Blog: Are enough advisers DB transfer qualified?

The number of advisers with DB transfer qualifications is rising, but it may not be enough to keep pace with demand.

Defined benefit transfers are here to stay.

That much at least is agreed, even as advisers and the regulator fight over how to ensure they are suitable.

But are there enough qualified advisers out there to deal with the boom in demand?

Money Marketing went to the Personal Finance Society for the last ten years’ worth of data on how many financial advisers were qualified to provide pension transfer advice (i.e. those that hold either G60 pensions or AF3 pension planning certifications.)

Back in 2007, there were 5,175 financial advisers qualified to advise on DB transfers. In 2017, that number is now at 8,347: a 61 per cent increase.

An extra 1,000 advisers have joined the ranks of the DB qualified since 2014 alone.

On the face of it, this looks good for those praying that advisers are not so overburdened with transfer requests that standards slip.

But remember: The Pensions Regulator estimates that around 80,000 DB transfers were conducted in the year to March 2017.

That is 10 DB transfers per financial adviser per year, then. That could sound like too many, depending on how much work you thought was needed to make sure a recommendation was suitable.

Or indeed, too few if you were convinced that the world has shifted irrevocably since the freedoms and DB transfers are often the best option.

Crucially, though, there are another 7,000 pension transfer specialists who hold the relevant qualifications, but do not hold statements of professional standing with the PFS that need to be thrown into the mix.

This group is showing a similar growth rate to those of your regulated IFAs, but numbers are increasing marginally slower (see above chart).

UK advisers see biggest increase in DB transfer demand

While these could take up the slack for IFAs trying to stay up to date on their transfer workloads, we have seen the FCA take aim at third-party providers of transfer value reports and other pension transfer services in recent months, resulting in several agreements to cease firm’s permissions, so they may not be the panacea for efficient case handling.

Consumer crunch-time

Either way, a wider look at the numbers suggests demand still outstrips supply.  Though there is no clear trend showing either the number of SPS holding IFAs or pension transfer specialists qualified to conduct pension transfers slowing down, the rate of growth does not appear to be keeping pace with so many clients calling for a DB transfer.

Providers such as Xafinity say they’ve seen DB transfer volumes increase by 166 per cent year on year in the first quarter of 2017.

Comparatively, the growth rate in the number of advisers with transfer qualifications last year dropped from 5.9 per cent to 3.6 per cent (the high was 6.3 per cent in 2011 and 2012).

The growth rate in the number of non-SPS holding pension transfer specialists was 2.8 per cent, down from 3.3 per cent in 2015.

The top of the market

So have we nearly reached peak qualifications? Are we simply running out of bodies to get trained up to do DB transfer work?

PFS chief executive Keith Richards says greater certainty from the FCA will help more advisers into the market and help existing advisers expand their own service.

Richards says: “While the number of qualified pension transfer specialists has been increasing in recent years, this has not necessarily resulted in a corresponding increase in the capacity to service the growing market.

“Since the introduction of pension freedoms, many financial advisers have been reluctant to action pension transfer requests, particularly in cases where there is a fear that an insistent client request could result in retrospective retribution.”

“That is why the FCA’s recent proposals are so important. The proposals offer much needed clarification to advisers, and by introducing more stringency, help to allay any concerns around the potential for future action being taken against the adviser. This should result in an increased capacity for advisers to service the pension transfer market.”

If the demand for DB transfers keeps ballooning while this capacity increase does not happen among qualified advisers, we may be in for a demand crunch in a few years’ time.

Justin Cash is news editor at Money Marketing. You can follow him on Twitter @Justin_Cash_1



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. The chances of a demand crunch remain high. I, along with many other G60-qualified individuals, will continue to give this sector a wide berth so long as critical variables remain. With allegations of recidivism still ringing in our ears, PII apprehension and legislative uncertainty (a future government`s dislike of pension freedoms, anyone?), prudent business planning would suggest this remains an area to be avoided.

  2. I (and I am sure Keith Richards too) was disappointed to see that the learning material for the much vaunted AF7 Pension Transfer exam will not now be available until August – for an October Exam sitting! Doesn’t leave long to cram in the 100 hours expected study time does it, Keith?

  3. 8000 qualified doesnt mean 8000 with DB permission. We have 2 AF3 qualified advisers but we keep well clear as we dont want to a part of the next PPI scandal

  4. The comments on here demonstrate a complete lack of understanding of the subject.

    Dodging giving advice in this area is potentially negligent also.

    The fact defined benefit pension transfer advice is time consuming and complex and carries higher risks is a fact of life.

    Look up Threesixty Service’s Phil Young excellent article in Money Marketing 18th July 2016 “DB transfers should be the best example of financial planning”.

    Really know your client, follow the suggested planning and advice process there and you should not go wrong.

    The depth and complexity of the subject will be well beyond the skill set of many. No shame in that. That’s fair enough. The CII G60 exam sitting I took saw 77% fail. Setting the qualification and supervision bar high helps to control the quality of advice in this area. We don’t want to see the pensions reviews of the 1990s repeated.

    The fact is many consumers with DB schemes now seek advice with regard to ALL of their pension options. £10,000 for life indexed that dies when you die or a flexible pension pot of £400k to £600k? Duck it as you may, but these questions still need expert answers.

    • Ian, all IFAs dodge giving advice or providing services to some extent. For example, that might be on DB transfers, long term care, direct equity and bond investment, DFM, physical property, etc. None of which, interestingly, prevent them from calling themselves ‘independent’.

      Funny old world…

  5. Having the qualification does not make you competent. I would be very concerned about 1,000 newly ‘qualified’ advisers rushing out and giving DB transfer advice.

    I’m G60 qualified (very early days), have given, and overseen, advice on DB transfers for over 25 years. The standards vary enormously. The FCA should be worried. Which means firms should be worried.

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