PA360 Digital: 'DB suitability reports should be 90% personalised' - Percival

Percival, who now has his own consultancy firm, said suitability reports were a "key area of failings" when it came to DB transfers.

He said a suitability report should be highly personalised to individual clients and the more generic information about the transfer process should be given to clients elsewhere.

"It's all about personalisation. My view is you can probably get around 90%+ of a suitability report to be personalised to individual clients," he said.

"Now you might think that seems ridiculous, you might think 'there's lots of other stuff we need to tell the client', but here's my tip: if something is generic, don't put it in the suitability report, put it in the appendix, or better still put it in a separate guide for the client.

"Keep the suitability report personalised to the individual - that's what the FCA and the Ombudsman is looking for."

Needs must

Elsewhere, Percival reminded advisers not to work as facilitators for clients' wants when it came to DB transfers, but rather to place prominence on their needs - despite some advisers arguing doing so flies in the face of pension freedoms.

"In simple terms, needs must override wants. The client might want to transfer for flexibility, death benefits, and so on, but you need to ensure their needs are addressed first," said Percival.     

Watch Percival's PA360 Digital session on demand

He added that client needs centred on securing an income in retirement, and that retirement income was the "bedrock" of a client's retirement planning. Then, when their income needs were met, the can adviser start considering clients' wants.

The former FCA man continued: "Once the client's needs have been addressed, then yes, if they've got wants around wanting to leave assets to their children, for example, then yes, you can consider that a reason for transferring."

He said transferring for death benefits and/or flexibility were "maybe" areas when it came to suitability, depending on the client's needs being met and their financial situation. 

He added: "The client might want to do things, you need to give them that sense check and give them advice that's suitable in their best interest.

"If you think that's paternalistic then yes it is, if you think that conflicts with the pension freedoms, freedom of choice concept, then yes it does. If that's your view, fine, keep it, put it in a biscuit tin, but stick to the FCA rules to ensure you give suitable advice and stick to the client's best interests."

Percival's PA360 Digital session is available to watch now on demand. Follow this link to sign up and watch the session.

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