Advice firm revamps DB transfer service following FCA guidance

Hannah Godfrey reports...

Advice firm Tideway has revamped its defined benefit (DB) transfer offering after the Financial Conduct Authority (FCA) “made it clear” it wanted firms to perform a “fully joined-up” service.

For its intermediary service in the past, a client would typically be referred to Tideway from another business. Tideway would then undertake the transfer work and then return the client back to its referrer for advice on where to invest their money.

Tideway decided to “pull back” from such services, however, after the FCA “made it very clear” it wanted businesses to carry out a “fully joined-up” advice process, including where the money is invested post-transfer.

“We would get referrals in from a large wealth manager and then advise on the DB transfer, knowing the money was going back into the wealth management solution,” explained Tideway managing partner James Baxter (pictured). “We told the customer that, but did not specifically recommend how the money was invested.”

Baxter said industry guidance from “the FCA it made clear” the regulator wanted firms to advise all the way through the DB transfer process, adding: “Historically we were using some reasonably generic and conservative assumptions about what the [referral] firm would do, but the FCA did not like that. It wanted a specific set of recommendations as to how the money was actually going to be invested, line by line.”

‘Help smaller advisers’

Since then, Tideway has revamped its process, and is now offering the full “joined-up service” – as Baxter described it – as well as targeting smaller wealth managers and advisers who may not have the regulatory appetite, necessary permissions or professional indemnity insurance to engage in the DB transfer arena.

“We want to help smaller wealth managers and advisers participate in this market and believe many of them can deliver more suitable, lower-cost and more efficient ongoing drawdown solutions for clients post-transfer than these big players,” Baxter continued.

“We understand the shift away from outsourced discretionary fund management (DFM) solutions being taken by many advisers to lower the total costs of their drawdown investment solutions. While 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.”

In the past, Tideway has found itself in the thick of the pension transfer debate. Earlier this year, the Trades Union Congress suggested it, alongside advice giant St James’s Place, had been proactively contacting workers to discuss pension transfers – an accusation both firms denied.

Tideway was one of the firms the FCA visited during its ongoing multi-firm supervision exercise on DB transfers. Despite the visit, Tideway maintained permissions to carry out DB transfer advice, and has never stopped undertaking DB transfers.