DB Transfers
LouiseD79
Member
I am trying to set up an in-house process for DB Transfers to ensure the time spent on completing them is kept to a minimum, whilst making sure that its a robust process that clearly shows whether a transfer is in the client's best interest. We have seen a huge increase in clients requesting to transfer and I am trying to work out realistically how long one case would take to get from start to finish so I can make sure that we do not take on too many. We currently use O&M to produce the TVAS report (which can take up to 3 months!) and in the meantime I try to gather all of the facts together along with clients objectives etc. I am looking at using Voyant to provide a cashflow report as part of the process. What process do other people use for DB Transfers and how long does a typical case take you to process from start to finish?
Comments
If the client has stated some clear objectives that indicate that a transfer might be suitable, then the first step for us would be to build a cashflow forecast to illustrate potential scenarios on transfer out / staying in the scheme. This will include the CETV vs. normal scheme benefits, alongside their other usual income/expenditure and any planned capital expenditure stated (as an example, we have recently had a client who wanted to use her TFC to repay her mortgage and didn't think it was doable staying in the scheme - it was!). This can be a lot of leg-work and can end up with several scenarios, but "if you're gonna do it, do it right" and all that! We use Prestwood/Truth but I've heard good things about Voyant.
If it's a brand new client, we'll also do a full assessment of attitude to risk, using FinaMetrica for emotional risk tolerance, then the cashflow scenarios to help establish risk need / capacity for loss. Simulating a market fall in pre/post-transfer scenarios also helps to highlight that giving up guaranteed income is a big decision to make.
Unless time is extraordinarily tight (i.e. they sat on the CETV for a while) then we'd do all that before requesting a TVAS, as sometimes the discussions can stop there, with a short letter to follow-up. We use Selectapension for the TVAS at the moment, which is cheaper than O&M and turns the report around in 5 days, so that's worth a look if you're struggling with O&M. We've used O&M in the past and I don't think the resultant report is worth the extra cost or time.
Once the TVAS is back, unless anything wild comes up, you'll have all you need to get the report done. Ours includes all the usual stuff, but also a summary of the cashflow scenarios and take-home points from the TVAS prior to the recs/suitability to make it flow a little better, rather than referring to appendices throughout.
If I had to guess, once the client gets all the initial info to you, I'd say the whole process only takes a couple of days in total, but that can be spread over the course of a few weeks depending on how quickly you can build the cashflow, review the cashflow scenarios with the client, get the TVAS turned around, and the current size of your reports. Happy to send over the general structure of our reports if that'd help, but they come in about 15 pages for a brand new client and slightly shorter if they're an existing client, the trickiest ones maybe taking a day to pull together.
Sorry for the rambling, but I hope this helps a bit!
Becca
Hi Becca
Thank you so much for taking the time to reply, that is really helpful! Previously we have requested CETV and O&M report before we have started doing cashflows etc but I am in with agreement with you in that it makes sense to do the leg work first, even if that means that the case then doesn't progress because something comes up in the cashflow that makes it clear that its not in the clients best interest to transfer. Do you charge your clients for the time spent analysing if it doesn't progress? I have used Select a Pension in the past so am new to using O&M but my experience so far has been that they are very slow. I think our company like using them because they do all of the chasing of the scheme trustees etc which is one less thing for us to do. The other difficulty I have is trying to get all of the soft facts from the advisers, it seems all the knowledge of the clients feelings/wishes/future objectives etc are in the advisers head but not passed on to me which is a real struggle and not quite sure how to get round this! In my previous company I would sit in on the client meetings so could get all the info I needed, but that just isn't possible here as there is not enough resource for me to be away from my desk. How do you get all of the info you need from the adviser?
If you could send over the general structure of your reports that would be so helpful - thank you!
Louise
We tend to find that (potential) clients already have their CETV; which means we have to move fast to meet the guarantee date.
We do full fact find (including ATR etc) and build out Voyant plans to give us the high level view on transfer - we tend to include as standard early death what if's as well as market crashes (doomsday scenario). At the same time we produce an initial TVAS based on the information the scheme provides in the TV pack.
These two allow us to see whether transfer could be in the clients best interest or not given stated objectives. Adviser discusses these with client.
Whilst this is happening we are in contact with the scheme administrator to get any missing information or clarification on scheme rules.
Once we have satisfied ourselves we have all we need we produce a final TVAS and recommendation report to present to the client.
Hi Jona
Thanks for your response, we are faced with the same issue of having to move fast due to the guarantee date. Do you do your own in-house TVAS or do you outsource it?
So, we always charge for the cashflow build separately, regardless of what any future advice may then be.
As far as getting the info you need from the adviser goes, what do they give you at the moment?
We've re-jigged a few things lately that seems (touch wood!) to be working quite well. For any meeting, there's now a simple document that only includes the key headings (background, objectives, risk discussion etc.) that then requires a fully free-flow response, meaning that we tend to now get a lot more detail in the client's own words.
Specifically for potential DB transfers, once the initial meeting/factfinding has all been done and the cashflow prepared, there's another discussion document the adviser takes to the cashflow meeting that includes the headline details of the scheme/CETV, then relevant prompts and considerations to be discussed alongside the cashflow scenarios (i.e. why now? other guaranteed income? health considerations? need for income/PCLS?) which means that we can tick all the boxes and really nail some client-specific suitability points. Again, happy to send this over if you think it'll be of use!
Hi Louise
Most of our clients come to us with a CETV and that then dictates how long we have to complete the process. We have rather stolen the Standard Life/1825 "triage" process for DB transfer but it seems to be working. We have compiled a DB transfer specific short fact find (in addition to the usual fact find) which uses soft facts about the client and assess the value of the CETV. This is assessed by a PTS and have found this filters out all cases where we wouldn't recommend a transfer. Last year we only did about 6 or 7 DB transfer recommendations because all the other queries were stopped before a report is written. This saves the client having to pay a fee only to be told to remain in the scheme and we don't charge for the initial analysis. For all those reports that were written the transfer is recommended.
We had previously used O&M but found on a few occasions the TVAS was returned after the CETV had expired, which forced us to pay for a new one with the added risk of it going down in value. So we now do it in house using the Selectapension system. Yes, we don't get the depth of analysis, but more often than not, the critical yield and some of the more superfluous information captured by O&M isn't a reason for recommending the transfer.
As with others we use cash flow (Voyant), either at the initial stage (if it is an existing client and the cash flow has already been built) or at report stage for new clients with the usual loss scenarios etc.
The whole process usually takes around a month (depending on how much, if any, information is required from the scheme).
In terms of recording soft facts, sounds like a training need to me! That can really only be dealt with by changing the mindset and culture of the advisers. Our paraplanning team is centralised and we have been through that cultural change when this was set up. If the fact find does not contain all the soft information it is returned to the adviser to complete properly!
Much the same as everyone else then really, bar that initial stage which is really useful.
Cheers
Tom
We do our TVAS in-house.
Hi Becca, hope you don't mind, just dropped you an email in regards to this one
Tom, genuine couple of questions in relation to the process you follow.
You say you don't charge for the initial analysis and only charge if a recommendation to transfer is made. So do you only charge a fee on a recommendation to transfer and not provide a report at all if the recommendation is to remain?
You also mention that for new clients you would build the cashflow at report stage but this seems to be after the point where you deem it appropriate to transfer or not?
Sorry if I am missing something obvious, but genuine interested in other firms processes in this area.
Nathan
Hi Nath, in answer to the first bit, yes this is what we had been doing. In a number of cases we would have written to the client to explain why we would not recommend a transfer but this wouldn't have been a formal suitability letter.
I think of the cases we have done only two were new clients. All the other DB queries had come from existing clients and so we were already earning decent fees from the clients anyway and happy to include the triage as part of the service. It would probably also have been discussed as part of their annual review and easily enough to model in the existing cash flow.
For one of the new clients they are super super HNW so the decision to proceed was fairly straightforward without cash flow. The other we built the cash flow as part of the recommendation.
Since the recent consultation paper, we will be changing the process to make it more guidance led rather than "we wouldn't advise you to proceed to full advice", letting the client decide whether to proceed. I am thinking a detailed "DB things to consider fact sheet", personalised to a degree.
Hi @Jona
Are you still running these as a rough guide in the triage process, bearing in mind the new rules?
Cheers
Tony
@T_Smith No not as triage. If the client wants us to look at it then we charge a fee regardless of advice outcome.