invested.
At Final Salary Transferwise, we have investment specialists in our team. So, if your transfer goes ahead, we also make sure the new investments are right for you and explain them carefully to give you peace of mind.
Final Salary Transferwise is an initiative of independent adviser Blackstone Moregate, which has 17 years’ specialist experience in pension planning. The team has a combined experience of 70 years.
To assess the suitability of a transfer, we conduct a thorough, holistic review of all your financial affairs. Our specialist tools and technical skills will also help assess the sustainability of your retirement income throughout life, to ensure your money never runs out.
The result is a fully-informed, professional, transparent and personal recommendation about whether a transfer is right for you.
Transferring out of your final salary scheme is a once in a lifetime decision and you must get it right. Get the best specialist advice that you can.
To find out more, contact Richard Hopkins at 020 3376 1444, email@example.com