IFAs take the lead in sorting the transfer blockage.


think big


Two things I’m really looking forward to in September are threesixty’s two “Big Thinking Days”. One’s in Edinburgh and one’s in London and if you’re going, you;re in for a treat.

Threesixty are a pretty pucker outfit (IMO) and I’m  chuffed to be involved. Here’s how CEO Phil Young bills his event

There can’t be many professions subject to as much outside influence than that of the financial adviser.

threesixty’s Big Thinking Days have been put together with exactly this thought in mind.

Here’s the ‘Big’ idea …

If you were able to take a look around, and understand all the issues which were likely to shape the views of yourself and your clients, you would have a better chance of knowing how to react, when not to react, and how best to prepare and position things with your clients. It’s rare that we get a chance to take a step back, look at the bigger picture, and think about the future . . .

This is your chance!

Sadly for IFAs, their future has been shaped by legislation, they have little input into the way to lead their markets. Looking at the line-up for these events, the Big Ideas survive, this is not just a marketing jamboree for the insurers , fund and platform managers.

big idea

One Big Idea – addressing transfer values

We’ve been providing actuarial input and our client feedback to threesixty for six months now as they make a concerted bid to shift regulatory emphasis governing the transfer of defined benefits. The “Big Idea” that threesixty has, is that the primary driver should be what the customer wants  and this should be informed by the Transfer Value Analysis rather than governed by it.

Currently, the analytical process makes decisions black or white, you either have a transfer value that is sufficient to cover the guarantees given up – or you haven’t. The measure of that is known as the critical yield and this is calculated using similar assumptions to those operated in calculating the transfer in the first place.

As we all know,  the process of paying a pension from a defined benefit scheme is less expensive than replicating this process using an individual annuity. Were the guarantee from the defined benefit as good as the guarantee from the life company, it would not make economic sense to transfer.

Any system based on a like for like comparison is always going to favour leaving the money in the DB scheme. This is what the TVAS system does, and it makes pariahs out of advisers who pursue the right to transfer and turns people who are determined to transfer their rights into insistent customers.



Is the law an ass?

By no means.  We need an extra layer of protection to make sure people properly engage in what they are giving up and recognise the nature of the risk transfer.

We also need to protect people from scammers who are using pension freedoms (and even the scorpion campaign) as a front to steal their money,

The law is not an ass, but it makes an ass of advisers who are unable to pursue legitimate lines of advice because of the threat of action from their Regulator, from the Financial Ombudsman and from their Professional Indemnity (PI) insurers.

So how does the Big Idea turn out in practice

What threesixty are doing, and this is largely down to Phil Young’s vision and Russell Facer’s expertise, is creating space for suitably qualified advisers to act in, just as actuaries have. Space where, subject to the agreement of the insurers, regulators and ombudsmen, they can advise in what the Americans call a “safe harbour”.

They have taken an idea , pioneered by Margaret Snowden and the Incentivised Transfer Working Group, to establish a code of conduct from within.

I won’t spoil the boys thunder- I have only seen drafts – but I tip my hat to them. It looks more than likely that through this initiative, those wishing to shape their retirement finances through financial planning (as opposed to the payment of a defined benefit) will be able to do so.


Why is this such a big idea?

I sense, at last, that there is some grown up dialogue happening between advisers and regulators and that advisers are – independently of their former paymasters – negotiating the terms under which they advise.

This is an important step in their gestation from salespeople to professionals.

I’m not saying that some advisers have not had individual influence, you only have to look at Alan Higham and Michelle Cracknell, both of whom have been practicing IFAs in recent times to see that advisers are influencers.

But what threesixty are doing is responding to calls from the actuarial community and from the trustees of occupational pension schemes, to show leadership. And they are doing so.


big thinking

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to IFAs take the lead in sorting the transfer blockage.

  1. George Bentham says:

    I am struggling to find an adviser as they are all running fir cover.Any suggestions?

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