Watchdog rethink on simplified advice likely to shake up pension consolidation market to the benefit of consumers, wealth managers and IFAs alike – better late than never, says Zippen boss Stuart Feast
SIMPLIFIED pension adviser Zippen boss Stuart Feast has welcomed the FCA decision to run trials with IFA firms in early 2025 on the efficacy of simplified advice.
Zippen, which offers a switching service for IFAs and wealth managers designed to take all the hassle out of pension consolidation has been banging this particular drum since 2022.
“After a bit of toing and froing by the watchdog, its great news that the FCA is finally recognising a service that fully benefits those who cannot justify or afford holistic advice for relatively small pots,” said Feast.
“We set out our stall as a simplified adviser, which can offer huge benefits to a client wanting advice on, say, a £10,000 pot, which can mean a massive workload for the average adviser.”
To get advice (and in the words of the FCA, to avoid poor outcomes) a consumer is encouraged to seek independent financial advice through an IFA.
“The trouble is that the FCA has applied the same stringent rules on the viability of a pension switch (formerly called a transfer) whether the individual is switching £1,000 or £1m. But simplified/targeted advice – which may well be around the corner – could make a huge difference,” said Feast.
Currently, providing this service costs anywhere from £750-£1,250 – clearly not viable for the consumer on a £10,000 pension pot.
“This creates a huge ‘advice gap’ because, if a standard IFA can’t offer a simplified service what does the firm do in this instance, other than tell the customer that any consolidation will not be cost effective?
“Most advisers recognise that pension values under around £75-100k will be non cost effective but they can’t just put on a different hat and become a simplified adviser because it suits them,” he adds. “Then there is the added problem of advising a customer to use an execution only service with a Provider, which whilst free, has no substantive in-built checks as to what is being transferred and valuable benefits maybe lost. Zippen has these checks in place to ensure the best consumer outcome.”
As a simplified advice service, Zippen is able to offer these switches at £145-£245 depending on the amount of pots because it does not consider the investment performance of the ceding and receiving schemes.
