Do nothing! What sort of advice is that?
Written by Carl Turner on June 16, 2014.
This was my advice to a client in a recent meeting and it struck me that this would make a great subject for a blog piece. The best advice for that client at that particular time was to leave things exactly as they are.
In this case, it involved the client’s pension from a former employer. He was looking to move it and consolidate it with his other pensions. However, when I took a closer look, it transpired that the pension was a final salary scheme which was enhanced and had a good accrual rate. The transfer out value and critical yield figures showed that moving the pension would have seriously impacted on the amount he would have left, hence my advice to do nothing and leave the pension where it was.
Here at Infinity Solutions, we never recommend moving a pension unless it is in the client’s best interest. We arrange for an independent analysis of every final salary pension for our clients and our advice is based on the results of that analysis and the needs of the client. Sometimes our advice will be to transfer but we are also quite happy to tell a client to leave a pension where it is.
Of course, the legislation surrounding pensions is subject to change (in fact big changes to UK pensions regulations were announced in the 2014 budget) and a client’s needs or the scheme itself may also alter. I therefore made a note of the pension in my client’s file and will look at it again at every client review. It could be that a few years down the line it will make sense to move the pension, a point which highlights the importance of regular reviews with your financial planner.
Reviewing my clients’ existing financial situation is a major part of my job and enables me to check that their investments are performing as they should and that the individual is on track to achieve their objectives, or indeed if the objectives themselves have changed. I enjoy this process of catching up with the client and chatting about what has happened since I last saw them. Sometimes there will be major changes such as a new job, an addition to the family or a marriage and these events will almost certainly involve adapting their financial plan, however often these meetings end with the advice to do absolutely nothing.