The high cost of failing to review pensions

The FSA’s review of pension transfers crops up in an article in FTAdviser today. Although this has been covered elsewhere in recent press reports, I’ve drawn this particular article to your attention because of the discussion about regular pension reviews conducted by advisers with their clients.

David Trenner, technical director of Glasgow-based IFA Intelligent Pensions says, “It is important you make sure that clients understand the importance of reviews. Clients love the idea of doing a transaction and then just leaving it for five years. If you have got a client who is not going to commit to reviews then there is an argument to say that they should not be in a product that needs reviews.”

I think that’s an excellent comment and I like to believe that the majority of advisers proactively seek to meet with clients regularly to discuss their pension provision. The trouble is that with lacklustre stock markets and dismal fund performance in specific sectors (e.g. property), it must be difficult to face a client where funds and retirement portfolios have dropped significantly.

But then the answer to that is quite simple and straightforward: it’s about managing client expectations - and that comes down to clear communications and a fundamental understanding of risk and reward. See:

FSA review highlights problem of unsuitable pensions advice (FTAdviser)

Finally, apologies to you if you tried to read the article I referred to in my comment yesterday. For some reason, the Citywire website struggled with the link which periodically failed. The publisher removed the original article (and along with it the comments that followed) and reloaded another. Unfortunately John Goddard’s comment was removed along with others although I don’t know why. The revised article and new comments are still worthy of a read though. See:

Darling to introduce 'health warnings' on mortgages and financial products (Citywire) (July 8th 2009)