IFA Newsletter February 2025

Recently, a number of referring IFAs have asked us to clarify the rules surrounding initial adviser charges, particularly with regard to ‘introducer’ fees.

You are absolutely entitled to charge your client a fee for your time when referring a case to us. Typically, this fee should cover the time spent on initial meetings, completing the Factfind, and gathering necessary scheme information such as CETVs. It’s essential that you have the relevant client agreements in place in line with FCA requirements. Additionally, please remember that any fee cannot be contingent on the transfer proceeding.

When the transfer value exceeds £131,666 (which ensures our minimum fee of £3,950 is effectively covered), we can facilitate a fee for you, within reasonable limits. However, it’s important to note that, aside from the minimum fee, we reduce our standard charges on all IFA-referred cases to enable an introducer fee – without the client paying more than they would if they had approached us directly.

For more information, please see FAQs – DB Pension Transfer Service for IFAs

We’ve seen three 0.25% interest rate cuts in the past six months (August 2024, November 2024, and February 2025), as the Bank of England responds to falling inflation and wider economic concerns, particularly fears of a potential recession. Bank Rate reduced to 4.5% – February 2025 | Bank of England

It’s also noteworthy that while all nine committee members voted for the rate cut, two members voted for a larger 0.5% cut. Based on future economic factors, this could signal that further rate cuts might happen sooner than expected.

While these cuts could ultimately lead to higher average transfer values, other factors may mitigate this, and any impact is likely to take some time before it’s significant.

Long-term fluctuations in average transfer values are tracked by the ‘Real World’ CETV index below.

While DB schemes and transfers have largely been unaffected (at least directly), the government’s recent announcement that pensions will be subject to Inheritance Tax (IHT) for the first time has created a stir in the industry. Although the change is still two years away and very few details are known about how the legislation will work, the potential impact on advice is significant. Key questions like, ‘Are pensions still tax efficient amid IHT changes?’ – FTAdviser (as discussed by FTAdviser) will need to be addressed in the next 24 months.

The initial consultation was completed in January, and draft legislation is expected to be published later this year, so stay tuned.

CETV’s calculated since July 2023.  This is unlike other indexes that use a ‘typical’ CETV based on assumptions.

The following chart is based on analysis of thousands of real CETV’s calculated since July 2023.