The Consumer Focus report issued today on the subject of personal pensions is timely.
Timely not because it tells us anything new at all, but because it is always important to remember that when a recommendation is made to transfer from one plan to another there are some very important points to be considered to ensure that the advice is suitable for the investor.
Indeed the Financial Services Authority (FSA) has carried out some important work in this area and identified four key areas that a competent adviser would consider in delivering such advice;
* the loss of any guarantees if a transfer takes place, such as loss of a guaranteed bonus rates on with profits plans or the loss of any guaranteed annuity rates available from the personal pension policy
* the cost of any transfer out as well as the cost of any new policy with particular reference to future charges ensuring that any additional costs are fully justified
* making sure that recommended investment funds are suitable in terms of the client’s attitude towards risk particularly if the degree of investment risk increased by the transfer
* and making sure that the client where appropriate is offered suitable reviews particularly where they are paying ongoing fees to their adviser.
So as I said earlier the Consumer Focus report tells us little new but that does not make it unworthy.
Very often we find clients with a collection of disparate plans, no cohesive investment strategy, and overpriced and under performing plans. What this report must not do is put people off reviewing their plans and where appropriate and suitable to do so transferring their plans.
