For the last 40 years, Perth-based Douglas Baillie and his firm have been offering specialist pension advice but now the IFA has firmly embraced technology in offering web-based pension switching solutions through its new subsidiary, Thepensionspecialist.com.
Baillie says he was prompted to set up the new business due to the number of technical pensions queries he was receiving.
“We have been pension specialists for as long as I can remember, which is quite a while. We had a number of people coming to us with pension problems, even though they had IFAs, and it turns out their IFAs were not able to give the level of advice that we were able to give them. That is what really started it all for us.”
Five years ago, the IFA launched G60.com, which offered referral services to IFAs on a limited basis. Baillie says his firm received so much business it had to reconsider how it was organised.
He says: “At that time, the business was not web-based, it was just face-to-face but we found that to really do volumes, you have to be electronic. So we went off to develop an electronic systems design. It was very difficult, it took us about three years.”
The firm’s perseverance paid off and it was able to launch a web-based service with a robust compliance process. “We have an incredibly strict way of doing things but every case produces an FSA-proof audit trail. Everything we do is compliance, compliance, compliance.”
The firm initially launched its web-based service direct to consumers through another Baillie-owned website, Comparemypension.com, but last month saw the launch of the IFA referral services Thepensionspecialist.com. Baillie says one benefit of an electronic system is that Thepensionspecialist.com is able to handle any size of pension pot.
He says: “We did not design the system to be able to handle smaller pots, we started at looking at only larger transactions in the beginning. But once we developed the systems, we found that we could han-dle any size of transaction because the economics of doing things electronically are much more effective.”
Baillie says an electronic service is something that clients now expect. “People are not surprised by the web-based solutions we offer. They have become accustomed to dealing online and they assume that should apply to pension plans as well.”
But as fast as the IFA’s systems have become and as willing as clients are to use them, Baillie admits that pension providers remain a stumbling block on the journey towards offering a smoother, faster pension transfer proposition.
He says: “We have effectively created a new distribution channel but insurance companies are slow in the way they do things. They think it will take a long time and cost millions. In fact, you can do it now and it would cost very little. We are looking for online submission of client detail, online illustrations and online pre-population of application forms, where we give them the download and they produce the documents. The providers’ systems are holding us back somewhat but it is improving.”
Baillie says IFA remun-eration for referrals are based on a sliding scale, increasing depending on the size of the case.
Baillie says: “We give a lot of latitude to the introducer and we offer a decreasing share of the remuneration while others who report to do what we do take an increasing share. It evolved out of the web-based system and it was something that IFAs were asking for and it is working.”
Baillie says it is important that financial advisers do not ignore pension switching just because it is currently deemed a risky transaction and says fear of the FSA may lead to a future where clients who lost out are finding that they should have been switched today.
He says: “There is a real fear that IFAs are being put off transfers due to the FSA’s focus – it’s the sin of omission. The IFA must be bringing it up with their clients and offering the service.”
Baillie says since the launch of Thepensionspecialist last month, it has been able to convert 100 per cent of referred cases, which has helped the firm double in size and it is now expanding south of the border.
We are going foraging south of Hadrian’s Wall and we have a real Englishman on board,” he says.
The growth of the market could tempt other comp-anies into the space that Thepensionspecialist occupies but Baillie says the difficulty in coming up with the technology may be difficult to overcome. But even with competition, he says the FSA’s attitude to pension switching will mean that services like his will continue to be necessary.
Baillie says: “We didn’t know of anyone else coming up with these systems when we began and we still do not know of any because it is so
pecialised. The FSA sees pension switches and transfers as toxic or dangerous goods, that is why not too many IFAs do them. We were able to reduce the toxicity and deliver solutions to the clients of other IFAs.”