Tideway Investment Group head of private clients James Baxter suggested the press make defined benefit (DB) transfer advisers look bad, likening the media's portrayal of those giving advice on DB transfers to drug dealers.
Speaking at the Personal Finance Society (PFS) Future Proof conference in Birmingham on Thursday (28 November), Baxter emphasised the economic benefit for clients who go through with DB transfers, but said the way the media portrays advisers in the DB world gives them a bad name.
He said: "Unfortunately, the way [DB transfers] gets told, when the press gets hold of it, is that [people who advise on transfers] are like drug dealers."
Baxter told delegates they should make sure to differentiate DB transfers with self-invested personal pensions (SIPPs) and unregulated collective investment schemes (UCIS) and to then make this clear with their clients.
This is because most pension claims that are made at the moment involve SIPPs and UCIS, he argued, but people do not separate those from DB transfers. The head of private clients said most of the pension claims going on now are regarding "hotels in Cape Verde and dodgy trustees".
Baxter said SIPP and UCIS claims, along with the British Steel saga, is where the "problem" of people being wary of DB transfers started, as those were the stories that hit the headlines. The Financial Services Compensation Scheme (FSCS) paid out £123m for claims relating to SIPPs in its 2018/19 financial year - up £11m from the previous period. The lifeboat fund has consistently cited the growing number of claims relating to defined benefit (DB) pension transfers as the main reason for the its rising levies.
Instead of focusing on SIPP claims and the like, the Tideway head of private clients told delegates in Birmingham to keep pushing the "positive message" that DB transfers are beneficial, and added advisers should ensure their clients understand the economic benefits of DB transfers.
His comments follow the FCA earlier this year saying it was "concerned and disappointed", pointing to the high number of clients recommended to transfer out. The regulator has since begun to crack down on DB transfers. FCA executive director of supervision, wholesale and specialists Megan Butler said at the time: "We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable."
Baxter said he had seen a "cohort of people" who transferred out of their DB schemes in 2012 and all now have portfolios generating income that is more than the pensions they gave up. Baxter said to therefore to show customers "the maths" to ensure they understand how beneficial a DB transfer would be.
"It would be good if we could all start singing from the same hymn sheet," he added. "Explain to people that [DB transfers] is economically proactive, not negative."
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