Towry has been told it was wrong to tell an 81-year-old cautious investor to transfer his Sipp.
In November 2014 the client, referred to as Mr T, was told to transfer his plan to a Towry Sipp using its discretionary investment management service.
At the time he received this advice he was drawing less than maximum income and had a pension value of around £70,000.
The advice from Towry was that his funds would benefit from being proactively managed with potential to beat inflation over a 10 to 12-year period.
But in a final decision, ombudsman Terry Connor said Towry should have considered what was appropriate for him at the time they provided advice and focused on Mr T’s specific circumstances.
He ruled given Mr T’s age, his cautious approach and his concern to maintain his income from the pension fund it was not suitable advice for him to incur additional costs by transferring to a new Sipp to get a discretionary investment management service.
Mr Connor said telling Mr T to keep his existing Sipp and building a model portfolio with an advisory service would have been suitable advice.
He said: “Mr T was elderly, a cautious investor and with a modest pension fund. The impact of any additional costs would likely have a negative effect on the transferred funds and the fund going forward.
“In my view, advice which incurred additional costs to his plan had to be fully justified with the fund having a reasonable opportunity to recover those additional costs and with increased growth to justify the transfer.
“In my view, the annual return quoted, averaging 6 per cent, would have required a higher level of risk than the cautious risk Mr T was willing to take.
“There would be a potentially limited opportunity for the fund to recover from any fluctuations in value.”
The transfer completed in January 2015 and in May 2015 Towry told Mr T his pension was being transferred to another Sipp provider following Towry’s review of the services it provided to its clients.
Shortly after that second transfer, on advice from another adviser, Mr T transferred his plan from Towry.
Towry argued the advice it gave was suitable as Mr T was a cautious investor, who always worried about his money running out but didn’t want to pay for a lifetime financial plan which would have helped quantify how long his assets would last.
The intermediary argued Mr T wanted to achieve an average return of 6 per cent a year to beat inflation.
Towry has been told to compare the performance of Mr T’s investment with that of the FTSE WMA Stock Market Income Total Return index and pay the difference between fair value and actual value of the investment.
