IFA Newsletter September 2023

We wrote in the previous newsletter (February 2023) about the significant falls in transfer values, linked to the sudden and large increase in interest rates / gilt yields, around spring / summer last year. However, since then we have seen a small increase in average transfer values, and this trend has continued with the XPS Transfer Value Tracker index showing a 4% increase in the last month.

As detailed in the previous newsletter, unless interest rates and gilt yields fall significantly (which appears very unlikely), the chances of transfer values getting back to their peak of late 2021 remain remote.

Ultimately, advice should always be an individual consideration, and outcome of Full Advice should be based on the importance of a client’s objectives compared to the relative generosity of the transfer value. Due to our balance approach, and despite the general falls in transfer values since summer 2022, interestingly we’ve only seen a small drop in positive recommendations to transfer:

We have upcoming seminars in Southampton next month, whilst we are also planning visits to Scotland and Northern Ireland in October / November.  

If you would like to attend any of our seminars or have any questions, just e-mail seminars@groveps.co.uk.

Following the introduction of Consumer Duty and a review of our charging structure, from 1st September we are pleased to announce a maximum fee cap of £13,000. However, we are making an increase to our minimum fee and tiered structure, as below:

This is our first fee change in three years (and the first time we’ve applied a cap) and reflects market conditions at the moment; in particular increasing PI costs, regulatory and FOS levies as well as the increasing cost of back-office systems and professional services.

• We remain committed to providing advice to any client irrespective of the transfer value, so there remains no ‘minimum’ CETV.
• Abridged Advice remains free of charge.  Therefore, unlike some companies we only charge a fee where we have to in accordance with FCA rules e.g. on provision of Full Advice.
• Whilst this will impact on our ability to facilitate an adviser charge for you on smaller transfer values, you can still agree an administrative fee for yourself with your client where required, either before or after a transfer.
• We are ‘capping’ our charges for the first time – so our maximum fee is now £13,000 irrespective of the size of the transfer value.
• This increase will apply to new cases submitted after 1st September, existing applications, the old fee will be applied.

We have published a further two articles in FT Adviser titled ‘Why are DB transfers taking so long?’ and ‘DB transfer conundrum still proving hard to tackle for IFAs’.

Both provide 30 minutes CPD and are available via www.ftadviser.com/tim-flippance/

The Grove Pensions Solutions (GPS) CETV Index provides an average CETV based on a £10,000 per year pension. This is calculated by analysing the actual CETV and benefit value of thousands of ‘real-world’ CETV’s calculated since January 2022. This is unlike other indexes that use a ‘typical’ CETV based on assumptions.

A Transfer Value Comparator (TVC) is the amount a transfer value would need to be at the date of calculation, to match the future benefits from the existing scheme, based on risk free investments. Comparing the TVC against the CETV gives an indication of the relative generosity of the CETV. For example, if the Transfer Value offered by the scheme matches the TVC (100%), this indicates a generous transfer value.

The following chart is based on analysis of thousands of real CETV’s calculated since January 2022.