I believe it would be naïve of us as advisers not to expect some clients to be adverse to the implementation of the fee charging structure and as a result attempt to liberate their own pension funds, potentially leaving them in significant trouble once their savings ebb away.
Even those clients who value the input of an adviser on releasing their money will perhaps sign various letters and statements to document their intent and understanding.
As professional advisers we will of-course ensure we adhere to their wishes but there may now be an underlying fear of the wrath of the regulator should the rules be reversed further down the line.
As much as I despise the blame game that exists in today’s society it is viable and undeniable and in the event of a reverse in the law, scapegoats could well be sought out and we could well be wearing the bell.
Further rules
Along with the changes comes a further new rule; this one relating to defined benefit schemes.
FCA regulated, G60/AF3 qualified advisers will need to deliver pension transfer advice relating to occupational schemes.
No big deal here in the UK, as this is already a standard requirement, but let’s consider the options for clients living and working abroad?
The CII has already announced upcoming plans to launch a voluntary unit for advisers looking to improve upon their competence and potentially satisfy their CPD requirements in the process. This will be based around the changes to flexible drawdown.
However, with all the changes afoot isn’t it about time that our awarding bodies offer an international pensions unit?
The FCA want their own regulated firms and individuals to be involved in all DB transfer advice, on paper this is great, to clients this should be great.
That said, have they the experience and knowledge that an offshore adviser has after living and breathing the job in an offshore environment?
I am not talking qualification here per say, I am focusing on knowledge and experience, which as we know is incredibly important.
It’s in the delivery
When delivering pension and retirement advice, the international adviser must consider local taxation and currency issues, double taxation agreements, regulation matters within other jurisdictions, knowledge of the best offshore providers and products, investment options and personal residency implications.
Can a UK IFA say with confidence that they can do the same without concern?
International advisers
AF3, the highest pensions qualification offered by the CII, touches upon the QROPS structure and perhaps a couple of others, but is this enough, and does a UK based IFA have the right experience under their belt to properly advise a client who lives outside of Blighty?
The obvious answer in the short term would be for the UK IFA to work closely with an international adviser in order to offer the client the best possible advice on all fronts.
The problem would be that this could result in an additional layer of cost for the client in order to get the best and most compliant advice.
Can, and importantly will, a UK adviser offer advice to non-residents, particularly on DB schemes which will undoubtedly lead them to higher PI and even regulation costs with the addition of further scrutiny from the regulator? Or will these latest changes lead to the further alienation of clients?
In my opinion, having worked in the industry for over 25 years, it is time for the UK awarding bodies to address this knowledge gap and provide advisers with relevant international qualifications to ensure appropriate advice is given to any client’s living offshore.
By constantly and consistently improving the industry in which we work we can rest assured that clients worldwide make the most of their money.
