Three out of four advisers say the defined benefit advice market is not working effectively or efficiently, with consumer demand for advice far outstripping current market supply.
The survey, by Aegon, found the vast majority of advisers working in this area (89 per cent) say there are still many individuals who would benefit from advice about their DB pension options.
Despite high profile media coverage of poor advice to some members of the British Steel pension scheme, over half (55 per cent) of advisers say demand from individuals wishing to explore their options remains high. In fact the research findings reveal that only 25 per cent of advisers think most of those interested in transferring a DB workplace pension have already taken advice – indicating significant pent up demand for advice services.
Aegon says that the supply of advice is being hampered through regulatory complexity and the inability of many firms to obtain affordable professional indemnity cover.
It’s survey found only a third (36 per cent) of advisers who provide DB advice believe there are sufficient numbers of advisers to meet the current demand, while seven in 10 advisers (69 per cent) believe that FCA regulations err too far on not recommending transfers.
Last week the FCA said it was ‘deeply concerning and disappointing’ to see 69 per cent of those advised on DB pensions being recommended to transfer.
Furthermore the Aegon research found six in 10 advisers (58 per cent) believe the market is also being harmed by the lack of an effective triage facility, with advisers unable to have a personalised discussion with a client to determine if it’s appropriate to progress to full advice.
Aegon’s pensions director Steven Cameron says: “Whilst transfers volumes have declined from a peak at the beginning of last year, demand for such advice remains high and continues to outstrip supply.
“Transferring is not the right way forward for the majority of people with DB pensions, but the market is not working effectively if people are unable to obtain advice to even explore their options.
“This means it’s important to resolve the current issues including PI difficulties which are discouraging advisers who are active in this market from continuing to offer DB advice.”
He adds: “Aegon is particularly supportive of introducing a form of triage that would allow advisers to offer individuals some initial help to assess whether it is worth progressing to advice on transferring.
“Unless the current log jam is eased we’ll be left with an increasing number of people whose advice needs can’t be met because of a lack of supply, leaving them unable to explore their options, a situation which is in no one’s interest.”