Despite high profile media coverage of poor advice to some members of the British Steel pension scheme, over half (55%) of advisers say demand from individuals wishing to explore their options remains high. In fact the research findings reveal that only 25% of advisers think most of those interested in transferring have already taken advice, further reinforcing the fact that significant demand remains.
The supply of advice is being hampered through regulatory complexity and the inability of many firms to obtain affordable Professional Indemnity cover. As a result, 75% of advisers conclude that the DB advice market is not working as effectively as it could with the supply of advice not enough to meet consumer demand.
Only a third (36%) of advisers who provide DB advice believe there are sufficient numbers of advisers to meet the current demand.
Seven in ten (69%) advisers believe that FCA regulations err too far on not recommending transfers. Last week the FCA said it was ‘deeply concerning and disappointing’ to see 69% of those advised on DB being recommended to transfer.
Six in ten (58%) believe the market is also being harmed by the lack of an effective triage facility, with advisers unable to have a personalised discussion with a client to determine if it’s appropriate to progress to full advice. The FCA’s publication last week did highlight that once allowance is made for those who received triage, the proportion recommended to transfer fell to 55%, indicating a beneficial role for triage.
Steven Cameron, Pensions Director at Aegon, commented: “Whilst transfers volumes have declined from a peak at the beginning of last year, demand for such advice remains high and continues to outstrip supply.
“Transferring is not the right way forward for the majority of people with DB pensions, but the market is not working effectively if people are unable to obtain advice to even explore their options.
“This means it’s important to resolve the current issues including PI difficulties which are discouraging advisers who are active in this market from continuing to offer DB advice.
“Aegon is particularly supportive of introducing a form of triage that would allow advisers to offer individuals some initial help to assess whether it is worth progressing to advice on transferring.
“Unless the current log jam is eased we’ll be left with an increasing number of people whose advice needs can’t be met because of a lack of supply, leaving them unable to explore their options, a situation which is in no one’s interest.”
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