With regard to the article (ftadviser.com 17 June) about Royal London calling for a review of advice rules to enable a ‘cost-effective’ advice option for savers with modest pension pots, regulated advice still requires evidencing suitability for the client regardless of the size of the pension pot authorised.
That includes advising on the advantages and disadvantages of doing nothing/deferring, taking tax-free cash, buying an annuity flexi access drawdown and uncrystallised funds pension lump sum.
To do this the adviser has to “know their customer”. Personalising the recommendation based on the most appropriate advice to the client is nothing like as easy as some people – politicians, regulators, CEOs of life assurance companies – try to make out.
It is expensive to deliver this. Imagine for small pot providers a “modest” fee of £150 was charged for this so-called cost-effective advice. My firm would have to provide advice to about 300 people just to cover the cost of regulatory fees and our professional indemnity insurance premium.
Forget profit – trying to provide cost-effective advice for the small-pot owner would put us out of business
Anyhow, I thought that Pension Wise was the solution for small-pot owners not full-on authorised and regulated advice.
Nick Bamford
Chartered Financial Planner,
Informed Choice,
Cranleigh, Surrey
