Putting together the Great Pension Transfer Debate with Al Rush has been the most rewarding part of my job these past few weeks. This is mostly because of Al, who sums up for me not just the Great British IFA but the Great British male, and I say this with total respect for the women at the Debate.
Al came to me in late April for some help understanding how transfers worked, he wanted some education. I’m happy to say that whatever he is getting out of the Debate will be matched by what I learn and what those in corporate and trustee advice can learn. Make no mistakes, this is a meeting of equals, the Debate has already shown that.
Al has worked on the if you build it principle;-and he has built it – and we have come in our hundreds to the East of England Showground. We haven’t come to network, or to gorge on corporate freebies, we’ve come to learn – and to learn from each other. That was Al’s vision in April and nothing has changed since – except the logistical challenge.
So let’s hear it for Al, who has got 300 people to sign up to a day out of the office , in pursuit of better client outcomes.
I think we need to define what “better outcomes” means, and this is one of the areas where corporate advisers can do some learning.
We” start with abstractions such as “member” and move up the ladder of abstraction till a member is a “liability”.
Members of occupational pension schemes may be a balance sheet liability, but they are look, smell and talk like ordinary people.
Ordinary people differ – just look around you, we are one of the most diverse nations on earth. We have different aspirations, some of us live for adventure, some of us fear it. Some of us want to control our money, some want someone to manage it for them.
We are united in our common fear of old age but will meet its challenges in quite different ways. IFAs understand this diversity, many of us who work for sponsors and Trustees of DB schemes don’t.
I hope that the Great Pension Transfer Debate will have as a theme both the diversity of people wants and needs and the commonality of purpose we have to meet them. This dynamic of a common purpose but diversity of needs will I hope underpin today.
Which is why we have put together a program that brings together experts and experience from diverse backgrounds
Steve Webb and Gregg McClymont have each represented 70,000 voters from Thornbury and Yate near Bristol to Cumbernauld near Glasgow. Personally I wish they still did – thought Royal London and Aberdeen would disagree!
They became Minister and Shadow Pension Minister at what we knew at the time would be a parliament of revival of UK pensions.
The reformed state pension, the roll out of the first part of auto-enrolment and the introduction of the pension freedoms happened on their watch and though they have fiercely different views, I cannot remember a time when pensions and politics were more vivid and real than when they were locking horns!
Rory Percival is IFAs Regulator- or should I say former regulator- like Gregg and Steve he has lost little in translation. There can be no doubt that it is the FCA who are the kingmakers and executioners.
Rory will today give us an insight into the FCA’s mindset. For many in this room , the FCA are perceived as part of the problem; I think those of us who interact more with the Pensions Regulator will bing a different perspective. Frustrating as Regulators are , we must work with them and not against them.
John Ralfe is unashamedly a corporate adviser- though I’m happy to say our firm works with him in his capacity as a DB scheme trustee. John has that rare capacity to express his views succinctly, twitter is his natural habitat. I don’t agree with him most of the time but that brings me to the second dynamic of this event.
There is a fundamental disagreements between the “experts” as to whether letting people leave defined benefit schemes is a good thing for trustees and scheme sponsors.
John has historically been on the side of de-risking. Schemes should feel happy to lose liabilities (members) . Expect the contrary view to be held by actuaries in the room, two of whom are speaking.
Alan Smith is a Scheme Actuary, meaning he advises trustees on funding levels and funding rates. First Actuarial are in the business of managing schemes out over time.
The other actuary speaking is Michelle Cracknell, CEO of The Pension Advice Service. Michelle has the distinction of also knowing life as a registered IFA. Michelle will be speaking on the public perception of IFAs
And that brings us nicely to the third dynamic of the day. I will frame this simply with a question
“are transfers advised or sold?”
I am sure that Michelle will explore how the public reacts to IFA behaviour
The IFA’s view
So much for the institutional experts. Who will be looking at IFA behaviour? Michelle may be sitting on both sides of the fence but Abraham Okusanya is very much a practicing IFA.
His job is to find a sustainable withdrawal rate on drawdown and that means establishing an optimal investment strategy to take into account the diversity of people’s wants and needs.
Following Abraham will be Gregg Davies who will be looking at the behavioural aspects of client decision making. While Abraham is studying numbers, Gregg studies the diverse traits of human behaviour, to help clients make optimal choices. Al tells me he is particularly looking forward to hearing Gregg, I take him at his word.
Finally, we have three practicing IFAs sitting on a panel, due to sickness, we are re-arranging this panel but it’ll include offshore specialist Eugene Neagu and IFA guru Gill Cardy.
Our aim in putting together the IFA speaker line-up was to focus on the final dynamic of the day, again summed up in a simple question “are IFAs liable for the outcomes of their advice”.
Critical to this debate is the phrase “duty of care”, to what extent do IFAs have a duty of care for the client’s outcome or is the advice stand-alone?
There are a number of further questions arising out of this fundamental question, most of them surrounding the management of the proceeds, but also issues to tax, inheritance and of course cashflow analysis.
For me, as Chair, this is the most interesting part of the day. I am now an observer not a practitioner, but have been an IFA in the eighties and nineties and know instinctively the conflicts that arise in managing your own practice.
How IFAs deal with these conflicts is perhaps the most interesting aspect of a very interesting day.
There are still a few places available for the day – if you would like to come here is the link