We kicked off Powwow South West on 25 May 2017, setting up camp at Aviva’s offices in Bristol, where we welcomed paraplanners from all over the local area.
The topics we covered at the Powwow were voted for by the paraplanners attending (aka Powwowers), and the main topics of choice were:
- Defined Benefit Pension Transfers
- Handy Hints & Tips
As we expected, although we started off covering these areas, discussions quickly lead to other areas, all of which is summarised below.
Defined Benefit Pension Transfers
As these are high-risk transfers, it was agreed that not many of us are used to dealing with these on a regular basis, but we did agree that when dealing with a DB transfer case, either an expert should assist or the TVAS should at least be outsourced to a specialist company.
When outsourcing is not used, Selectapension is one of the providers Powwowers have used to create a TVAS. They offer webinars which can assist in using the software and those that had previously taken part in these confirmed how useful they had been. They take place monthly and can be booked here.
When completing your own TVAS, getting information from the scheme can be difficult as well as understanding any changes which have been “grandfathered” in for longstanding members. Where a helpline to the scheme is available, it is often better to use this rather than email as turnaround times of around a month can be expected by email. Always get several LOAs signed as the scheme will need one to speak to the IFA and an outsourced TVAS provider may also need one.
Scottish Widows offer useful checklists here as well as a master class video which has been found useful in the past.
Common problems are found with the guarantee date on the CETV, with clients or Advisers receiving the CETV and not acting on it straight away. Therefore it is sensible to control the request for a CETV and start the process of a TVAS as soon as possible. Many schemes will either charge for the second request within a year or simply not provide one.
As DB transfers are high-risk business, it is important to focus on the objectives of the client and the reasons for them transferring. The starting point should be for them not to transfer.
If the reason for transfer is for death benefits, obtaining a whole of life assurance quote should be considered and presented to the client as an alternative option. This will also provide evidence on the file that other options have been considered prior to transfer.
It is also important to consider the client’s attitude and experience of investment risk as the client must be able to tolerate a certain level of investment risk to make a transfer suitable.
Many firms use cash flow forecasting as a starting point for considering whether a DB transfer should be considered. This will provide one of three scenarios:
- Client can meet their needs by transferring
- Client can meet their needs by retaining the DB pension
- Client can meet their needs by either method
This will either assist in providing justification for the transfer or show that a lot of further justification would be required.
We considered how different firms charge for DB transfer advice, with some charging a high initial for cash flow forecasting and the TVAS, and then a separate implementation fee, and others charging an all-in fee ranging from £5-10k to a percentage of the transfer value.
A recent article by Les Cameron in Professional Paraplanner was referenced as a great case study of the coverage a DB member can expect through PPF should their scheme fail. If the guaranteed pension is way in excess of the guarantee available through PPF, this could provide justification to transfer as the downside on this basis could outweigh the potential downside if invested in a DC scheme.
We discussed the importance of the client buying into ongoing advice when considering a DB transfer. Without this view, the risk of the client’s invested pension funds not meeting their objectives is much greater and would bear too much risk to consider a transfer.
Our discussions led onto our general communications with advisers and how areas such as objectives are not necessarily clear. We also considered the potential changes that could occur in the future in regards to recording meetings or all client adviser communications, and the implications this could have for the client adviser relationship going forward.
We went on to discuss that although it is not easy, challenging the adviser about a client’s objectives, circumstances, or the recommendations being made, should be something that a Paraplanner is able to do. The culture of challenge is something that Rory Percival has identified as a key part of making a firm current and relevant.
Handy hints and tips
Powwowers discussed general pointers which could help us in our day to day tasks, and the following highlights were identified:
Suitability letters – we discussed the “Executive Summary” at the beginning of most Paraplanners’ suitability letters, and whether this was best suited to a covering letter to summarise or removing the word “Executive”!
Using tables, pictures and diagrams within the report were also discussed as a good way to engage the reader. Many firms are now moving to including only client information within the report, and everything else in an appendix to increase readability and engagement from the client.
Microsoft offers a Flesch-Kincaid facility which scans a document assessing the readability of the document – a handy tool when writing letters or reports.
Taking the analysis of existing arrangements, and putting this information in a separate report which would be included as an appendix, was also identified as a way to reduce the length of a report.
Paperless Office – with technology now supporting everything we do, many offices have moved to sending reports to clients by email which can reduce printing costs and the effect on the environment. The use of Docusign allows clients to sign to confirm they have received and read documents being sent to them, and PDF stichers such as PDF Merge can allow you to combine T&C documents with your report to send to the client.
We also talked about how The Big Tent provides paraplanners with a facility to discuss common issues and review previous debates which can generally help in day to day paraplanning.