DB transfer specialist looks to cash in on business from smaller firms

A pension transfer specialist which came under scrutiny for its outsourcing model is now making a bid for the transfer business of advice firms unwilling to take the risk on themselves.

Clients would generally be referred to Tideway’s defined benefit to defined contribution pension transfer service before returning to the referring advice firm for follow-up advice on how to invest their money.

However, Tideway was one of the firms recently visited by the FCA amid its multi-firm supervisory work on DB pension transfers and made changes to its process last year. Tideway moved to only carry out transfers if the client intends to stay with the company for ongoing investment advice through its own discretionary fund manager arm.

It is now pitching as a low-cost competitor among firms putting together ongoing drawdown solutions for pension transfer clients.

“We want to help smaller wealth managers and advisers participate in this market,” says managing partner James Baxter.

“We believe that many of them can deliver more suitable, lower cost and more efficient ongoing drawdown solutions for clients post-transfer than these big players,” he says.

In a re-launch of its pension transfer service, Tideway states its managed investment fund range is targeted at generating income yields in excess of inflation after fees.

Baxter also says Tideway will now offer an advised model portfolio solution.

He says: “We understand the shift away from outsourced DFM solution being taken by many advisers to lower the total costs of their drawdown investment solutions. Whilst we offer a DFM solution we are also happy to work with advisers who want to create low turnover, low-cost liability-driven portfolios matched to a client’s drawdown objectives on an advisory basis.”

Tideway says it sees a continuing high demand for pension transfer services and is pitching to advice firms reluctant or unable to offer them themselves.

“[The service is for] professional advisers wanting to engage in the DB transfer arena – but who may not have the regulatory risk appetite, necessary permissions or professional indemnity protection to cover this complex advice activity,” it states.

The regulator has previously expressed concerns about what it called a “commoditised” approach to pension transfers.

In January this year the FCA sent a letter to advisers with pension transfer permissions.

The regulator said: “We are aware that firms offering a commoditised approach to pension transfer advice are more likely to give unsuitable advice or fail to recommend a suitable destination fund. By a commoditised approach, we mean an approach which does not entail a complete analysis of a client’s personal circumstances or needs and may include some generic assumptions in order to arrive at a personal recommendation.

“Commoditised business models do not adequately focus on the clients’ needs and personal circumstances and can result in a high incidence of unsuitable advice to transfer.”

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