A common pension problem that is arising according to IFAs is incorporating esoteric investments inside SIPPs.
The providers are acting as policemen. Few provider-trustees are willing to accept the investments unless either the individual is certified HNW/Professional client or advice has been given by the IFA.
And the advice to the client must recommend that they proceed â€“ and the report copied in to the provider.
This is a similar problem to that reported before on the transfer of protected tax free cash requirements.
Once again the providers are acting as the policemen and gold plating of the rules is creeping in to our industry.
And you can forget about insistent client work because arranging an investment for a client against your advice will not stop you being fully liable for the product.
You cannot arrange against your advice and expect any mercy from the authorities or FOS on a complaint any more than a surgeon can whip out an organ for donation that you insist is right, but surgeon knows may harm you.
So here is a new scenario.
A client who is not HNW / professional is a part owner and director of a small company who are doing a share issue.
He wants his pension SIPP to subscribe.
The trustees will not allow it without that clear letter of advice mentioned before.
But how can an IFA recommend such a product? Even if the client is ultra high risk, the analysis of the end product â€“ shares in a small unlisted trading company â€“ is surely difficult to prove and it is difficult to see that you will not be held liable if the product fails.
Relying on the customerâ€™s own research â€œI know my companyâ€ is like that doctor again - prescribing a drug manufactured by the patient to the patient.
If it was easy then anyone could be an IFA.
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