Appoint a Pension Transfer Specialist?
To enable you to offer advice on Pension Transfers,
which are those from Occupational Schemes, you need to have access to a Pension Transfer Specialist. This includes transfers from which include
Final Salary, Deferred Annuity, Money Purchase, SSAS, EPP and S32
There are basically three methods by which this is
- Appointing a Full Time Pension Transfer Specialist or employing someone
who has the appropriate qualifications to undertake this role as part of their
- Referring cases to another firm which specialises in this type of
- Obtaining the services of a Pension Transfer Specialist on a contract
There are of course merits and difficulties with
all three options. We must be clear at
outset that our preferred route is the final option and it is on this basis
which we have worked for the last seven or so years. In the last couple of years, we have added
the facility of offering the second option where suitable.
Appointing a Full Time Pension Transfer Specialist
The first option requires you to locate an
individual who has the necessary experience and qualifications to satisfy our
regulator the Financial Services Authority.
Additionally it means ensuring they remain up to date and also
supervising their work.
That individual then has a disproportionate power
over the company especially within a smaller firm, as they know that they must
be replaced and can demand a higher remuneration package. If such an individual is receiving work from
other colleagues, they can have difficulty ensuring work is up to satisfactory
standards as they do not have the power or position of the Compliance
team. This is especially difficult if
they are being passed cases by a supervisor or manager.
If the individual in question is also expected to
produce their own business, they may struggle to work efficiently on pension
transfer work which is less lucrative for them.
This may also mean they have insufficient cases to remain fully au fait
with changes in the market place. They
will not have the time to create formal structures and systems and so may work
in a more ad hoc manner.
If this individual leaves, invariably the firm
reviews the situation. We have found
over the years that new clients have turned to us when such a situation has
arisen and rarely reverted to the in house alternative.
Referring cases to another firm which specialises in this type of
This requires the initiating firm to pass across
client details and allow another firm to deal with this specific piece of work
for them. This may mean there is a lack
of impetus to complete work, which appears to result in delays in many
cases. This does frequently seem to mean
there is a need to chase through progress of cases.
It also means that the commission is paid to that
other firm which may then pay a proportion back to the introducing firm. That does affect cash flow for the
introducing firm. Additionally, certain
firms set the way the commission is to be generated and this may exclude
renewal commission for the introducing firm.
The actual level of commission can be significant.
Additionally the case has to be transferred back to
the originating firm at the end of the transaction, which involves further
paperwork and follow up with the client.
We also understand that some of our competitors are
less able to deal with variations in ceding scheme i.e. they can assist easily
with Final Salary or Defined Benefit cases, but have significantly more
difficulty with money purchase including SSAS, EPP etc. Furthermore, the costs quoted for such
situations appear to be extremely high.
This option does have the benefit of removing any
liability for the transfer advice, but that is at the expense of the control
with regard to the advice.
We have in recent years picked up several clients
who have previously used these alternatives and come to the conclusion they
prefer our methodology and working practices, which involve a clear and simple
charging structure which depends on the number of plans involved as against the
types of contract.
We do now offer this referral basis via one of our
long term clients, where our clients are unlikely to undertake sufficient cases
to make our preferred method viable financially due to the FSA fees
incurred. This referral option incurs a
higher the fee per case and requires additional paperwork completed by our adviser
client and their client as well as ourselves.
We have based our systems for this firm (HDIFA) on
those we use internally and so sub contract the actual pension transfer work to
HDC Limited. It means that whichever
route our client uses they receive the same high standard of service and
compliance with regulatory standards.
Obtaining the services of a Pension Transfer
Specialist on a contract basis.
This is our preferred system for working with our
adviser clients. This gives you the
access you need to the technical support you require both in relation to actual
transfers and also in respect of other more technical pension areas.
You only pay for the work undertaken on your behalf
by HDC Limited. If at any time you are
not satisfied you can walk away and appoint an alternative PTS or use one of
the other routes.
- Many of our clients have been concerned about the
- The one charge we cannot assist with
is the FSA adviser fee, which is imposed for adding Heather to the firm’s
consultant list. We understand that this
is in the region of £1,500 to £2,500 and appears to vary depending on the type
of firm and the permissions already granted.
This is the fixed cost, which means a certain number of cases need to be
processed in a year, to make the appointment financially viable.
- The other fear is the Professional
Indemnity Insurance Premium. Over the
years, the majority of our clients have confirmed that once their PI Insurers
have been provided with our detailed explanation of how we work and our PI
Insurance Certificate they make little or no extra charge for extending the
- Our fees are generally set on a fixed
basis, though we do negotiate hourly rate fees for certain more specialist
The application process is another
concern and over the years we have become very familiar with this. A detailed explanation of this process and
all the required documents are available on our website and we will assist you
with any concerns or clarifications required.
There are other competitors in the market place and
we recommend you look at some alternatives before making a final decision. That will enable you to consider who suits
your firm’s systems and mentality best. Our
industry is based entirely on trust and as such you need to be certain the
person you choose fits you and so is more likely to have a similar mentality
and understand your clients’ needs and wishes as you express them.
If you decide you do wish
to use us, we look forward to working with you.