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With transfer advice around defined benefit pensions remaining a controversial topic firms are finding it increasingly difficult to get adequate professional indemnity insurance an affordable cost. FT Adviser asked Bovill’s Neil Walkling to write a piece on the high demand for advice on whether to transfer out of defined benefit pension schemes.
“In July, research found that pension advisers who renewed their PI insurance policies in the previous six months saw their premiums rise on average by 21 per cent. This has led to some businesses pulling out of advising on DB transfers altogether.”
Based on our experience of independently assessing the quality of DB transfer advice, there are a number of questions advisers need to think about if they are to convince insurers that their advice process is not high risk.
- Can you prove you are not order-taking or providing formulaic advice to transfer out?
- Can you be sure the quality of your advice is as good as you think it is?
- Have you identified your target market for DB transfer advice?
- Do your suitability reports inspire confidence?
- How have you identified and managed conflicts of interest?
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