The adviser group, led by Origen, wants to be able to offer a consistent advice service for scheme members looking to take transfers out of final salary schemes.
Origen has discussed the plan with the FSA which has given its approval to the principle of the idea. The names of the other firms in the discussions have not been revealed at this time.
The initiative comes as an increasing number of corporate intermediaries are adding final salary transfer solutions to their advice offerings, a move which is seen as putting a practice which has come in for criticism in the past into the mainstream of financial advice. Mercer says it is now offering advice on transfers after a review of the issue carried out three months ago, and Hargreaves Lansdown is also now bringing transfer advice into its range of solutions.
The demand for large numbers of IFAs to give individual advice to departing scheme members is likely to grow as schemes of increasing size look to offload their liabilities. Mercer UK chief executive Alan Whalley says that several FTSE100 companies are seriously considering entering the transfer game, although to date none are yet to do so. Whalley says were a 50,000 member scheme to offer transfers, most IFAs would be swamped because they do not have sufficient advisers to give individual advice to everyone taking up the offer.
Alexander Forbes Financial Services is not a member of the consortium. It says it would not want to join because it believes it can deal with schemes with tens of thousands of members itself.
Origen managing director Stephen Greenstreet says: “Origen is involved in providing advice on enhanced transfer values and pension liabilities. We have delivered a number of projects including one scheme involving 11,000 members. Against this background it is recognised that even the large IFA firms could not handle very large ETV/pension liability projects; in consequence we have been in discussion with other IFA firms to see if there is an appetite to join forces to deliver a ‘joined up’ service in this regard. There are certainly several firms who have agreed to pursue this opportunity although as yet we have not done this.”
David Marlow, marketing director of AFFS says: “We think we have got the capability to run individual advice for very large schemes, even running into tens of thousands of members, although for schemes of this size advice would be staggered.”
Whalley says: “Initially we were one of the firms who said this is not something that we really want to get involved in, but the practice has now evolved to a stage where, while the regulator has stopped short of saying it is acceptable, it is prepared to accept that this is a reasonable thing to do, provided that people know all of the facts, and have the opportunity to get advice. It will not be long before FTSE 100 companies are doing this,” he says.