Is DB advice falling short of consumer demand?

89% of advisers who are or have been active in advising on defined benefits say there are still many individuals who would benefit from taking advice.

Yet just 36% of advisers who provide DB advice believe there are sufficient numbers of advisers to meet the current demand.

Aegon says the supply of advice is being hampered through regulatory complexity and the inability of many firms to obtain affordable Professional Indemnity cover.

Seven in ten (69%) advisers said FCA regulations err too far on not recommending transfers. Last week the FCA said it was ‘deeply concerning and disappointing’ to see 69% of those advised on DB being recommended to transfer.

Six in ten (58%) believe the market is also being harmed by the lack of an effective triage facility, with advisers unable to have a personalised discussion with a client to determine if it’s appropriate to progress to full advice. The FCA’s publication last week did highlight that once allowance is made for those who received triage, the proportion recommended to transfer fell to 55%, indicating a beneficial role for triage.

Steven Cameron, pensions director at Aegon, commented: “Whilst transfers volumes have declined from a peak at the beginning of last year, demand for such advice remains high and continues to outstrip supply.

“Transferring is not the right way forward for the majority of people with DB pensions, but the market is not working effectively if people are unable to obtain advice to even explore their options.

“This means it’s important to resolve the current issues including PI difficulties which are discouraging advisers who are active in this market from continuing to offer DB advice.

“Aegon is particularly supportive of introducing a form of triage that would allow advisers to offer individuals some initial help to assess whether it is worth progressing to advice on transferring.

“Unless the current log jam is eased we’ll be left with an increasing number of people whose advice needs can’t be met because of a lack of supply, leaving them unable to explore their options, a situation which is in no one’s interest.”