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Profile: Mowatt Financial Planning director on why partial DB transfers need to happen

Mowatt Financial Planning director Will Mowatt has followed the debate on partial defined benefit transfers with interest. The former actuary turned IFA thinks having the option available is “such an obvious thing to do” and that DB schemes should not have the ability to decide for themselves whether to offer them.

He says: “It needs to be made to happen. People want flexibility in early retirement yet DB schemes are not geared towards that. They provide a steady amount of income forever, with the same amount at age 60 as 85, but income needs differ over time. Most people have a need for a guaranteed income but don’t always need all of that. Part of a DB pension would provide it but not many schemes allow it.”

Webb: Partial DB transfers would reduce risks for advisers

Mowatt admits to finding the reasons put forward by contributors to a recent Money Marketing article on what is preventing partial transfers as “lame”.

“If one scheme can do it, they all can,” he says. “They would just need to work out on what basis. Some say there’s no demand for partial transfers but there won’t be if people don’t know there is the option.”

This observation is also reflected in the way Mowatt categorises the two services he offers to clients. Visitors to the Mowatt Financial Planning website are offered the choice between independent financial advice and financial planning, which Mowatt accepts is an unusual marketing strategy.

“I’ve tried to differentiate myself with those options but some planning firms cover both. For me, the distinction is that planners take a holistic view and provide broader financial planning advice, while advice is more specialist. For example, a client who wants to set up a pension but isn’t interested in holistic financial planning at that stage would need advice. They have an immediate financial need they want to fill. Or a client contributing to a pension might have an annual allowance problem and would need help in this specific area.”

Mowatt points out that some clients know exactly what issues they need help with, while others do not until they have had a conversation with an adviser. His distinction between advice and planning means his business appeals to both types and makes it clear the firm can help in either case.

Mowatt is no stranger to the subtleties of marketing; prior to setting up Mowatt Financial Planning in 2009, his last job title was director of marketing at Norwich Union. He had started his career in the pensions department at Scottish Widows in 1983 and qualified as an actuary, then gradually moved into product development and marketing – initially with General Accident in 1990.

General Accident gave him the chance to sample life in France in 1993, but the firm’s French subsidiary had nowhere near the presence the brand had here and Mowatt returned to the UK business in 1996 as European marketing manager.

Three quarters back new partial DB transfer rules

General Accident merged with Commercial Union in 1998 to become CGU, where Mowatt became product development manager. In 2000, the firm merged with Norwich Union which was rebranded Aviva in 2009, the year Mowatt decided to start his own IFA business.

“A few things came together at this time. I’ve got a real interest in the retirement market; I saw there was a need for advice in that area and I wanted to start my own business. We knew the RDR was coming and I saw that as meaning I could start with a clean sheet of paper. I could start with a fee-based model. When I left Norwich Union I had the time to do the exams. Having qualified as an actuary I had some credits but I still had to build up my qualifications,” he says.

For the first six years, Mowatt’s business was based at home and he would go out to meet clients. However, 18 months ago he realised he was able to take on a paraplanner, so he moved into an office and hired someone in that role.

“I wanted someone local and had some great candidates but my paraplanner didn’t come from the typical paraplanner background; he was the deputy head at the local secondary school who was looking for a career change.”

The firm got so busy at the start of 2017 that Mowatt brought in a former colleague as another adviser. Does he have any plans to expand the business further?

“We might bring someone in to the back office and there may well be opportunities to grow the business through acquisition,” he says.

FCA director: ‘We have made it clear contingent charging is higher risk’

Mowatt is happy with the direction the advice industry has taken in recent years, pointing to improvements in the quality of advice and consistency of approach since the RDR. However, he believes more work needs to be done on charges.

“I charge a fixed fee for initial advice and a percentage on ongoing advice for bigger cases, and I cap those fees. I’m not saying my model is perfect but I’m uncomfortable with charging an initial percentage on larger transactions. I don’t think we can justify this as an industry; I think it will come back to bite us,” he says.

He is also wary of contingent charging for business such as DB transfers as he feels it is best to eliminate any potential conflicts of interest. “The initial fee covers the groundwork if the client goes ahead with the transfer or not,” he says.

Mowatt also highlights the generation of paperwork to meet regulatory requirements as a potential source of confusion for clients.

“Pension freedoms have moved at a fast pace and documentation has not caught up with it,” says Mowatt. “AJ Bell chief executive Andy Bell wanted to do something about the amount of paperwork clients get but he had no joy. It’s probably because the FCA has bigger fish to fry.”

Five questions 

What is the best bit of advice you’ve received in your career? 

Be true to yourself. 

What keeps you awake at night? 

Finding the optimal decumulation strategy. There’s a bit of noise about how you can run down a pension fund but there’s no golden bullet. 

What has had the most significant impact on financial advice in the last year? 

Pension freedoms and DB transfers. 

If I was in charge of the FCA for a day I would…? 

Make it clear that advisers have an important role in helping individuals plan their financial futures. The FCA workshops are really helpful in establishing good practice – we need to share good practice, then go out and do it. 

Any advice for new advisers? 

Play the long game. Have a clear proposition and stick to it.

 

CV 

2009-present: Director, Mowatt Financial Planning 

2000-2008: Head of protection and retirement, then director of marketing, Norwich Union 

1998-2000: Product development manager, CGU 

1990-1998: Various roles including product development manager, European marketing manager and chief actuary at French subsidiary, General Accident 

1983-1990: Actuary, Scottish Widows 

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